South Africa’s Petra Diamonds (LON:PDL) said on Wednesday it had signed a non-binding agreement with an unnamed party for the sale of its loss-making Koffiefontein diamond mine in the country.
The diamond miner, which did not disclose the terms of the potential sale, has been exploring options to unload Koffiefontein since April 2022. The operation, which is due to reach the end of its life in 2025, was placed on care and maintenance in November 2022.
Petra said it continues to transition the mine towards closure, with an application expected to be submitted to the Department of Mineral Resources and Energy (DMRE) in February 2024.
The miner noted that such an application will only be withdrawn if the potential sale is completed. If the parties are unable to reach a definitive agreement, Petra intends to proceed with the decommissioning, rehabilitation and closure of the mine in accordance with the plan to be submitted and subject to DMRE approval.
“We are mindful of our obligations to our stakeholders at Koffiefontein in considering a potential sale, which provides an opportunity to extend the economic life of the mine beyond the responsible closure process currently underway,” chief executive Richard Duffy said in the statement.
Burdened by debt and falling revenues, Petra Diamonds put itself up for sale in 2020, but later reversed the decision and opted instead for a debt-for-equity restructuring.
The move allowed the company to cut its net debt by two-thirds to $228 million in the year to 30 June, down from just under $693 million a year earlier. The diamond producer has also reduced its stake in the Williamson mine in Tanzania.
Petra said last week that the results of its latest sale, along with some market signs, suggest that the fall in diamond prices experienced this year is likely to be over.
The miner believes that measures taken by major producers to curb supply and the two-month Indian moratorium, which ends on 15 December, have helped. It also cited stronger retail sales in the US as a factor that has improved market conditions and made it easier to rebalance inventory levels across the pipeline.
