Petra Diamonds Limited has completed its transaction with De Beers Consolidated Mines Limited to acquire the mining and associated assets previously used by De Beers in the operation of the Kimberley Underground diamond mines in Kimberley, South Africa.

Petra has been operating Kimberley Underground under care and maintenance since September 2007, during which time Petra has built up substantial ore stockpiles totaling approximately 500,000 tons (estimated to contain 90,000 carats); processing and diamond recoveries will now commence forthwith.

Petra and De Beers entered into the agreement for the sale of the Kimberley Underground Assets in September 2007, however the transaction has taken longer than originally anticipated to complete due to complexities related to the new order mining right, which have now been completely resolved.

The purchase consideration of R78.5 million (US$10.4 million) has been settled by Petra assuming De Beers’ rehabilitation obligations with regards to Kimberley Underground of R63.5 million (US$8.4 million) and the payment in cash by Petra to De Beers of R15 million (US$2.0 million).

Kimberley Underground is expected to produce 100,000 carats in the financial year to June 2011, rising to 180,000 carats per year thereafter following commissioning of a second production plant by June 2011.

Johan Dippenaar, Petra's CEO, commented, "The mines produce high value gem diamonds and in particular are noted for fancy yellow diamonds. We have been looking forward to commencing diamond recoveries at these mines for some time and are expecting strong operating results.”