De Beers sells Kimberley mines to Ekapa and Petra to secure future

In a significant move with far reaching consequences, De Beers Consolidated Mines, DBCM, a 26% BEE company, has signed an agreement to sell Kimberley Mines (including the tailings mineral resources as a going concern to Ekapa Minerals Limited - an investor consortium. The consortium comprises Ekapa Mining, Ekapa Mining,50.1%, and Petra Diamonds Limited,  49.9%, which both have proven track records in diamond mining in Kimberley; Ekapa Mining as a medium sized TMR processing business, and Petra Diamonds in the underground workings of the Kimberley Underground Mines.

It may be recalled that ,over the last few years, DBCM has explored a variety of options to extend the life of its Kimberley Mines beyond 2018. Following the review, DBCM concluded that the best way to secure a future for Kimberley Mines was to find an operator better suited to process the remaining resources in a long-term, sustainable way, ensuring continuation of employment and economic activity in the Northern Cape.

The sale process followed a competitive process that attracted more than 70 expressions of interest. The decision to sell to Ekapa Minerals was predicated on the basis that it is an experienced local TMR operator with sound technical, financial and economic capability as well as strong corporate social responsibility credentials, including a real and ongoing commitment to the Kimberley region. The sale combines experienced operators and enables them to leverage their joint resources, expertise and capabilities to create a compelling future for Kimberley’s tailing resources.

Barend Petersen, Chairman of DBCM, emphasised: “Throughout this process, our objective has been to sustain operations, protect jobs and grow empowered participation in South Africa’s diamond industry. A rigorous, independently-advised process enabled De Beers to select a consortium with not only the right mining and financial credentials, but also a commitment to meet future social and labour plans, and environmental obligations. We are delighted that the new owning consortium is broad-based HDSA (Historically Disadvantaged South Africans) controlled – illustrating that transformation in the South African diamond industry is steadily making progress.”

It is envisaged that the new owners’ BEE structures will include a broad-based share scheme for the employees of Kimberley Mines.

De Beers will retain a presence in Kimberley through various other businesses, including De Beers Sightholder Sales South Africa, the Ecology Division, the Microdiamond Laboratory, the Big Hole, the Technical Training Centre, the Pension Fund and Benefit Society functions.

Phillip Barton, CEO of DBCM, said: “I am hugely appreciative and grateful for the commitment of our employees over many years and wish to thank them for their dedication. Although the decision to sell the Mine has not been easy, it was the right thing to do to give it a future. Previously an employee of Kimberley Mines, and a resident for many years in this famous diamond city, I know I represent all of the De Beers leadership over many generations, when I acknowledge today that passing this mine to new owners is an important commitment by De Beers to the future of Kimberley Mines.”

The transaction with Ekapa Minerals is subject to customary conditions, which all parties hope to conclude without delay. Suspensive conditions are expected to be fulfilled during Q1 2016.

DBCM continues to operate two other diamond mines in South Africa, namely Voorspoed Mine in Kroonstad and Venetia Mine in the Limpopo Province, where the company is investing US$2 billion to take the Mine from an opencast to an underground operation. This substantial investment will extend the life of Venetia Mine from 2021 to beyond 2040.