London-listed Petra Diamonds has announced that the IFC has agreed to a $25 million loan to expand Petra’s Finsch Diamond Mine in South Africa.
Petra said that given the lead times between its now larger diamond tenders (after the acquisition of the Finsch mine) and the volatility experienced over the last 12 months of both the rand and diamond prices, the new revolving credit facilities will give it additional scope and flexibility to execute its capital expenditure programme and bring its stated production and revenue growth opportunities to fruition.
An independent diamond mining group, Petra Diamonds is increasingly supplying rough diamonds to the international market. The company has a well-diversified portfolio, with interests in eight producing mines: seven in South Africa (Finsch, Cullinan, Koffiefontein, Kimberley Underground, Helam, Sedibeng and Star) and one in Tanzania (Williamson). It also maintains an exploration programme in Botswana.
The company has a core objective to steadily increase annual production to five million carats by FY 2019, and has a major resource base in excess of 300 million carats.
Commenting on the news, Johan Dippenaar, Petra's CEO, said: "We are delighted to have entered into further credit facilities with IFC, whose continued support endorses the quality of our asset base, as well as our strong commitment to corporate social responsibility. These combined IFC and RMB facilities further strengthen Petra's financial position and the company's ability to deliver on its core objective of rolling out its stated expansion plans and ramping up production to over five million carats per annum by 2019."
The new credit facility has been put in place in addition to the $36.9 million Rand Merchant Bank (RMB) revolving credit facility that was announced in November last year. On completion of the IFC Agreement, the $36.9 million RMB facility will reduce to approximately $24.6 million, so that the lenders together provide circa US$49.6 million in revolving credit facilities to Petra.
The IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in developing countries. It provides financing to help businesses employ more people and supply essential services, by mobilising capital from others and by delivering advisory services to ensure sustainable development. The IFC's new investments hit a record $19 billion in fiscal 2011.
