De Beers Consolidated Mines on Friday announced that it has agreed to sell its Kimberley underground mines to Petra Diamonds.

Petra will operate the mines with its BEE joint venture partner, Sedibeng Mining. Petra, and Sedibeng currently operate two mines previously purchased from DBCM: The Dancarl Mine in the Barkley West District, and the Koffiefontein Mine.

The purchase price is R78.5 million ($11 million), which includes a cash payment and provision of a guarantee for the full environmental rehabilitation liability. Petra will also assume responsibility for full care and maintenance of the underground mines from the signature date.

Petra, Sedibeng, and DBCM await approvals from the South African Department of Minerals and Energy that will allow the joint venture to operate the mines at optimal levels following the transaction. Petra said it believes that, based on its operating model, the Kimberley underground mines will have an economic life in excess of 10 years.

The Kimberley underground mines were closed in 2005. So the agreement could create new employment opportunities in the area, a DBCM strategic goal.

“To date our transactions with DBCM have created approximately 1,000 new jobs, and have further facilitated the aims of the government to optimize the resources of the country and create opportunities for BEE transactions that involve historically disadvantaged persons in real operations and asset ownership,” said Johan Dippenaar, Petra CEO. “Due to the economic multiplier effect of mining, these mines bring much needed development and economic activity to the communities where they are situated.”

JCK