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London, England — MININGREVIEW.COM — 19 November 2009 – Petra Diamonds Limited “’ one of the world’s largest independent diamond groups by resources “’ is to double its stake in the Cullinan diamond mine from 37% to 74%, by buying out  partner Al Rajhi for shares and cash in a deal worth some US$183 million (R1.4 billion).
Revealing this in a statement issued here, the company said about US$48 million (R360 million) of this would be settled through an issue of 36 million new Petra shares to Al Rajhi at a price of 80 pence each. In addition, Al Rajhi would receive a further 11.4 million shares at 80p each, as partial repayment of the US$80 million (R600 million) Cullinan loan it had advanced to help fund the purchase of the mine.

Petra CEO Johan Dippenaar  said Al Rajhi’s equity stake in Petra would rise to about 20% from the current 9% as a result of this deal. reports that Al Rajhi will be entitled to appoint a director to the Petra board and participate in future issues of shares, pro rata to its holding in Petra at the time.

Petra is to carry out an equity placing led by Cannacord Adams and RBC Capital Markets. This will raise funds to meet the cash loan repayments and pay for development programmes at both the Cullinan mine and the Williamson mine in Tanzania.

Dippenaar said Petra was looking to raise up to US$100 million (R740 million), but the actual amount would depend on market appetite and reaction from shareholders and investors. He declined to specify the price at which these shares would be issued, saying this would be determined in the book build through market response to the offer.

Dippenaar said: “The consolidation of the Cullinan acquisition and the simplification of the ownership structure will be highly value accretive to us and our shareholders. Increasing ownership of Cullinan to 74% will push Petra’s attributable diamond resources at the mine from 75.7 m carats to 151.4 m carats. It will also double attributable diamond production from about 320 000 carats to more than 650 000 carats, based on production results for the 2009 financial year.