Petra Diamonds, together with its empowerment consortium, has entered into an agreement to acquire the Finsch diamond mine in South Africa from De Beers Consolidated Mines (DBCM) for some $210 million. Finsch is a leader in underground mine automation and was covered in detail in International Mining’s January 2008 issue (pp14-25). Its main innovation is an automated underground trucks system.

Finsch is one of the world’s major diamond mines and South Africa’s second largest diamond mine by production. Petra says the Acquisition is a continuation of its strategy to build a worldclass diamond mining group – “Finsch will further diversify Petra’s portfolio, adding a second major over 1 Mct/y mine, and will become the group’s eighth producing diamond mine.”

Finsch is expected to produce over 1.5 Mct/y in its first full year of production, more than doubling the group’s current production of about 1.3 Mct/y; it is expected that group production (including Finsch), will increase to some 4 Mct/y by the 2014 financial year (FY) and to over 5 Mct/y by FY 2019

Finsch brings a major diamond resource of 48.1 Mct to the group, including 26.6 Mct of reserves, and will increase Petra’s gross resource base to approximately 309 Mct, with a gross attributable in-situ value of approximately $38 billion (based on current diamond prices)

Petra has a proven track record of extracting value from similar acquisitions, with a plan to mirror the successful strategy (including its block caving expertise) applied at Cullinan. Finsch is acquired on a ‘going concern’ basis (assets and assumed liabilities), including the full employee complement and state-of-the-art mining infrastructure.

Johan Dippenaar, CEO of Petra, commented: “This acquisition is a landmark development for Petra and a further progression of our strategy to build one of the world’s leading independent diamond producers. Finsch is a major diamond producer and this acquisition will serve to immediately more than double our current production, significantly enhance earnings and cashflow and will increase our resource base to over 300 Mct. We believe that Petra offers an exceptional growth profile at a time when there is a very positive outlook for our industry and a strong rough diamond price environment.”