Petra Diamonds is set to finalize the sale of its Koffiefontein mine to the Stargems Group by the end of October 2024, following approval from South Africa’s Department of Mineral and Petroleum Resources (DMPR). This significant development allows the long-anticipated transfer of ownership, ensuring the mine remains operational under new management.
The London-listed diamond producer had initially planned to place the mine on care and maintenance, followed by closure, due to operational challenges and a slower-than-expected market recovery, particularly impacted by economic instability in China. However, with the recent regulatory consent granted under Section 11 of South Africa’s Mineral and Petroleum Resources Development Act, the Stargems Group will now take control of the Koffiefontein operations.
Petra’s Chief Executive Officer, Richard Duffy, welcomed the development, noting that the sale represents a responsible transition for all parties involved. "The decision to transfer the mine allows continued economic activity in the region under new ownership. This outcome aligns with our commitment to managing a responsible exit and avoiding additional closure-related costs," Duffy commented. Petra had estimated these costs to range between $15 million and $18 million, which will now be avoided thanks to the transaction.
This sale marks the conclusion of Petra's direct involvement in the Koffiefontein mine, an asset that has faced operational difficulties in recent years. The Stargems Group, known for its global presence in the diamond trading sector, is expected to invest in revitalizing the mine, offering a positive economic impact for the surrounding community and maintaining the site’s production capabilities.
Petra’s strategic focus now shifts toward other core assets, as it continues navigating a diamond market influenced by global uncertainties, including fluctuating demand from key markets such as China and the United States. With the completion of the Koffiefontein sale, Petra is positioning itself for a stronger financial outlook while reducing its operational footprint.
