Petra Diamonds

Infobox Company
company_name = Petra Diamonds
company_
company_type = Public (aim|PDL)
foundation =
location = flagicon|Jersey Jersey
key_people = Adonis Pouroulis, Chairman
Johan Dippenaar, CEO
industry = Diamond Mining
revenue = US $76.9 million (2008)
operating_income = US $39.2 million (2008)
net_income = US $1.9 million (2008)
homepage = [http://petradiamonds.com petradiamonds.com]

Petra Diamonds Ltd. aim|PDL is a leading diamond mining group. It is headquartered in Jersey, and is the leading diamond producer listed on Alternative Investment Market, part of the London Stock Exchange. It operates in South Africa, Angola, Botswana, Sierra Leone and Tanzania. Petra Diamonds' operations range from exploration assets to major producing mines. As of 2008, Petra owns 6 of the 24 of the world's most productive mines historically. [ cite journal
last=Janse
first= AJA
authorlink=
coauthors=
year=2007
title=Global Rough Diamond Production Since 1870
journal=Gems and Gemology
volume=XLIII
issue=Summer 2007
pages=98–119
publisher=GIA] . These mines include the Cullinan Diamond Mine famed for having produced the world's largest rough and polished diamond. Petra became one of the world's largest diamond groups on the basis of gross resource.

Overview of Mining Operations

Petra Diamonds has operations in five African countries. It has a relationship with De Beers from which it has bought several mines in South Africa and Tanzania. Petra also has exploration projects in Angola, Botswana and Sierra Leone at varying stages of development.

South Africa

Petra Diamonds operates five producing diamond mines in South Africa. These break down into two categories, fissure mines (Helam, Sedibeng, Star) and underground kimberlite pipe mines (Koffiefontein, Cullinan). It will also shortly acquire a sixth mine in South Africa, the Kimberley Underground mines.

The fissure mines were acquired by Petra when it merged with Crown Diamonds NL in May 2005. Petra is renowned for its in-house expertise in mining such difficult fissure orebodies, unlocking value in otherwise economically inviable structures.

Petra Diamonds has established a record of turning De Beers' unprofitable South African mines into financial successes. According to Nicky Oppenheimer, Chairman of De Beers, the reason for this was "De Beers was operating the mines with too large a cost structure, something Petra doesn't have." [http://www.miningmx.com/diamonds/554063.htm] The underground kimberlite mines were purchased from De Beers Consolidated Mines. Koffiefontein was purchased in December 2006 for ZAR82m, mostly covering the rehabilitation obligations at the mine. [http://www.miningmx.com/diamonds/554063.htm] Petra managed to turn Koffiefontein mine into a profitable operation by making modifications to both the plant and the mining process, as well as by applying a leaner cost structure. Production from Koffiefontein at the end of April 2008 had an average value per carat of $484 which places the value of Koffiefontein's production amongst the world's top kimberlite mines.

Cullinan Diamond Mine

In July 2008, Petra led a consortium which acquired the Cullinan diamond mine from De Beers Consolidated Mines for a total cash consideration of ZAR1 billion. In line with the South African Mining Charter, the Petra Diamonds Cullinan Consortium included broad based Black Economic Empowerment partners.

The Cullinan kimberlite pipe is the second largest indicated diamond resource in the world by in-situ value. The current operating levels include the B-Cut at a depth of 747 metres, and beneath that lies the Centenary-Cut (“the C-Cut”), a world class diamond resource. There are extensive resources in place (58 million carats) at the B-Cut, excluding the potential of the 133 million carat C-Cut resource. [http://www.debeersgroup.com/en/Media-centre/Press-releases/2008/Petra-completes-acquisition-of-Cullinan/]

The mine, previously known as Premier Diamond mine, is renowned for producing many of the world’s largest and most famous diamonds, including the Cullinan Diamond, the world’s largest gem diamond, at 3,106 carats rough. Sir Thomas Cullinan, the former chairman of the Premier Diamond Mine, presented the Cullinan to England’s King Edward VII in 1905. [http://www.farlang.com/diamonds/williams_history_diamond_mines/page_437] The Cullinan, which was found near Pretoria more than a century ago, was until recently acknowledged to be the largest cut diamond in the world, weighing in at 530.20 carats. In 1985 it lost the record to the Golden Jubilee, which was found in the same mine as the Cullinan and weighed 545.67 carats in its polished state.

