LSE-listed diamond miner Petra Diamonds has executed a nonbinding memorandum of understanding (MoU) to sell 50% (less one share) of the entity that holds Petra’s shareholding in Williamson Diamonds Limited (WDL) to Caspian for $15-million.
This is in addition to a pro rata portion of shareholder loans owed by WDL.
Caspian is the long-term technical services contractor at the Williamson mine, in Tanzania, of which WDL is the operator.
Petra CE Richard Duffy says Caspian will bring considerable local and mining experience. “This will assist us in optimising the orebody for the benefit of all of Williamson’s stakeholders, both in the short term as we continue to ramp up operations and in the longer term to fully realise the mine’s potential in an improved economic environment.”
WDL is currently 25% owned by the Tanzanian government and 75% owned by Petra, with Petra having acquired its majority interest in WDL in 2009.
However, further to the framework agreement with the Tanzanian government, announced on December 13, which provides for a capital restructuring of the WDL entity, Petra’s effective interest is due to decrease to 63% and the Tanzanian government’s interest to increase to 37%.
Upon completion of the transactions contemplated by the MoU, and upon the capital restructuring in the aforementioned framework agreement becoming effective, Petra and Caspian will each indirectly hold a 31.5% stake in WDL, while Petra will retain a controlling interest.
“The reduction in Petra’s equity interest in WDL, from 75% to 31.5% while still retaining control, both reduces Petra’s exposure in line with our stated objectives outlined in our preliminary results while maintaining a share of the upside that we believe exists following the signing of the framework agreement with the government who continue as partners,” Duffy says.
Caspian chairperson Rostam Azizi says the company has maintained long and successful relationships with companies such as Petra, De Beers, Barrick and AngloGold Ashanti.
“In addition, we also own the largest fleet of mining equipment in Tanzania. As a company, we are committed to adopting and adhering to the latest internationally recognised standards throughout all aspects of our business.”
“We have been contracting at the Williamson mine, the largest kimberlite diamond mine in the world by surface area, for close to 20 years and, as such, we are particularly pleased to enter into this next phase of our involvement at the mine as co-owners.
“We recognise its viability in providing sustainable employment and a significant contribution to the Tanzanian economy,” he says.
Caspian will fund the acquisition through the settlement of $11.1-million of past technical services payments owed by WDL to Caspian, including services rendered during the recent restart of operations following the care and maintenance period. The remaining amount will be funded by Caspian rendering $3.9-million of technical services to WDL to ramp-up operations at the Williamson mine.
The transactions in the MoU are subject to Petra and Caspian agreeing definitive transaction agreements, including a share purchase agreement and a shareholders’ agreement, with the parties seeking to agree those transaction agreements in early 2022.
Production at Williamson has recommenced post the care and maintenance period and is expected to ramp-up over the course of the 2022 financial year, with estimated production for the year expected to be between 220 000 ct and 270 000 ct.