JOHANNESBURG (Reuters) - Petra Diamonds has agreed to sell its Botswanan exploration assets to Botswana Diamonds for $300,000 and a 5% royalty on future revenue, the diamond miner, which is in the process of restructuring, said on Monday.
The purchase price will be payable in two equal instalments on or before August 31, 2021 and August 31, 2022, Petra said. Botswana Diamonds has the option to buy out the royalty for $2 million (1.5 million pounds) in cash.
Petra’s subsidiary Sekaka Diamonds Exploration (Pty) Limited, which Botswana Diamonds would take over, holds three prospecting licences including the KX36 project, which has an indicated resource of 17.9 million tonnes at 35 carats per hundred tonnes.
Botswana Diamonds managing director James Campbell said KX36 would be the company’s most advanced project in southern Africa, and Sekaka’s exploration database would also be “hugely complementary” to its current activities.
Petra, which has been planning to sell Sekaka since June 2018, said the deal is separate to the sales process it announced last month as part of its restructuring.
“The first tranche of the purchase consideration is not expected to be received until August 2021, making the sale too long-dated to help with Petra’s immediate cash flow challenges,” said BMO analyst Edward Sterck.
The sale still requires approval from the Botswana Competition Commission, ministerial consent in Botswana, and approval from Petra’s lenders and debtholders.
Campbell said he hopes the deal will be sealed by August 31.
Reporting by Helen Reid; Editing by Jan Harvey
Our Standards: The Thomson Reuters Trust Principles.