More than a quarter of all diamonds weighing more than 400 carats came from the Cullinan. It is also the world's only significant source of blue diamonds. One of these famous large blue diamonds was cut into several stones and made into a necklace which subsequently became known as the Cullinan Blue Diamond necklace. [http://www.gia.edu/loupeonline/29960/22166/2257/back_issue_detail.cfm]

The Cullinan mine continues to produce large stones. In May 2008, a diamond found at Cullinan became the largest colourless diamond to appear at auction in 18 years and one of only three colourless diamonds of over 100-carats ever to be auctioned. It was also the biggest colourless diamond ever to be sold in Asia. The 101.27 carat shield shaped diamond was cut from a 460-carat rough stone and sold at Christie's Hong Kong for $6.1 million. [http://www.smh.com.au/news/world/who-paid-record-price-for-huge-diamond/2008/05/29/1211654192147.html]

Petra announced that during the first year of operation focus will be on establishing the new economics of the mine, including grade, value per carat, cost per tonne and overall production capacity of the infrastructure. They plan in the first fiscal year to June 2009 to mine from the B-Cut 1.4 to 1.8 million tonnes per annum, which is expected to yield between 600,000 and 750,000 carats, plus tailings production from the Optical Sorting Plant (“OSP”) of approximately 100,000 carats.

Angola

Petra undertook a joint-venture exploration with BHP Billiton of the Alto Cuilo concession in Angola. Alto Cuilo is located in the North East of Angola which experts predict will become a prolific production region of diamonds in the future. [http://www.reuters.com/article/pressRelease/idUS80199+30-Apr-2008+RNS20080430] Petra also invested in the adjacent Luangue concession when it acquired Frannor Investments and Finance Ltd from Xceldiam Ltd in March 2007. BHP Billiton decided to exit both projects in May 2008 and Petra has been the sole operator and funder of exploration since this time. [http://www.miningmx.com/diamonds/156816.htm]

Botswana

Petra has become the holder of the largest area under diamond prospecting licence in Botswana, following the acquisition of Kalahari Diamonds in September 2005. 36 kimberlites are known to exist in Petra's licence areas, including two important diamondiferous kimberlites close to the major Jwaneng diamond mine.

Sierra Leone

Petra's exploration operations in Sierra Leone consist of the Kono project, which is a joint venture with Stellar Diamonds. So far two shafts have been developed, Pol-K and Bardu. The exploration project has yielded 20,889 diamonds weighing a total of 1,729 carats as of September 2008. The first parcel of Kono test production (1,064 carats) to be sold on tender, with the Pol-K shaft parcel of 866 carats achieving an average value per carat of US$152. [http://www.financialexpress.com/news/Sierra-Leone-underground-diamond-mine-sells-first-gems/362275/]

Tanzania

Petra agreed to acquire the Williamson Mine in Tanzania in September 2008 from De Beers. [http://allafrica.com/stories/200809150571.html] The Williamson mine has a reputation for the production of large, high value diamonds, with special stones (classified as larger than 10.8 carats) produced regularly. Gem-quality diamonds larger than 200 carats have been also been recovered from this large open-pit operation. The Williamson Mine is currently thought to have a resource of some 40 million carats (995 million tonnes of kimberlite). It has a maximum mining depth of 90 metres and a very low stripping ratio. Energy and Minerals Minister William Ngeleja said Petra's entry is "an opportunity to breathe new life into Williamson Mine and Tanzania's diamond mining sector." [http://www.4to40.com/art/music_art_news_detail.asp?id=102]

References

External links

* [http://petradiamonds.com Official website]