Petra Diamonds (LON:PDL), based in South Africa, announced on Wednesday that it has reached a non-binding agreement to sell its struggling Koffiefontein diamonds mine to an undisclosed party.
Since April 2022, the diamond miner—which remained silent regarding the conditions of the possible sale—has been considering its options for selling Koffiefontein diamonds. The operation was put on maintenance and care in November 2022 with a target of finishing it in 2025.
According to Petra, the mine is still in the process of being closed. And an application is scheduled to be filed with the Department of Mineral Resources and Energy (DMRE) in February 2024.
The miner stated that such an application won’t be withdrawn until the prospective sale is finished. In the event that the parties cannot come to a firm agreement, Petra plans to move forward with the mine’s decommissioning, rehabilitation, and closure in accordance with the guidelines outlined in the plan that will be submitted and approved by the DMRE.
In the statement, chief executive Richard Duffy stated. “We are mindful of our obligations towards our the stakeholders at Koffiefontein when considering a possible sale. Which provides a possibility to grow the economic life of the mine beyond the responsible closure process presently underway.”
Petra Diamonds, beset by debt or declining earnings, decided to rescind its 2020 sale offer and pursue a debt-for-equity restructuring.
Petra Diamonds’ Strategic Financial Moves and Market Outlook
The company was able to reduce its net debt from just under $693 million to $228 million in the fiscal year that ended on June 30, 2021, a two-thirds reduction. The manufacturer of diamonds also went so far as to reduce its ownership stake in Tanzania’s Williamson mine.
According to Petra, the recent sale results and certain indications from the market suggest. That the current year’s decrease in diamond prices is probably coming to an end.
The two-month Indian moratorium, which expires on December 15. And the steps taken by major producers to reduce supply, according to the miner, have been beneficial.
Stronger the United States retail sales were also highlight as a contributing factor to the better market conditions and the easier rebalancing of stock levels throughout the pipeline.