Petra is listed on the London Stock Exchange with a market capitalization of about GBP942 million (US$1.4 billion) (as of April 8, 2015). Petra was founded in 1997. During the company’s early history, Petra focused on diamond exploration but in 2007, Petra started acquiring a series of De Beers’ mines to transform itself from an explorer to a producer. Petra has been an IFC client since 2005, and is producer of rough diamonds that has developed into a leading independent diamond mining group and an increasingly important supplier of rough diamonds to the international market. The company is geographically diversified with four producing mines in South Africa (Finsch, Cullinan, Koffiefontein and Kimberley Underground), one producing mine in Tanzania (Williamson), and one exploration project in Botswana (Kalahari Diamonds).

IFC has a 1.8% equity stake in Petra. As a listed company, Petra’s shareholder base is diversified. Petra’s major shareholders (as of January 30, 2015) include: Al Rajhi Holdings W.L.L. (10.9%), T. Rowe Price Associates Inc. (10.2%), BlackRock Investment Management (UK) Limited (10.1%), JP Morgan Asset Management Holdings UK Limited (7.8%), Prudential PLC (6.1%) and the Directors (2.5%). The remaining shareholdings (totaling about 50.6%) are all less than 5% each. IFC also extended corporate loans to Petra to support capital expenditure programs at Williamson in Tanzania and Finsch in South Africa. The outstanding facilities total $60 million, and comprise an amortizing loan of $35 million and a revolving facility of $25 million, both maturing in 2018. IFC also invested $2 million in the Kalahari exploration project in 2003, which was acquired by Petra in 2005.

Cullinan Diamond Mine (Pty) Limited is the project company. Petra holds an effective interest of 77.03% in Cullinan comprising a 74% direct interest and a 3.03% indirect interest through one of Petra’s Historically Disadvantaged South African partners, Sedibeng Mining (Pty) Limited. The remaining shareholding in Cullinan is held by the Itumeleng Petra Diamonds Employee Trust (12%), Sedibeng Mining (6.16%), Umnotho WeSizwe Group (Pty) Limited (5.04%) and Namoise Mining (Pty) Limited (2.80%).

The Company intends to use the net proceeds of the Offering to repay (without cancelling) amounts outstanding under certain of the Company’s existing debt facilities ($140.4 million) and, together with amounts the Company intends to draw under certain of the Amended Senior Facilities following the Notes offering, to finance the construction of a new processing plant at Cullinan ($142.8 million), for general corporate purposes and to pay fees and expenses associated with the Offering.

The proposed IFC investment is to purchase notes to be issued by Petra Diamonds US$ Treasury Plc, a wholly-owned subsidiary of Petra Diamonds Limited registered in the United Kingdom in an amount not to exceed $70 million, and thereby participate in a 5-year, US$300 million senior secured high-yield Petra public bond offering. IFC will participate as an anchor investor in the bond in order to assist in mobilizing and attracting additional investors. The balance of the bond amount will be raised through different local and international institutional investors.

70.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	70.0
Equity

* These investment figures are indicative

The Cullinan mine is located in the town of Cullinan, approximately 37 kilometers east of Pretoria, Gauteng Province, South Africa. The mine is an existing brownfield site.

The expected development impact for this project will include: (i) higher revenues to government through higher recoveries and increased efficiency/cost savings; (ii) energy efficiency through lower per unit power consumption; (iii) community development through Petra''s already established corporate social responsibility program; and (iv) strengthening of Petra''s brand.

The project benefits include fiscal payments to the government in the form of royalties and taxes, and direct spending on community development. This is achieved through engagements with external stakeholders (such as local municipalities and the regulator, the Department of Mineral Resources) in terms of the Local Economic Development Plan spend as well as engagements with internal stakeholders (e.g., unions) and other stakeholders through the mine-level Corporate Social Investment committees for discretionary spend. IFC has reviewed potential governance risks to project benefits and has concluded that these are manageable.

The mining tax and general legislative framework in South Africa is well developed and complimentary. The South African Revenue Service is responsible for levying and collecting mineral royalties. These are published in the budget review as part of non-tax revenue (although not at the company level). The DMR also has its own internal process and procedures to perform audits on the information provided to them by mining companies. The DMR may also release information though this would be on an industry basis. Petra will also disclose all material payments to government and South Africa is a member of the Kimberley Process, which requires similar disclosure.

With respect to direct spending on community development, Petra views the support of the community as integral to the success of the Cullinan operation (and indeed all its operations) and is committed to community development. The implementation of the Cullinan LEDP is being managed by an on mine steering committee which is made up of representatives from the local municipality, various government departments and on mine specialists.

IFC''s Expected Additionality will include: (i) Stamp of approval: IFC''s involvement as an anchor investor will provide comfort to potential long-term investors. IFC is the only anchor investor and a willingness to take up a significant portion of the bond offering is a positive signal to other investors, especially for a first time issuer; (ii) Long-term partnership: Petra is a repeat client since 2005 with projects in South Africa, Botswana and Tanzania. IFC is both a lender to and an equity investor in Petra. Petra considers IFC''s continuing support to be a comparative advantage and IFC''s role as an anchor investor in Petra''s debut bond offering was specifically requested by Petra; (iii) Other value added services: Petra has expressed interest in IFC''s Advisory Services support on the establishment of a charitable foundation. IFC has shared global experience on foundation design and aims to engage with Petra to help set up the foundation; (iv) Mobilization: As an anchor investor, IFC''s involvement will contribute significantly to a successful bond issue and we anticipate a mobilization factor of up to six times.

This is a Category B project according to IFC’s procedures for Environmental and Social Review of Projects because the project involves replacement of a +60 year old processing plant with a new one with improved efficiencies. In addition to this, Cullinan, like all other Petra operations, has demonstrated strong commitment to meeting international best practice standards through compliance with the IFC Performance Standards as well as adherence to the strong, well enforced South African environmental laws, regulations and requirements. In particular, the Mineral Resources and Petroleum Development Act (MPRDA) of 2002 and the National Environmental Management Act (NEMA) of 1998 are both used to guide practice, as well as various international best practice standards. The mine has an approved Environmental Management Plan (EMP) and is certified for ISO 140001 and OHSAS 18001. The EMP is a legally binding document for which performance is regularly reviewed.



Key E&S issues associated with the project include: occupational and community health and safety; dust control; waste management, including hazardous waste and management of mine residue deposits; water management; public safety, hazardous materials management and mitigation of transportation risks on roads leading to the site. Please see the Environmental and Social Review Summary (ESRS) for more information.

Please refer to the related Environmental and Social Review Summary (ESRS) document for this project.

Please refer to the Environmental and Social Action Plan (ESAP) tab in the related Environmental and Social Review Summary (ESRS) document for this project.