Petra Diamonds Limited
("Petra" or "the Company" or "the Group")
New IFC Revolving Credit Facility of US$25 million
Petra Diamonds announces that its wholly owned subsidiary Finsch Diamond Mine (Pty) Limited ("FDM") has entered into a revolving credit facility agreement (the "IFC Agreement") with IFC (a member of the World Bank Group) with regards to a new revolving credit facility of US$25 million secured on the assets of FDM in respect of the Finsch diamond mine in South Africa ("Finsch") and the Company's interest in FDM.
The new facility has been put in place in addition to the ZAR300 million (approximately US$36.9 million) Rand Merchant Bank ("RMB", a division of FirstRand Bank Limited) revolving credit facility that was announced on 30 November 2011. On completion of the IFC Agreement, the ZAR300 million RMB facility will reduce to ZAR200 million (approximately US$24.6 million), so that the lenders together provide circa US$49.6 million in revolving credit facilities to Petra.
These IFC (US$25 million) and RMB (ZAR200 million) revolving credit facilities are in addition to the debt facilities of approximately US$76.9 million that were put in place in November 2010 with IFC and RMB (being U$40 million with IFC and approximately US$ 36.9 million (ZAR300 million) with RMB) ("the IFC and RMB 2010 Debt Facilities"). Other than the revolving credit and debt facilities above, Petra also has working capital (overdraft) facilities with RMB/FirstRand Bank Limited of approximately US$20.9 million (ZAR170 million).
Petra's total bank debt facilities now amount to approximately US$147.4 million. As at the date of this announcement, Petra has drawn down US$36.5 million of the IFC 2010 Debt Facility and approximately US$32.9 million (ZAR267.1 million) of the RMB 2010 Debt Facility. All other facilities remain undrawn, leaving approximately US$78 million available.
Given the lead times between the Group's now larger diamond tenders (post the acquisition of the Finsch mine) and the volatility experienced over the last 12 months of both the Rand and diamond prices, these new revolving credit facilities provide Petra with additional scope and flexibility to execute its capital expenditure programme and bring the Company's stated production and revenue growth opportunities to account.
As stated in the Company's recent Interim Management Statement (released 9 May 2012), and separately to this new IFC facility, Petra has commenced discussions with its bankers with regards to the longer term restructure of the Group's debt requirements. It is an opportune time to revisit the Group's debt levels, terms and structure, given that Finsch was not part of the Group when the original debt financing was put in place in 2010 and given the other positive Group developments since this time.
Johan Dippenaar, Petra's CEO, commented: "We are delighted to have entered into further credit facilities with IFC, whose continued support endorses the quality of our asset base, as well as our strong commitment to corporate social responsibility. These combined IFC and RMB facilities further strengthen Petra's financial position and the Company's ability to deliver on its core objective of rolling out its stated expansion plans and ramping up production to over 5 million carats per annum by 2019."
Details of the Revolving Credit Facilities
· The IFC revolving credit facility will be repayable by 31 May 2014. It has been agreed with RMB that the repayment date for the RMB facility be extended from the original date of 1 December 2013 to 31 May 2014, so the two facilities are aligned.
· On 31 December 2013, the IFC revolving credit facility will reduce to US$18.75 million (and the RMB revolving credit facility will reduce to ZAR150 million).
· Interest rates: IFC US$ facility - six month US$ LIBOR plus 3.5% margin (RMB ZAR facility - three month JIBAR plus 3.5% margin).
Completion of the IFC Agreement is conditional upon, inter alia, certain conditions precedent being satisfied. The principal conditions precedent relate to completion of security arrangements over the Group's assets, the execution of the relevant documentation to ensure interdependence of the respective agreements, and consents required from the South African Reserve Bank. Petra expects to have met all of the conditions precedent before the end of August. The Agreements contain standard events of default and warranties for facilities of this size and nature.
1. An exchange rate of US$1:R8.13 has been used for the purposes of this announcement.
For further information, please contact:
RBC Capital Markets
(Sponsor and Joint Broker)
Telephone: +44 20 7653 4000
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in developing countries. It creates opportunities for people to escape poverty and improve their lives. It does so by providing financing to help businesses employ more people and supply essential services, by mobilizing capital from others, and by delivering advisory services to ensure sustainable development. In a time of global economic uncertainty, IFC's new investments climbed to a record US$19 billion in fiscal 2011. For more information, visit www.ifc.org.
About Petra Diamonds Limited
Petra Diamonds is a leading independent diamond mining group and an increasingly important supplier of rough diamonds to the international market. The Company has a well-diversified portfolio, with interests in eight producing mines: seven in South Africa (Finsch, Cullinan, Koffiefontein, Kimberley Underground, Helam, Sedibeng and Star) and one in Tanzania (Williamson). It also maintains a highly focused exploration programme in Botswana.
Petra offers an exceptional growth profile, with a core objective to steadily increase annual production to 5 million carats by FY 2019. The Group has a major resource base in excess of 300 million carats.
Petra conducts all its operations according to the highest ethical standards and will only operate in countries which are members of the Kimberley Process. Petra is quoted with a premium listing on the Main Market of the London Stock Exchange under the ticker 'PDL' and is a member of the FTSE 250.
For more information, visit the Company's website at www.petradiamonds.com