Petra Takes Over Operations at Cullinan, Completing Acquisition

The Petra Diamonds Cullinan Consortium (PDCC), of which Petra Diamonds holds a 37 percent interest, has completed the final stage of its acquisition of the Cullinan diamond mine from De Beers Consolidated Mines.

Drilling in Cullinan

Petra Diamonds, the technical operator of the mine, said in a release that for 2008-2009, its first year as the mine’s operator, Cullinan is expected to produce 700,000 to 850,000 carats.

From 2009-2010, when at full production, output is expected to increase to over 1 million carats per year, with associated annual revenues of around $100 million.

During its first year of operation, Petra will focus on establishing the new economics of the mind, including grade, value per carat, cost per ton and overall production capacity of the infrastructure.

Petra notes that it has plans in place to make major alterations to the processing of ore by making changes within the plant, in order to improve the grade and emphasize the recovery of “the whole spectrum of diamonds.”

The members of PDCC are Petra (37 percent initial interest with an option to increase its stake to 60 percent), Al Rajhi Holdings W.L.L. (37 percent initial interest) and PDCC’s Black Economic Empowerment partners (26 percent).

The ZAR1 billion ($130.55 million, according to current exchange rates) acquisition cost was settled by PDCC in cash.

Petra Chairman Adonis Pouroulis commented, “Cullinan is a major producer and Petra’s associated production and cash flows are therefore expected to rise substantially over the next few years.

“This transaction underscores our belief in the tenets of broad based mineral ownership in South Africa and a sustainable mining operation at Cullinan will bring long lasting benefits to the local community of this historic town for many years to come.”