PETRA Diamonds has agreed to sell its exploration assets in Botswana through the sale for $300,000 of its 100% stake in Sekaka Diamonds to Botswana Diamonds, a UK-listed exploration company.
“This disposal forms part of our strategy to focus on driving efficiencies from our high quality producing mines, but allows us to maintain upside to potential future commercial production from the Botswana assets, particularly from the KX36 deposit,” said Richard Duffy, CEO of Petra in a statement.
As part of the agreement, Petra will retain a 5% royalty on future diamond revenues should any of the prospects in Sekaka be brought into production. Botswana Diamonds has the option to buy-out the royalty for a cash payment of $2m. The transaction is not part of the asset sale process announced by Petra in June. Sekaka has been a “held for sale” asset since 2018 and constitutes part of the firm’s business efficiency drive.
Botswana Diamonds CEO, James Campbell, described KX36 as “… the most significant discovery in Botswana since Orapa and Jwaneng” – the mines on which the De Beers/Debswana joint venture has been built. “Botswana Diamonds will refine resource estimates of KX36, and development options,” said Campbell.
Petra Diamonds is due to publish a trading update on July 23 at which it may provide an update regarding plans to sell the company or assets owned by the firm after failing to cut net debt of some $600m as of December 31. It has agreed with creditors to suspend interest payments on a $650m bond.
The first tranche of the purchase consideration – of some $150,000 – is not expected to be received until August 2021 and will therefore not be helpful in tackling Petra’s cash flow difficulties.
The company recovered 2.07 million carats in the first half of its financial year and was on track for 3.8 million carats in full-year production before the pandemic struck. However, it reported an interim net loss after tax of $10m (2019: +57.9m) and a basic loss per share of 1.01 cents.