Petra Diamonds has agreed to sell its Botswanan exploration assets to Botswana Diamonds for US$300k and a 5% royalty on future revenues, the diamond miner, which is in the process of restructuring, said on Monday.
The purchase price will be payable in two equal instalments on or before August 31, 2021 and August 31, 2022, Petra said. Botswana Diamonds has the option to buy out the royalty for $2 million in cash.
Petra’s fully-owned subsidiary Sekaka Diamonds Exploration (Pty) Limited, which Botswana Diamonds would take over, holds three prospecting licences.
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Petra, which has been planning to sell Sekaka since June 2018, said the deal is separate to the sales process announced last month as part of its restructuring.
“The first tranche of the purchase consideration is not expected to be received until August 2021, making the sale too long-dated to help with Petra’s immediate cash flow challenges,” said BMO analyst Edward Sterck.
The sale still requires approval from the Botswana Competition Commission, ministerial consent in Botswana, and approval from Petra’s lenders and debtholders.