FIRESTONE Diamonds has announced the recovery of three diamonds, the largest being a 72-carat yellow diamond from its Liqhobong Mine in the Mokhotlong district.
In a statement to the Lesotho Times this week, Firestone said the 72-carat yellow diamond was recovered last week along with a 22-carat white diamond and an 11-carat light-pink diamond. The diamonds will go on sale at a tender which is scheduled to be held at a date to be announced next month.
Paul Bosma, the Chief Executive Officer of Firestone Diamonds, said, “it was a good weekend for us, recovering the 72-carat diamond as well as the two smaller, high quality stones from the northern, lower grade part of the pit”.
“These recoveries will certainly assist in supporting the average value of the next sale in May,” added Mr Bosma.
This is the second diamond of at least 70 carats to be recovered by Liqhobong this year following the recovery of a 70-carat white gem which was sold at an auction last month. Although the company did not say how much the 70-carat white gem was sold for last month, it however, said, the gem was sold for a “record overall price for a Liqhobong diamond”.
Firestone is a United Kingdom-based company, which trades on London’s Alternative Investment Market (AIM). It has 75 percent shares in the Liqhobong Mine and the remaining 25 percent stake is held by the government.
Firestone began full scale commercial production at Liqhobong on 1 July 2017 and by December 2018, the company had recovered 379 716 carats of diamonds (from trial mining and full-scale production) including the 134-carat light yellow gem which is its largest find to date. The gem was recovered in October 2017.
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 lamented the fact 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.
During their appearance before the PAC in January 2019, the Commissioner of Mines, Pheello Tjatja and the Principal Secretary in the Ministry of Mining, Ntahli Matete revealed that only one of the seven diamond mining companies operating in Lesotho was paying the full 10 percent royalties on the sale of diamonds.
Liqhobong and Kolo Mine were said to be the lowest paying mines at a just four percent of the sales value of diamonds.
Mothae and Gem Stone mines in Mokhotlong were said to be paying five percent royalties while Letšeng Diamonds and Kao Mine only pay eight percent and six percent respectively.
Only Lemphane Diamonds Mine was said to be paying the full 10 percent.
Messrs Tjatja and Matete said the law would be amended to ensure that every mine pays the full 10 percent royalties.
However, Firestone’s Chief Financial Officer, Grant Ferriman, told the PAC that the Liqhobong Mine was still new and it had not yet realised profits big enough to enable it to pay the 10 percent sales royalties.
Mr Ferriman also said that the mine would only be able to pay the full royalties after the 2023 financial year when they had fully serviced the multi-million-dollar loans which they secured to fund their full-scale operations.