Petra Diamonds (LON:PDL) has raised US$325 million in an oversubscribed issue and agreed to acquire the Finsch diamond mine in South Africa from De Beers for US$210 million.
Finsch adds a second major over 1 million carats per annum (Mtcpa) mine to Petra’s portfolio, becoming the company’s eighth producing mine.
The acquisition will more than double Petra’s current production and increase its resource base to over 300 million carats, while enhancing earnings and cashflow.
“We believe that Petra offers an exceptional growth profile at a time when there is a very positive outlook for our industry and a strong rough diamond price environment,” said chief executive of Petra Diamonds Johan Dippenaar.
The funds, which will in part be used to finance the deal, were raised with a share placing at 150 pence.
The placing price represents a discount to the company’s current share price of 162 pence.
Finsch is expected to produce over 1.5 million carats in its first full year of production compared to Petra’s current annual production of 1.3 million carats.
Group production is expected to increase to about 4 Mctpa by the 2014 financial year and to over 5 Mctpa by full year 2019.
By acquiring Finsch, Petra adds a diamond resource of 48.1 million carats including 26.6 million carats of reserves, taking the group’s gross resource base to about 309 million carats, with a gross attributable in-situ value of approximately US$38 billion.
“The acquisition and placing together consolidate Petra's position as London's largest quoted diamond company and provide a strong platform for the company's intended move to the LSE Main Market,” said Petra.