Petra Diamonds has reached a Heads of Agreement to divest its 75.9% interest in the Kimberley Ekapa Mining (KEM) joint venture (JV) to partner Ekapa Mining for around ZAR300m ($22m).

Assets held by the KEM JV include the Kimberley Underground mine, extensive tailings retreatment programmes and the Central Treatment Plant, all located near the diamond mining centre of Kimberley in South Africa.

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The sale will be carried out on a going concern basis and will see Petra transferring safety and social obligations related to the JV operation to Ekapa Mining.

“We will ensure a sustainable future for KEM JV by placing the operation under the sole stewardship of an operator best suited to maximise its value.”

Under the terms of the deal, Ekapa Mining will pay the total consideration in 24 monthly instalments starting in January next year.

In a statement, Petra Diamonds said: “The rationale for the disposal is to ensure a sustainable future for KEM JV by placing the operation under the sole stewardship of an operator best suited to maximise its value.”

“Ekapa Mining’s extensive experience of operating specifically within Kimberley and its ability to solely focus on these assets is expected to provide the right fit for the operation, thereby ensuring continuation of diamond mining employment and related economic activity in this renowned diamond centre.”

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The disposal comes after the company said in May this year that it would review the asset portfolio to maximise return on capital and to ensure a positive cash flow from the assets.

Petra Diamonds has also stated that the transaction will decrease operational risk and allow it to focus on key assets such as Finsch and Cullinan.

The transaction is subject to approval from regulatory agencies and lenders, and is expected to take place in the first quarter of Petra’s financial year in 2019.