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London - Petra Diamonds and a partner agreed to buy De Beers’ Kimberley Mines in South Africa, ending the biggest producer’s 127-year control of the operation that was the catalyst for the modern diamond industry.
Petra, along with Ekapa Minerals, will pay De Beers $7.2m for the operation where waste rock is processed to recover the precious gems, Petra said in a statement on Tuesday. Petra will own 49.9% of the project while Ekapa, which will manage the operation, will own the rest.
Kimberley Mines produced 722 000 carats of diamonds last year, making it De Beers’ biggest source of the stones in South Africa after the Venetia site in the Limpopo province. The project will produce about 700 000 carats a year with annual revenue of about $65m for the next three years, according to the statement.
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Diamonds were first discovered near Kimberley in 1871, about a mile away from the De Beers farm that would give its name to the former monopoly. De Beers, which gained full control of the mine in 1888, said in May that it was putting the operation up for sale.
Petra has based its business model on buying aging diamond mines from De Beers. It’s previously bought the Finsch, Koffiefontein and Cullinan projects, where the world’s biggest ever diamond was found in 1905, from the company.
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Petra rose as much as 6.9% and traded up 6.1% at 68.05 pence by 10:42 in London, valuing the company at $540m. The stock has tumbled 65% this year on lower diamond prices and investor concerns about the company’s debt position.
The producer said on Monday that its banks had agreed to waive some of its debt covenants.
