The acquisition will be in a consortium with Ekapa Mining, an established Kimberley-based diamond tailings producer and amounts to R120 million in total.
Ekapa Minerals is the established consortium acquisition vehicle - owned by Ekapa Mining (50.1%) and Petra (49.9%). It has entered into a binding agreement with DBCM to acquire the Kimberley Mines as a going concern. Ekapa Minerals is also an HDSA (historically disadvantaged South Africans) controlled consortium vehicle.
The R102 million will be funded by way of shareholder loans from Ekapa Mining and Petra, pro-rata to their shareholding. In addition, Ekapa Minerals will assume liabilities relating to environmental rehabilitation, employee related liabilities and certain accounts payable.
The Kimberley Mines acquisition comprises a number of tailings dumps in Kimberley (tailings mineral resources or TMR), associated plant (combined treatment plant or CTP), employees and all other assets and liabilities.
Diamond value and production plan
The TMRs have resources of 2.8 Mct, as well as further potential for the treatment of other TMR deposits, containing an estimated 4.4 Mct (as at 31 December 2014).
The TMR grade is expected to be circa 11 cpht for the first three years of operation, reducing to circa 6 cpht thereafter, when the higher grade tailings have been treated.
The CTP is a relatively modern plant incorporating 'state of the art' technology and currently has a 6 Mtpa capacity. It is capable of treating a range of ore sources, including TMRs and run-of-mine material.
Ekapa Minerals expects to produce circa 700 000 ctpa in the first three years of operation, with revenue of R920 million per annum, based on an assumed diamond price of US$95/ carat.
Kimberley Mines is expected to be cash flow positive in their first year of operation subsequent to completion of the transaction; initial working capital of R200 million will be financed 100% by Ekapa Minerals on a standalone basis.
Extending the life of Kimberley Mines
The consortium between Ekapa Mining and Petra offers synergy opportunities with regards to joint resources and the potential to leverage the combined skills and capabilities of each company.
There is considerable potential to combine the various operations in order to extend the lifespan of the Kimberley Mines TMRs, as well as Petra's existing underground assets in Kimberley, thereby contributing to the future sustainability of the Group's operations and employee base in Kimberley.
"The most compelling aspect of this transaction is the extension of the mining and processing of Kimberley's TMRs far into the future. Ekapa Minerals will be operated and managed in Kimberley by the people of Kimberley and to the benefit of the area. Ekapa Mining could not wish for a better partner than Petra, who provides depth of knowledge and experience to the Kimberley operations," says John Hohne, CEO of Ekapa Mining.