Petra Diamonds has entered into an agreement to acquire the Finsch diamond mine in South Africa from De Beers for approximately $210 million.

The acquisition is the latest move by Petra to build a world-class diamond mining group – Finsch – one of the world’s major diamond mines and South Africa’s second largest diamond mine by production – will further diversify Petra’s portfolio, adding a second major mine that produces over 1 million carats of diamonds a year, and will become the Group’s eighth-producing diamond mine.

Finsch is expected to produce over 1.5 million carats per hundred tons in its first full year of production, more than doubling the Group’s current production. With Finsch, the Group's annual production is expected to increase to 4 million carats by the 2014 financial year and to over 5 million carats by 2019.



According to the UK's Daily Telegraph, this would make Petra the world's third-largest rough diamond producer, after Alrosa and De Beers.

Petra CEO Johan Dippenaar said that the acquisition of the Finsch diamond mine marked a "landmark development" for Petra. "Finsch is a major diamond producer and this acquisition will serve to immediately more than double our current production, significantly enhance earnings and cashflow, and will increase our resource base to over 300 million carats," Dippenaar said.

Finsch brings a major diamond resource of 48.1 million carats to the Group, and will increase Petra’s gross resource base to approximately 309 million carats with a value of approximately $38 billion.

In addition, Petra has completed a placing of 136,698,212 new ordinary Petra Diamonds shares of 10 pence each, raising gross proceeds of $325 million.

The placing proceeds will primarily be applied to satisfy the acquisition cost of Finsch, with the balance to fund the South African Department of Mineral Resources (“DMR”) environmental guarantee and working capital at Finsch.