Divestment of Kono Project -

RNS Number : 2219L

Petra Diamonds Ld

04 May 2010

 



Immediate Release

4 May 2010

Petra Diamonds Limited

("Petra" or "the Company")

Divestment of Kono Project - Sierra Leone

Petra Diamonds announces that it has reached agreement with Stellar Diamonds plc ("Stellar") to exchange its interest in the Kono Diamond Project ("Kono") in Sierra Leone for shares in Stellar, the project's joint venture partner. 

Petra is focused on delivering production and revenue growth from its portfolio of world-class kimberlite mines, with a core objective to grow annual production from one million to over three million carats.  The Kono kimberlite fissure project, whilst at an advanced stage of exploration and demonstrating positive project parameters, is not of a suitable scale to contribute to this objective and is no longer a core asset in Petra's portfolio.

Kono has no carrying value in Petra's balance sheet and therefore there are no impairments to be recognised by Petra with regards to the divestment.

Highlights

·     Strategic step in terms of Petra's core focus on delivering substantial production and revenue growth from its portfolio of world-class assets

·     Divestment of Petra's interest in Kono for £900,000, to be settled in 4,500,000 Stellar ordinary shares (based on a valuation of £0.20 per ordinary share)

·     Petra to become a 4.45% shareholder in Stellar

·     Formation of a "cooperation agreement" giving Petra first option to discuss with Stellar the joint venture of any current or future project in the Stellar portfolio

Johan Dippenaar, CEO of Petra, commented "We are pleased to have concluded this transaction with Stellar, as Kono is no longer core to our portfolio. Petra is wholly focused on delivering substantial production and revenue growth and our key objective is to take annual production from one million carats to over three million carats. This agreement allows us to retain an interest in Kono's future upside via our new shareholding in Stellar as well being exposed to the potential of the cooperation agreement, as Stellar is developing a number of other exciting diamond projects in West Africa."

Terms of Acquisition

The principal terms of the acquisition are that Stellar will issue Petra with 4,500,000 new ordinary Stellar shares (at a price of £0.20 per share) for a total consideration of £900,000, in return for Petra's interest in Kono, held via joint venture company Basama Diamonds Limited. On completion of this transaction, Stellar will increase its ownership in Kono to 100%.

The completion of the transaction is subject, inter alia, to the final signature of a share purchase agreement and issue of the Stellar shares to Petra.  On completion, Stellar's issued share capital will be 101,193,932 shares and Petra will become a 4.45% shareholder in Stellar. Petra has agreed (subject to certain exceptions) not to dispose of any of the Stellar shares for 12 months from the date of completion of the transaction, which is expected to be before 14 May 2010.

Cooperation Agreement between Petra and Stellar

As part of the transaction both Petra and Stellar have agreed to form a cooperation agreement whereby Stellar will give Petra the first option to joint venture any project in the Stellar portfolio which Stellar seeks to develop with a partner.

About the Kono Kimberlite Fissure Project

Kono is an advanced exploration project, with underground trial mining operations targeting diamond bearing kimberlite dykes within two Exclusive Prospecting Licences covering an area of 206km² in the heart of the Kono diamond district of eastern Sierra Leone.

To date, some 17km of kimberlite dykes have been mapped in the project area.  A number of shafts were sunk to evaluate some of these kimberlites, with underground development focusing on two kimberlite dykes, designated Pol-K and Bardu.  Over 4,200 carats of diamonds were produced by the joint venture between Petra and Stellar during this phase of development work. The project was put on care and maintenance in May 2009 after the global fall in diamond prices.  

For further information, please contact:

Cathy Roberts	Telephone: [phone]
Petra Diamonds, London	[e-mail]

Bobby Morse / James Strong / Katharine Sutton	Telephone: [phone]
Buchanan Communications	[e-mail] [e-mail] [e-mail]

Nicola Taylor	Telephone: [phone]
Russell & Associates	[e-mail]

Ryan Gaffney / Andrew Chubb	Telephone: [phone]
Canaccord Adams Limited (NOMAD and Joint Broker)	[e-mail] [e-mail]

Joshua Critchley / Martin Eales	Telephone: [phone]
RBC Capital Markets (Joint Broker)	[e-mail] [e-mail]

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About Petra Diamonds

Petra Diamonds is a leading supplier of rough diamonds, with a gross resource base of 262 million carats. The Company offers a unique growth profile within the diamond sector, increasing its annual production fivefold in the year to June 2009 to over one million carats, and with firm plans in place to grow production to over three million carats.

In South Africa, Petra has interests in five producing mines - Cullinan, Koffiefontein, Helam, Sedibeng and Star - and has also agreed to acquire the Kimberley Underground mines from De Beers (this acquisition is expected to complete soon). In Tanzania, Petra has an interest in the Williamson mine.

Petra conducts all its operations according to the highest ethical standards, and will only work in countries which are members of the Kimberley Process.  The Company is quoted on the AIM market of the London Stock Exchange (AIM: PDL).

www.petradiamonds.com 

 

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