Petra Diamonds has announced plans to invest $142.8 million (£95m) in a brand new, fit-for-purpose processing plant at its Cullinan mine in South Africa.
The construction is expected to improve the recovery of the full spectrum of diamonds (thereby increasing the volume of stones recovered, as well as better protecting large stones from breakage); and improve the efficiency of material flow, lowering operating costs.
The company also announced plans to settle – but not cancel – some of its existing debt, to finance the project.
Petra Diamonds chief executive officer, Johan Dippenaar, commented: “The announcement today of the proposed US$300 million notes issue will settle (but not cancel) existing bank debt and ensure the Group is well financed as it completes the execution of its expansion plans.
“Petra will be using a portion of the Notes financing to construct a modern processing plant at Cullinan, which we believe will significantly improve returns at the mine by delivering enhanced diamond recoveries, especially of the large, high-value diamonds for which the mine is known, as well as substantial savings to operating costs.
“In addition to the Notes’ proceeds, Petra’s lender group has agreed in principle to extend and increase the Group’s working capital and debt facilities to approximately US$300 million, which will remain largely undrawn at the time of closing the Notes issue. We believe that this new, more diversified, funding package better serves our needs as a business as we continue to grow and evolve and provides additional financial flexibility as we pursue our stated growth strategy.”