By Ntsebeng Motsoeli
MASERU — Firestone Diamonds has signed a revised lease with the government regarding operations at Liqhobong Diamond Mine.
The United Kingdom-based company owns 75 percent of the mine while the remaining shares belong to the Lesotho government.
According to a statement released by the company this week, the revised deal runs until June 30 2021 and can be renewed for two further periods of 10 years each.
“I am pleased to announce that Firestone has concluded the terms for the Revised Mining Lease Agreement,” reads the press statement signed by the Firestone Diamonds Chief Executive Officer, Mr Stuart Brown.
“The negotiations have been extensive and we believe that the concluded agreement is positive for all parties.
“Importantly, the Revised Mining Lease Agreement enables the company to proceed with its fundraising, a considerable private investment in Lesotho, and commence construction of the Main Treatment Plant and supporting infrastructure at Liqhobong.
“The Revised Mining Lease Agreement provides a framework by which Firestone and the Lesotho government can realise their combined strategy and vision of building and commissioning the Main Treatment Plant at the Liqhobong diamond mine to benefit all stakeholders.”
Mr Brown further revealed that under the new deal, his company would incur withholding tax on services rendered, and increase the cash outflow during the two-year construction period of the Main Treatment Plant.
And to compensate for this development, the Lesotho government had agreed to cut the royalty rate on diamond sales from eight to four percent until the group has benefited to the tune of US$20 million (M213million).
Thereafter, the rate will rise to eight percent, the statement further noted.
“While the board believes that the overall impact on the group will be broadly cash-neutral, the obligation to pay withholding tax may result in an increase in the company’s peak-funding requirement of approximately US$12 million during the construction phase of the Main Treatment Plant in late 2015/early 2016, when the majority of the withholding tax will be payable and before the commencement of full-scale production at the Liqhobong Diamond Mine and the resultant revenue-generation,” Mr Brown said.
