Struggling Petra Diamonds sells Botswana exploration business

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(iStock)
(iStock)

Debt-laden Petra Diamonds, which recently announced plans to put up all or some of its business on sale, has entered into an agreement to offload its exploration assets in Botswana in a transaction worth nearly R5 million.

The London-listed firm which owns the Cullinan mine located outside Pretoria, on Monday said the sale would boost its working capital as the company is further hammered by the impact of falling diamond prices in the wake of Covid-19.

Sekaka Diamonds holds three prospecting licences including the KX36 project, with an indicated resource of 17.9 million tonnes at 35 carats per hundred tonnes.

"This disposal forms part of our strategy to focus on driving efficiencies from our high quality producing mines, but allows us to maintain upside to potential future commercial production from the Botswana assets," said Petra Diamonds CEO, Richard Duffy.

Petra said it would be entitled to a 5% royalty on the sale of diamonds commercially produced from the site which falls within the licence areas covered in the sale. Botswana Diamonds has the option to buy-out the royalty for a cash payment of US$2 million which covers approximately  52 000km2 of highly prospective diamond exploration ground.

The transaction is expected to be concluded by 31 August 2020 and may be extended by both parties.

In June, Petra Diamonds announced that it was seeking offers for all or part of the company as it battles to service its debts as the repayment of a $650 million senior loan is due on May 1, 2022.

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