IFC and RMB to finance Petra mines expansion

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Petra seeks to expand core production with £53.5m new debt facilities.

Petra Diamonds Ltd has agreed terms of finance for $40 million (£27.4 million) from IFC and $38 million (£26.1 million) from RMB to fund the expansion of two mines.

The funding of Petra’s core production growth will be primarily split between the Williamson mine, Tanzania, and the Cullinan mine, South Africa, with some going towards the company’s working capital needs.

This will enable Petra to settle its outstanding $31 million (£21.3 million) loan due to Al Rajhi Holdings W.L.L, removing the short term debt obligation from its balance sheet.

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The planned expansions will increase the group’s annual production to well over three million carats.

Petra chief executive Johan Dippenaar said: “We are pleased to have agreed terms for these financing facilities with IFC and RMB. This financing is an important and independent validation by IFC and RMB of the quality of Petra’s asset base and our strong management team, following detailed due diligences by both banks. On completion of the financing, the Group will be well positioned to deliver on its core objective to treble annual production to over three million carats.”

He added: “Current operational trading is strong, with good prices being achieved at tender, and we look forward to updating the market in July with our trading update for the 2010 financial year.”

Petra Diamonds hosted a conference call this morning to discuss the announcement, which, on settlement of the Al Raljhi loan, will increase Petra’s overall debt by $47 million (£32.2 million).

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