Petra Diamonds to buy De Beers SA mine

Petra Diamonds said it agreed to acquire South Africa-based Finsch diamond mine from De Beers, the world’s largest diamond producer, for R1,42-billion to diversify its portfolio.

Petra shares were up 11,2% at 180,25 pence at 8.29am GMT on Friday on the London Stock Exchange. The stock has more than doubled in value since the company posted better-than-expected full-year results in September.

Petra, the largest diamond producer on London’s junior AIM market, also raised £205-million through a share placing to fund the acquisition, meet working capital requirements at the mine and repay debt.

The company placed 136,6-million shares at 150 pence each, which is a 7% discount to the stock’s Thursday close.

Finsch, which is South Africa’s second largest diamond mine by production, would become Petra’s eighth producing diamond mine, more than doubling the company’s current production of about 1,3 million carats per annum (mctpa), the company said in a statement.

The company expects group production to increase to about 4 mctpa by fiscal 2014 and to over 5 mctpa by fiscal 2019.

The acquisition is expected to immediately add to net asset value per share post the placing and operating cash flow per share.—Reuters