Another huge diamond recovered at Mothae
LUCAPA Diamond Company Limited has recovered an 83, 9 carat diamond from its Mothae Mine in Mokhotlong district. The latest find is the fourth such recovery of diamonds that are 50 carats or more in size from the company’s new plant where commercial mining operations commenced at the beginning of the year.
In a recent email to the Lesotho Times, Lucapa Managing Director, Stephen Wetherall, said Lucapa and the government of Lesotho were impressed by the diamond recoveries that had been achieved so far at the Mothae Mine.
“Lucapa Diamond Company Limited and the government of Lesotho are pleased to announce the recovery of an 83, 9 carat diamond from the new Mothae kimberlite plant in Lesotho.
“While the 83, 9 carat diamond was not gem-quality, it continues to underline the large-stone nature of the Mothae kimberlite resource,” Mr Wetherall said.
Mothae Mine is located close to the high dollar-per carat gem producer, Letšeng Diamonds in Mokhotlong. It was put up for sale by the government in February 2016 after prospective buyer, Paragon Diamonds Limited, failed to secure the requisite funding within the given time frame.
In April 2017, the government awarded mining rights to the Australia-based Lucapa Diamond Company to develop the mine which had been idle since 2015. Lucapa owns 70 percent of Mothae Mine while the government holds the remaining 30 percent shares.
It began its full-scale mining in January this year after the trial mining which produced more than 23 000 carats of diamonds with sales exceeding US$17 million.
Company documents seen by the Lesotho Times indicate that the trial mining at Mothae, since Lucapa took over, had produced more than 23 000 carats of diamonds with sales exceeding US$17 million.
This led Lucapa to draw up a development plan in October 2017, which outlines proposals to move into phased commercial production in the second half of this year.
Lucapa had budgeted US$17 million to commence Phase 1 of full-scale mining in 2018. Phase 1 of mining was initially expected to run from the end of 2018 to 2021 but only began in January this year.
The company documents show that Lucapa secured an additional US$15 million (M195 million) financing loan to develop Phase 1 of the Mothae kimberlite diamond mining project.
Phase 1 is expected to generate gross revenue earnings of US$79, 6 million while Phase 2 which will run from 2022 to 2031 will generate gross revenue earnings of US$697 million.
Lucapa is expected to incur royalties and marketing costs of US$5, 6 million for Phase 1 and US$48, 8 million for Phase 2.
Operating costs for Phase 1 have been pegged at US34, 1 million while those for Phase 2 have been pegged at US$307, 8 million.
There have however, been concerns that despite the huge finds, Lesotho does not realise significant revenue inflows from the sales of its diamonds.
For instance, the government only realised US$3, 2 million for the sale of the 910-carat diamond that was recovered at the Letšeng Mine in January last year.
This is despite the fact that the diamond, which has been dubbed ‘The Lesotho Legend’, is the fifth largest ever recovered in the world and it went on to fetch a whooping US$40 million (about half a billion maloti) at an auction in Antwerp in Belgium.
Finance Minister Moeketsi Majoro has previously told this publication that although Lesotho occasionally makes massive diamond finds including the ‘Lesotho Legend’, unfavourable contracts that the successive governments negotiated with the mining companies negatively impacted on the earnings that accrued to the state.
He said although the government had negotiated for 10 percent royalties from the sale of diamonds, the state was often forced to settle for as low as eight percent as was the case with the ‘Lesotho Legend’. He said this was because mining companies often pleaded with government to accept a lower percentage in royalties, citing operational costs which reduced their profit margins.
Recently, the Acting Commissioner of Mines, Pheello Tjatja, said Lucapa was one of the six mines in the country that did not pay the full royalty of 10 percent.
He said the company had negotiated to pay only five percent royalties for each diamond it recovered and sold.