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Petra Diamonds aquires Cullinan

Johannesburg - A consortium including Petra Diamonds has completed the acquisition of the Cullinan diamond mine in South Africa from De Beers Consolidated Mines.

The addition of Cullinan transforms Petra, which has an initial 37% interest in the Petra Diamonds Cullinan Consortium, into one of the world's largest diamond companies on a gross resource basis.

The Cullinan kimberlite pipe is the second largest indicated diamond resource in the world by insitu value and the mine is renowned for producing many of the world's most spectacular diamonds, the most famous of which is the 3 106 carat Cullinan diamond.

Petra said that for the 2008/09 year, Cullinan is expected to produce 700 000 to 850 000 carats and from 2009/10, when at full production, output is expected to increase to over 1 million carats per annum, with associated annual revenue of about $100m.

Al Rajhi Holdings has an initial 37% interest in the consortium and black economic empowerment partners a 26% interest. Petra has an option to increase its stake in PDCC to 60% from 37% initially.

The acquisition cost of R1bn has been in cash. PDCC has been funded by Petra and Al Rajhi each contributing $40m equity and Al Rajhi providing $95m loan finance. The total financing package of $175m covers the acquisition cost as well as working capital and capex requirements, Petra said.

Petra, as a member of the consortium, on November 22, 2007, said it had entered into an agreement with De Beers to acquire Cullinan. The completion of the acquisition was subject to certain conditions, all of which the company said have now been met.

Petra is the technical operator of the mine on behalf of the consortium.

- Dow Jones

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