LONDON (ShareCast) - (Sharecast News) - Shares in Petra Diamonds sparkled on Wednesday after the AIM-listed miner agreed to offload its Tanzanian mine in a deal worth up to $16m
Petra currently operates three mines, two in South Africa and the Williamson open pit mine in Tanzania.

Petra owns the mine with local partner Pink Diamonds Investments through a holding company called Williamson Diamonds Limited (WDL).

However, chief executive Richard Duffy said it had become "increasingly clear" to both Petra and Pink Diamonds that WDL would benefit from having a single owner.

In particular, Petra said WDL "continues to encounter short-term liquidity challenges" and would likely require further capital investment, which it felt unable to make.

"Following Petra's strategic review of its cost structure and the group's life of mine plans, and faced with prevailing market weakness, Petra determined that [WDL] would be unable to compete with [the rest of the business] for further capital investment," it said.

It has therefore agreed to sell its holding to Pink Diamonds in a deal worth up to $16m, although it acknowledged it may not receive all deferred payments. The $16m will be paid out of WDL distributable cash, with 20% of any distributable cash generated annually payable to Petra until the consideration is paid in full.

Duffy said: "We believe that Pink Diamonds, who are affiliated to Taifa, the long-term technical services contractor at the Williamson Mine, will have the technical and financial capability to conduct operations in a responsible manner for all stakeholders."

Rostam Azizi, chair of Pink Diamonds, said: "Taifa has been contracting at the Williamson Mine for over 25 years and as such, we are particularly pleased to enter this next phase of our involvement now also as the mine owners. It is the end of an era, whereby the mine will revert to exclusively Tanzanian ownership.

"We have had a very constructive partnership with Petra at Williamson Mine since it was acquired by them in 2009, and we look forward to now taking the mine forward on our own."

Subject to regulatory approval, the deal is expected to complete in the first quarter of 2025.

Shares in Petra were trading 13% higher as at 0930 GMT, at 29.4p.

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