Petra Diamonds is all set to exit from the Kimberley Ekapa Mining Joint Venture (KEM JV) that manages the Kimberley Underground mine and other assets in South Africa in a ZAR300m ($22.08m) deal with its JV partner Ekapa Mining.
The company along with its black economic empowerment (BEE) partners has entered into a binding heads of agreement in this regard with Ekapa Mining to dispose their stake of 75.9% in the Kimberley Underground mine and other properties in the JV.
The BEE partners of Petra Diamonds are the Itumeleng Petra Diamonds Employee Trust with a stake of 12% and Kago Diamonds with a stake of 8.4%.
Apart from the Kimberley Underground mine, the joint venture also incorporates extensive tailings retreatment programs and the Central Treatment Plant. All the assets are located in or around the Kimberley region.
Petra Diamonds said that it is quitting the JV to ensure a sustainable future for it by leaving the operation under the sole ownership of an operator, who is appropriately suited to maximize its value.
The company, in a statement, said: “Ekapa Mining’s extensive experience of operating specifically within Kimberley and its ability to solely focus on these assets is expected to provide the right fit for the operation, thereby ensuring continuation of diamond mining employment and related economic activity in this renowned diamond centre.”
Petra Diamonds also expects the sale to help it free up considerable management time that can be used on core assets of the business, especially the Finsch and Cullinan mines.
The UK-based diamond mining group had acquired the Kimberley Underground mine in May 2010 and in January 2016, purchased the Kimberley mines assets.
Completion of the sale of the KEM JV stake is expected to be completed in Petra’s Q1 FY 2019, subject to various conditions, including an approval by the South African Competition Commission.
The Kimberley Underground mine, which employs sub level and block cave mining methods, is expected to remain in production till 2035.