LONDON (ShareCast) - Petra Diamonds said today it has conditionally agreed to buy Frannor Investments and Finance from Xceldiam for £32.43m and has secured a $20m loan deal with BHP Billiton.

The all share transaction will see Petra take on Xceldiam’s interests in the Luangue diamond exploration project, which borders Petra's Alto Cuilo project in north-eastern Angola.

Each Xceldiam shareholder is expected to receive around 368.65 Petra shares for every 1,000 Xceldiam shares held.

Xceldiam, which will continue to trade on London’s AIM, said it plans to pursue new investment opportunities in the mining sector.

In addition, Petra has entered into a $20m unsecured, interest bearing convertible loan agreement with BHP Development Finance Proprietary Ltd.

Broker Collins Stewart lifted its target price on Petra to 209p and repeated ‘buy’ advice following today’s double dose of news.

Meanwhile, Xceldiam, which has already received a bid approach worth 50p a share from an unnamed party, said today that a second offer it now been withdrawn.

• News Channel