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A logo of the world's leading diamond company De Beers is seen is seen in New York, June 20, 2013. AFP PHOTO/Emmanuel Dunand

A logo of the world's leading diamond company De Beers is seen is seen in New York, June 20, 2013. AFP PHOTO/Emmanuel Dunand

A logo of the world’s leading diamond company De Beers is seen is seen in New York, June 20, 2013. AFP PHOTO/Emmanuel Dunand

PETRA Diamonds Ltd. and a partner agreed to buy De Beers’ Kimberley Mines in South Africa, ending the biggest producer’s 127-year control of the operation that was the catalyst for the modern diamond industry.

Petra, along with Ekapa Minerals (Pty) Ltd. will pay De Beers US$7.2 million for the operation where waste rock is processed to recover the precious gems, Petra said in a statement Tuesday. Petra will own 49,9% of the project while Ekapa, which will manage the operation, will hold the rest.

Kimberley Mines produced 722 000 carats of diamonds last year, making it De Beers’ biggest source of the stones in South Africa after the Venetia site in the Limpopo province.

The project will produce about 700 000 carats a year with annual revenue of about US$65 million for the next three years, according to the statement.

Diamonds were first discovered near Kimberley in 1871, about a mile away from the De Beers farm that would give its name to the former monopoly. De Beers, which gained full control of the mine in 1888, said in May that it was putting the operation up for sale.

Buying Mines

Petra has based its business model on buying aging diamond mines from De Beers. It’s previously bought the Finsch, Koffiefontein and Cullinan projects, where the world’s biggest diamond was found in 1905, from the company. Petra also operates the Kimberley underground mine it bought from De Beers.

Shares of Petra have tumbled 63 percent this year on lower diamond prices and investor concerns about the company’s debt position. The stock jumped the most in more than three years Tuesday, partly after the producer said Monday afternoon that its banks had agreed to waive some of its debt covenants.

“This is a good transaction for Petra — with a small investment they can take part in revenues from tailings treatment with a plant in place,” SP Angel Corporate Finance LLP said in a note to investors Tuesday. The debt waiver “is also helpful as Petra is undergoing more difficult trading conditions.”

Petra rose as much as 14%, the steepest gain since May 2012, and traded up 12% at 71,65 pence by 1:55 p.m. in London, valuing the company at US$564 million.-Bloomberg

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