THE local content in the mining sector has continued to pay off and seeing a Tanzanian company, Taifa Mining and Civils Limited, buying 50 per cent less one share of the Petra's shareholding in Williamson Diamonds Limited (WDL).
The Petra also announced it has entered into definitive transaction documents which also give effect to a prorated portion of shareholder loans owed by WDL for a total consideration of 15million US dollars (about 35.46bn/).
"Our partnership with Taifa places Williamson on a stronger basis for the future. This new structure will reduce our equity interest in WDL, limiting our exposure in line with our stated objectives, while retaining control and maintaining a share of the upside," Mr Richard Duffy, Petra's Chief Executive stated in the statement issued in Dar es Salaam, yesterday.
He said the Williamson holds a unique place in the sector with its significant resource base and ability to produce high quality pink diamonds.
He added: "Taifa brings considerable local and mining experience to the partnership. This will help us to optimise the orebody to the benefit of all Williamsons."
Mr Rostam Aziz, Chairman of Taifa and a director nominated by Pink Diamonds, commented: "Taifa Mining is a wholly Tanzanian owned company. It is also Tanzania's largest mining contractor with over 30 years mining related experience. We have been the contractor of choice for most mines in Tanzania and have maintained long and successful relationships with companies such as Petra, De Beers, Barrick and AngloGold Ashanti.
Adding: "we also own the largest fleet of mining equipment in Tanzania. As a company, we are committed to adopting and adhering to the latest internationally recognised standards throughout all aspects of our business."
Mr Azizi noted that they have been contracting at the Williamson Mine for over 20 years and as such they are particularly pleased to enter into this next phase of their involvement at the mine as co-owners.
The mine has the largest kimberlite deposit in the world by surface area - with Reserves and Resources of 37.7mcts as of 30 June 2022.
"We recognise the mine's viability in providing sustainable employment and a significant contribution to the Tanzanian economy," he pointed out.
Under the UK's Listing Rules, the Petra's transaction is in Class 2 and as such this announcement is made in accordance with Petra's disclosure obligations pursuant to Chapter 10 of the Listing Rules.
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Petra has entered into these transaction documents with Pink Diamonds Investments Limited (Pink Diamonds), a company nominated by and affiliated with Taifa. Taifa remains the long-term technical services contractor at the Williamson Mine.
Pink Diamonds' payment of the US$15m purchase price will be satisfied through payments owed by WDL to Taifa for past technical services, dependent on WDL's ability to meet these obligations.
It is expected that these payments will be received by Petra in instalments over the next five years.
WDL is the operator of the Williamson Mine, and is currently 25 per cent owned by the Government of Tanzania and 75 per cent owned by Petra, with Petra having acquired its majority interest in WDL in 2009.
Petra entered into a Framework Agreement with the Government of Tanzania in December 2021, in which it was agreed that Petra's effective interest in WDL will decrease to 63 per cent, with the Government of Tanzania's interest increasing to 37 per cent.
Petra intends using the US$15m proceeds from the Transaction to continue strengthening its balance sheet.
As noted in the Company's financial year 2022 Annual Report, the book value of WDL's gross assets as at 30 June 2022 was 140.5million US dollars, with WDL recognising a profit before tax of 41.1million US dollars in financial year 2022.
