Petra raises US$120 million

Finance

Petra Diamonds Ltd has raised US$120 million in its previously announced equity sale partly to settle loans as part of an option to take control of the Cullinan diamond mine in South Africa.

A total of 121.2 million shares were placed at £0.60/share (US$1/share), a discount of 9 percent to the closing price prior to Petra’s November 18 announcement regarding the option to double its stake in Cullinan to 74% and an intention to raise approximately US$100 million in funds.

Johan Dippenaar, Petra’s chief executive, says the company has introduced over 40 new international long-only institutional investors to the register.

“The placing not only strengthens the company’s balance sheet, allowing Petra to invest in the development of our producing mines, but will also significantly increase our attributable resources, production and cash flow following the consolidation of our holding in the Cullinan mine,” said Mr Dippenaar.

The proceeds will be used to pay down US$15 million of an US$80 million loan with large shareholder Al Rajhi. In addition a convertible loan note of US$20 million with the same shareholder will also be paid off in full. Accrued interest totalling just over US$10 million will also be paid.

A total of US$38.9 million has been earmarked for working capital and short term debt.

The company has also allocated US$15 million for development capital at Cullinan and the same amount for Williamson in Tanzania. 

The new shares will increase the company’s shares in issue by 66% to 305.2 million shares.

A resolution increasing the authorised share capital to 400 million shares will need to be passed at the AGM on December 17 before the company can issue 41.2 million of the shares placed.