London, England — MININGREVIEW.COM — 18 July 2008 – The internationally-known Cullinan diamond mine is expected to produce more than one million carats in the 2009/2010 year, making its new owners one the largest diamond groups in the world.
Announcing completion of its acquisition of the Cullinan diamond mine, the Petra Diamonds Cullinan Consortium (PDCC) said that in the 2008/2009 year – its first year of operation in Petra’s hands as the mine operator – the mine was expected to produce 700 000 to 850 000 carats. The rise to one million carats the following year would push annual revenues to around US$100 million (R800 million).
The members of PDCC are Petra (37% initial interest and an option to increase its stake in PDCC to 60%), Al Rajhi Holdings W.L.L. (37% initial interest) and PDCC’s Black economic empowerment partners (26% interest).
The Petra statement confirmed that the acquisition cost of R1 billion had been settled by PDCC in cash. PDCC had been funded by Petra and Al Rajhi each contributing US$40 million (R320 million) equity, and Al Rajhi providing US$95 million (R760 million) loan finance. This total financing package of US$175 million (R1.4 billion) covered the acquisition cost, as well as working capital and capex requirements.
Petra says that during the first year of operation it will focus on establishing the new economics of the mine, including grade, value per carat, cost per tonne and overall production capacity of the infrastructure. Due to this focus in the first financial year to June 2009, Petra will mine from the B-Cut at a rate of 1.4 to 1.8 million tonnes per annum, which is expected to yield between 600 000 and 750 000 carats. This will be augmented by production from the optical sorting plant tailings of approximately 100 000 carats.
The company has plans in place to make major alterations to the processing of ore by effecting changes within the plant, with the objective of improving the grade and placing emphasis on the recovery of the whole spectrum of diamonds.
The Cullinan kimberlite pipe is the second largest indicated diamond resource in the world by in-situ value. The mine is renowned for producing many of the world’s most spectacular diamonds (including over 300 stones weighing more than 100 carats), the most famous of which is the 3 3 3 106 carat Cullinan diamond. The mine is also the world’s only significant source of truly rare and highly valuable blue diamonds.