Business
Acquisition of CDIH
Acquisition of CDIH.
About this update from Petra Diamonds Limited
[{"type":"text","content":"\n Petra Diamonds Ld\n27 November 2006\n\nFor release 27 November 2006\n\n\n\n\n\n Petra Diamonds Limited\n\n\n Acquisition of Calibrated Diamonds\n\n\nPetra Diamonds Limited ('Petra' or 'the Company'), the AIM-quoted and ASX-listed\ndiamond group, announces that it has acquired the entire issued share capital of\nCalibrated Diamonds Investment Holdings (Pty) Limited ('CDIH' or 'the CDIH\nGroup') ('the Transaction').\n\n\nCDIH is focused on the cutting and polishing ('beneficiation') of rough diamonds\nutilising what Petra believes to be a unique process developed by the CDIH Group\nand which enables CDIH to produce polished diamonds of a very high and\nconsistent standard. The initial cash consideration in respect of the\nacquisition is R16.3 million (US$2.28 million) which has been funded from\nPetra's existing cash resources. A deferred consideration of warrants and cash\nis payable subject to the achievement of certain production threshold levels, as\nset out below.\n\n\nThe Transaction represents a significant step forward in Petra's objective of\ngrowing its diamond revenues, as CDIH will provide Petra with the potential to\nsignificantly enhance its overall revenues due to the value added from the\nbeneficiation of rough diamond production. The addition of CDIH's beneficiation\nbusiness to Petra's production and exploration portfolio makes Petra AIM's first\nfully integrated diamond mining group.\n\n\n\nReasons for and benefits of the Transaction\n\n\n • The progression of diamonds through the 'diamond pipeline' takes global\n rough diamond production of around US$12.7 billion to around US$19.3 billion\n at polished wholesale prices (an increase of approximately 50%); as a\n producer of its own regular run of mine production, Petra is now able to\n participate in this value-add pipeline by beneficiating certain of its own\n production in line with Petra's stated objective of building a true mid-tier\n diamond group\n\n\n • The Company believes that such beneficiation and value add has the\n potential, as the initial capacity of Petra's new diamond cutting division\n is developed over time, to significantly enhance Petra's revenues. Petra\n will be able to tailor the production process to optimise the potential\n returns, and having the benefit of regular and reliable run of mine supply\n is a key factor in that busine...