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Petra buys yet another De Beers mine
Allan Seccombe
Posted: Tue, 09 Sep 2008

[miningmx.com] -- PETRA Diamond’s acquisition of mines from De Beers continues unabated, with the latest transaction being the $10m cash purchase of a 75% stake in the Williamson diamond mine in Tanzania.

Petra has already built itself into a formidable producer through the purchase of the Koffiefontein and Cullinan mines from De Beers and it has agreed to buy the Kimberley underground mines from the world’s largest producer of rough diamonds.

De Beers has a strategy of honing its portfolio, stripping out assets that no longer fit its requirements. Most of these have been its South African mines, with the last big transaction being the sale of its Namaqualand mines. Williamson made a $29m loss in 2007.

Petra is not involved with the Namaqualand talks, which include Trans Hex.

De Beers said the Mwadui kimberlite is a technically difficult and “financially challenging” operation because of increasing clay content and low grade. It produced 220,209 carats in 2007.

The mine has a resource of some 40 million carats, having produced 20 million carats over its 70 years of opencast operations.

Petra has a target of reaching one million carats of production in the year to end-June 2009. It produced 200,287 carats in the year to end-June 2008. Production from Cullinan will be reflected this year, with the deal concluded in July 2008. Cullinan is forecast to produce between 700,000 and 850,000 carats this year.

"This acquisition will take us well above a million carats," said technical director Jim Davidson.

De Beers has just spent $10m on a plant improvement programme, which boosted production by 30,000 carats to 220,000.

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De Beers said in its annual report, that the Williamson mine needed mineral sizing and autogenous milling technology that would bump up production to around 500,000 carats/year and adding another 23 years of life.

Petra will now assume this programme, having signed a memorandum of understanding with De Beers to assume that company’s obligations as regards the purchase of the mill.

Petra will pay $5.5m for the mill, which is currently at the port of Durban in South Africa. The mill is essential for the grinding of the ore and increasing production over the next two years as part of a $28m capital expenditure plan that Petra will implement to more than double production at the mine.

The mill is able to deal with the clay in the ore, something the present system using scrubbers can't, Davidson said.

"Those two years should get us up to 500,000 carats," he said, adding it was too soon to talk of expanding production beyond that target.

“It is Petra’s strategy to initially maintain mining operations at the current volumes and during the first year of operation the Company 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,” Petra said.

It will then consider an expansion programme for the mine at which mining in the past focused on the high-grade areas on the edge of the kimberlite crater.

The acquisition should be completed in mid-October and will be funded from Petra’s internal cash resources. The Tanzanian government will own 25% of the operation.