Petra to finally sever link with problematic Williamson mine

PETRA Diamonds said on Wednesday it was to sell its remaining shares in Williamson mine in Tanzania for $16m although the deal comes with risk.Announcing the proposed transaction, the diamond miner said the cash would be paid out over five years from Williamson’s cash, adding: “There can be no certainty that any or all of this deferred consideration will be paid to Petra”.The buyer is Pink Diamond, a company associated with Tanzanian contract miner Taifa which will pay Petra 20% of the consideration annually from Williamson’s cash resources.Petra has dealt with Taifa before. In 2023, the miner finalised a long-standing deal to sell down its stake in Williamson to 31.5% for $15m. This made good on a 2019 memorandum  of understanding signed when Taifa was known as Caspian Ltd.The decision to sell the mine is motivated by Petra’s last round of cost cutting unveiled in December. This was after diamond prices continued to deteriorate.Richard Duffy, Petra’s CEO said today that it had become “increasingly clear to both Petra and Pink Diamonds that it would be preferable for WDL (Williamson Diamonds Ltd) to come under consolidated ownership”.Williamson is one of the world’s largest resources of diamonds but it had been problematic for Petra to manage over the years. In 2022, Petra suspended production at Williamson following a break in a tailings dam. Then in 2020, it faced allegations of violence perpetrated by local security forces on illegal miners which required a £4.3m settlement. A few months earlier Williamson was shut owing to poor market conditions.Even as far back as 2017, Williamson was shut amid a dispute with the Tanzanian government, then led by John Magufuli, which accused Petra of underreporting the value of some export diamonds.The transaction is set to close in the first quarter of this year pending approval by Tanzanian regulatory authorities.Petra is under big pressure as the diamond market remains down at heel. The company said on Tuesday in an interim production report that diamond output fell 2% to 1.4 million carats.This adds further pressure to its ability to generate cash and which has precipitated a second round of cost cutting, although the company added that it would not “silly decisions” around its latest restructuring plans.“We consider risk in the [restructuring] process and so we won’t be silly about decisions we make. We need to ensure we make the business sustainable not just in the context of the current market but going forward,” said Duffy.As part of its cost cuts, Petra also said it would unveil a restructure of its debt repayment plan on February 18 at its interim financial results announcement. Of critical importance is some $273m in loan notes that are due to mature in March 2026.Net debt increased to $225m as of December 31 compared to $201m at June 30. This was “mainly due to the continued weak diamond market and timing of tender sales,” said Petra.The post Petra to finally sever link with problematic Williamson mine appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com