Petra Diamonds agrees to sell its Botswana exploration assets
Botswana Diamonds is poised to buy in-country exploration assets from Petra for US$300,000
The Botswanan exploration assets belonging to the Jersey-based Petra Diamonds will soon be owned by Botswana Diamonds.
The agreement comes after a deal in which the former committed to selling its Botswanan exploration assets to the latter for US$300,000.
According to a report by Reuters, the takeover agreement includes a 5% royalty on future revenue.
Petra said payment will be in two equal instalments and should be completed on or before 31 August 2021 and 31 August 2022.
Botswana Diamonds can also take the option of buying out the 5% royalty by paying $2 million in cash to the UK diamond miner.
Botswana’s most advanced project
The agreement will see Botswana Diamonds also takeover Petra’s subsidiary Sekaka Diamonds Exploration (Pty).
Sekaka Diamonds Exploration holds three prospecting licences, including the KX36 project, which has an indicated resource of 17.9 million tonnes at 35 carats per hundred tonnes.
The managing director of Botswana Diamonds, James Campbell, described KX36 as the firm’s most advanced project in Southern Africa.
Petra, which is undergoing restructuring, made known its plans to sell the Sekaka in 2018.
An analyst for the financial services provider BMO Capital Markets, Edward Sterck, believes the takeover may be delayed because of approval which is pending from the Botswana Competition Commission.
Driving efficiencies
In a statement, the chief executive of Petra, Richard Duffy, said selling its exploration assets is in line with a strategy to drive the quality of mining.
The move will allow the company to maintain its potential for commercial production from the Botswana assets, he said.
Sekaka, for instance, has been a “held for sale” asset since 2018 and constitutes part of the firm’s business efficiency drive.
“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, particularly from the KX36 deposit,” Duffy said.
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