Petra reduces stake in Tanzania’s Williamson Diamonds

Petra Diamonds has reached an agreement with the government of Tanzania with the view to establishing a sustainable future for the Williamson Diamonds (WDL) joint venture.
The Aim-listed diamond company said the agreement provides for a capital restructuring of the WDL entity, including to reflect the 16% free carried interest that the government of Tanzania is entitled to receive in the mine.
The capital restructuring will include a WDL share issue with the effect of reducing Petra's indirect shareholding from 75% to 63% and consequently increasing the government of Tanzania's shareholding from 25% to 37%.
It will also include a contribution to the government of Tanzania of 16% of the principal outstanding value of WCL's shareholder loans payable by WDL, with the remaining 84% of such principal outstanding loans continuing to be owed to Willcroft Company (WCL), a Petra entity that currently directly holds shares in the capital of WDL.
Meanwhile, Petra said the agreement also provides for an overall economic benefit sharing ratio between the parties concerning their future economic benefits from the activities of the Williamson Mine.
“The agreed economic benefit sharing ratio is 55:45 as between government: Petra and is intended to capture the parties' entitlements as shareholders as well as to the government of Tanzania, the revenue it collects from WDL arising from taxes, royalties, duties, fees and other fiscal levies,” it said.
“The framework agreement records that the parties have also agreed that WDL shall be entitled to off-set its unpaid and overdue VAT receivables against future government-imposed charges payable by it to the government of Tanzania, with such off-set government-imposed charges treated as paid for the economic benefit sharing ratio.”
Petra and the government of Tanzania will provide financial assistance for the restart of operations at the Williamson Mine, with Petra having already provided funding and the government of Tanzania agreeing to allocate the proceeds of the sale of the 71,654.45 carat parcel of diamonds from the Williamson Mine that was previously confiscated and blocked for export.
The original value of this parcel was assessed in September 2017 at about $15 million, as previously disclosed, although Petra has not had the parcel independently valued.
The mine recently resumed operations and sales, having been on care and maintenance since April 2020.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished