Petra Diamonds Unburdens Itself of Mine for $14

Mining and Exploration
11/12/2018 14:24

In a cost-cutting move, mid-tier miner Petra Diamonds has unburdened itself of the Helam mine in South Africa for a total price of $14 (ZAR 200). Petra put the Helam mine on care on maintenance during FY 2015, following previous attempts to source a suitable purchaser and has conducted no mining activities since then.

The rationale for offloading the mine to Lindleys Mining, according to a statement, is to, "support the South African Government's intention to prolong the lives of mines facing closure by facilitating opportunities for emerging miners to the benefit of entrepreneurs, host communities and local employment." However, Petra also notes the disposal fits with their strategic priorities, which includes a review of the asset portfolio with a view to maximizing return on capital and ensuring its assets are in a position to contribute positive cash flow to the business. 

The sale of the mine will reduce its expenditure on keeping the mine in care and maintenance, which amounts to approximately $2 million each year. Furthermore, Lindleys Mining will assume the environmental obligations with regards to Helam, currently estimated at about $1.7 million. The deal also involves retaining shared access to the processing plant, which Petra has used to conduct resource and production sampling and analyses for its other projects. The move comes less than a week after Petra officially completed the disposal of its majority interest in the Kimberley Ekapa Mining Joint Venture, which it sold to Ekapa Mining for ZAR 300 million ($22 million), payable in 24 monthly installments starting in January 2019, as the company seeks to reduce its debt by streamlining its assets. The Helam mine is one of three underground Fissure mines (Helam, Sedibeng, and Star) Petra added to its portfolio more than a decade ago. Back in 2012, the company already announced it would attempt to sell those mines: “The fissure mines have become non-core to the Group, both in terms of their revenues and resource base, and Petra is of the view that the fissure mines have the potential to deliver strong returns under the ownership of an operator to whom they would be core assets,” a statement reads.