Petra’s sale of stake in KEM JV concluded
PETRA Diamonds Limited has sold it’s 75.9% interest in Kimberley Ekapa Mining Joint Venture (KEM JV) to the company’s joint venture partner, Ekapa Mining (Pty) Ltd, for R300 million.
The sale, announced on July 5 2018, was concluded yesterday.
KEM JV was a joint venture between Petra Diamonds and its partner Ekapa Mining and incorporates the Kimberley Underground Mine, extensive tailings retreatment programmes and the high-volume Central Treatment Plant – all located in or around the historic diamond mining centre of Kimberley.
The sale was on a “going concern basis”, with Ekapa Mining taking on all of the company’s financial, employee, environmental, health, safety and social obligations with regards to the KEM JV operation.
The terms of repayment of the R300 million purchase consideration, originally to be payable in 24 monthly instalments starting in January 2019, have been amended to allow Ekapa Mining to maximise the prospects of the financial viability of the operation.
According to the terms, the purchase consideration will be settled with a fixed portion of R60 million payable in 24 monthly instalments starting on April 1 2019. The balance of the purchase consideration will be repayable from a 50% share of future operating cash flows including proceeds from the sale of assets, potential proceeds from a pending insurance claim that is subject to ongoing discussions, in relation to the mud-rush incident at Bultfontein, and adjusted for sustaining capital of between R110 million and R130 million per annum, for a period of five years to June 30 2024.
Johannes Dippenaar, Petra Diamonds CEO, said yesterday that the completion of the sale was in line with the company’s strategic priorities, which included the ongoing review of the asset portfolio, in order to maximise return on capital and ensure that all assets are in a position to contribute positive cash flow to the business.
Petra Diamonds recorded an attributable loss on discontinued operations of US$104.3 million, relating to the reclassification of KEM JV as a discontinued operation in the company’s results for the year ending June 30 2018.