Petra Diamonds Limited recently announced that its effective interest in Williamson Diamonds Limited (WDL) is due to decrease to 63% and the Government of Tanzania’s to increase to 37%.
In addition, the company has executed a non-binding Memorandum of Understanding (MoU) to sell 50% of the entity that holds Petra’s shareholding in WDL to Caspian Limited-the long-term technical services contractor at diamond mine-for a total consideration of USD 15 million.
Caspian’s purchase will be funded through the settlement of USD 11.1 million of past technical services payments owed by WDL to Caspian, with the remaining amount being funded by Caspian rendering USD 3.9 million of technical services to WDL in order to ramp up operations at the Williamson Mine.
Richard Duffy, Chief Executive of Petra, commented: “We are very pleased to be partnering with Caspian, who brings considerable local and mining experience. This will assist us in optimizing 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 realize the mine’s potential in an improved economic environment. The reduction in Petra’s equity interest into 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.”
Rostam Azizi, Chairman of Caspian, commented: “Caspian is a wholly Tanzanian-owned company. It is also Tanzania’s largest mining contractor with over 30 years of mining-related experience. 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 recognized standards throughout all aspects of our business. We have been contracting at the Williamson Mine 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 recognize its viability in providing sustainable employment and a significant contribution to the Tanzanian economy.”
The transactions in the MoU are subject to Petra and Caspian agreeing on definitive transaction agreements, including a share purchase agreement and a shareholders’ agreement, with the parties seeking to agree on those transaction agreements in early CY 2022.
The sale of the 50% stake in the entity that holds Petra’s shares in WDL is subject to the parties obtaining all necessary Governmental, regulatory, and lender approvals, including approvals from the Tanzanian Mining Commission, the Tanzanian Fair Competition Commission, and The Bank of Tanzania, and a binding ruling from the Tanzania Revenue Authority on the tax treatment of the transaction.
The parties are seeking to obtain such approvals by the end of H1 2022.
Williamson is Tanzania’s only important diamond producer.
The mine is an open-pit operation based upon the 146-hectare Mwadui kimberlite pipe, which is one of the world’s largest economic kimberlites.
Williamson is renowned for beautifully rounded white goods and “bubblegum” pink diamonds, including the 23 carats Williamson Pink (54 carats rough stone), which is considered to be one of the finest pink diamonds ever recovered.
Petra’s current mine plan for Williamson has a life to 2031, but given that the Mwadui kimberlite hosts a major resource of 37.9 Mcts, there is potential to substantially extend the Life of Mine (LOM).