Finsch Project The project entails an IFC revolving loan to Finsch diamond mine in South Africa (Finsch or the Project),  which is 74% owned by Petra Diamonds Limited (Petra or the Company). The financing, that will be provided jointly by IFC and a South African Bank (Rand Merchant Bank), will enable Petra to: (i) finance the Finsch mine expansion program; (ii) strengthen Petras overall liquidity position following its move to the London Stock Exchange (LSE) main-board; and, (iii) fund other general corporate requirements (through repayment of intercompany loans) (collectively, the Project).

On January 21, 2011, Petra entered into an agreement to acquire Finsch from De Beers Consolidated Mines Limited for 1.425 billion South African Rand (about $210 million), that was fully financed by a 205 million Great British pounds (about $325 million) equity-raising. The transaction was completed on September 14, 2011, with Petra assuming management (including production, revenues and cash flow) at the mine.

Finsch is one of the worlds major diamond mines with a resource base of 43.3 million carats (Mcts), of which 25.8 Mcts are in the reserve category. Finsch produced an average of approximately 2 Mcts per annum over the five years to 2010, from a combination of underground mining and tailings retreatment and has produced 126 Mcts in its 40-plus year life to date. The mine has a new order mining right valid until 2038. Finsch is expected to more than double Petras annual production, contributing about 1.5 Mcts per annum to Petras production, rising to nearly 2 Mcts per annum by 2018. Finsch adds an eighth producing mine to the Petra group, consolidating Petras position as Londons largest quoted diamond mining group and provided a strong platform for the companys  move to the LSE main-board in December 2011.

Petra will implement a development plan to increase production from 1.5 Mcts per annum to 2 Mcts per annum by 2018, by gradually opening up Block 5 below the current Block 4 operations, supported by a surface tailings treatment program. Production levels from underground will be maintained during the transition from Block 4 to Block 5 by developing smaller sub-level caves within the Precursor ore body (adjacent to the main ore body) at Block 4 and within Block 5 itself. Petra foresees a long life for the operation and has a current mine plan of 18 years, though the ore body remains open-ended at depth.

The Finsch capital expenditure over the next six years for the underground and infrastructure development program is estimated to be approximately $330 million and is expected to be financed by a combination of debt and internal cash generation. The proposed revolving loan facility will allow Petra to fully fund the projected capital expenditure programs for the next two years and withstand unfavorable variations in cash flows. A strategic priority of South Africa's Medium Term Strategic Framework (2009-2014) is the creation of employment opportunities. The framework also specifically recognizes the economic contributions from mineral extraction and processing, and the need for support for continued expansion in the sector. The Finsch expansion, which contemplates the long-term and economic sustainability of a 44-year old mine, will support this government objective, by increasing production from 1.5 Mcts per annum to 2 Mcts per annum and extending the mine life from three to 18 years, thereby promoting sustainable development in a frontier region of South Africa. More specifically, the development impact from the Finsch expansion is expected to include:

(i) Employment: Successful implementation of the Finsch expansion will help maintain the aggregate number of direct and indirect jobs and potentially create opportunities for further employment.

(ii) Fiscal Contributions: Petra anticipates Finsch to start generating royalty payments immediately and become a tax paying entity by 2014. As per IFC requirements, Petra has agreed to publicly disclose all material revenue payments made to the South African government.

(iii) Community Development: Finsch already contributes directly towards community development through the provisioning of social, commercial and industrial infrastructures.

(iv) Support to Local SMEs: A large proportion of Finsch's procurement is expected to be from South African suppliers, of which a significant percentage is expected to be from local and regional suppliers. Finsch is committed to supplier development and training, and expects to allocate a portion of its community development expenditure to such initiatives.