Mothae mine saga lands in court

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Lekhetho Ntsukunyane

A LOCAL company, Morafe Group (Pty) Limited), yesterday filed an urgent High Court application seeking the nullification of a contract that Mining Minister Lebohang Thotanyana awarded to Lucapa Diamonds Company to operate Mothae Diamond Mine early this month.

Morafe Group (Pty) Limited wants the court to interdict Mr Thotanyana and Lucapa “from concluding and finalising the process of acquisition of shares in the Mothae Diamonds (Pty) Limited, pending the outcome of criminal investigations and possible prosecution of any offender in relation to tender process known as acquisition of Mothae Diamonds Mine.”

Morafe also wants the court to declare the award of the tender null and void, and that the tender be revised and awarded “by considering only companies that have submitted the expression of interest for the tender and in strict compliance with the provisions of the Mining and Minerals Act of 2005”.

Through their lawyers, K. Ndebele Chambers, Morafe argues Lucapa was not one of the 10 companies that submitted their expression of interest before the deadline of 10 February 2016, adding the correct procedure was that only companies that have submitted expression of interest are called upon to submit their offers.

The company submits “it remains a mystery and totally against tender processes” how Lucapa was allowed to submit its offer.

Mr Thotanyana, Mining Board, Mothae Diamonds (Pty) Limited, Police Commissioner Molahlehi Letsoepa, Attorney General Tšokolo Makhethe, Lucapa and Trans Hex Limited are cited as first to seventh respondents respectively in the matter.

Morafe’s court application comes after Mr Thotanyana announced earlier this month that commercial mining at Mothae was set to resume before year-end after government awarded Lucapa a contract to resuscitate operations at the mine which has been idle since 2015.

Mothae Mine, which is located close to the high dollar-per-carat gem producer, Letšeng Diamond Mine, was put up for sale by government in February 2016 after a prospective buyer, Paragon Diamonds Limited failed to secure the requisite funding within the given time frame.

Paragon had made an agreement in July 2015 with Mothae’s erstwhile majority owner, Lucara Diamond Corporation, to purchase its original 75 percent stake in Mothae for US$8.5 million (about M92.42 million).

However, after the deal fell through, the government temporarily assumed 100 percent ownership of the mine and asked potential investors to submit their Expression of Interest (EOI) letters for the acquisition of the mine.

Mr Thotanyana said Lucapa met the government’s terms and assumed 70 percent share ownership of Mothae, with the rest remaining in government hands.

Sputnik Investments was initially recommended for the contract by the Mining Board after beating Trans Hex in the final two-horse race. The two companies eventually lost out after the re-submission of proposals from bidders that included Titanium and Lucapa.

Morafe argues in court papers that it has “necessary locus standi to institute the present proceedings on the following grounds: The applicant through its sister company Refela Holdings (Pty) Limited has an interest in diamond mining and as such is the holder of a mining license in respect of a kimberlite concession known as Pipe 200”.

The companies’ director and chief executive officer Mohapi Khofu noted in his affidavit that a few months before the tender process for the acquisition of Mothae mine commenced, he made contact with Trans Hex Group Limited, a company listed on the Johannesburg Stock Exchange.

“Trans Hex is well-established diamond mining company with extensive in-house expertise in all aspects of diamond exploration, project development, diamond mining operations, beneficiation and diamond tender sales. The purpose was to ask for Trans Hex assistance (financial and technical) to develop Refela’s Pipe 200 to full scale production,” Mr Khofu stated.

Trans Hex, he added, made an undertaking that should they acquire a viable diamond project in Lesotho they will use their technical expertise to assist Refela to develop Pepe 200.

“According to the Mining Policy of Lesotho, one of the key factors for consideration in awarding mining contracts is the ability of the investor to promote local investment and empowerment of businesses,” he says.

He said in effecting the spirit of the policy and the principles of social corporate responsibility, “any investor who is awarded mining rights must have a local partner and have a clear policy for local empowerment and investment.”

He saID over and above quarrying (mining) of stone, sand and clay, as well as manufacturing of bricks and concrete blocks, Morafe are also experienced in the construction of buildings, roads and other civil engineering projects.

The K. Ndebele lawyers argue their client had a legitimate expectation that in the event Trans Hex was successful in the tender, “it together with other Basotho companies benefit from procurement and other empowerment programmes Trans Hex would unveil.”

The lawyers SAID their client was a complainant “and possible witness in criminal case and proceedings which involve unlawful activities and suspicious acts of fraud in awarding a tender which is subject matter herein. Not only is the applicant (Morafe) a complainant in the matter, the applicant is a victim of the acts complained of.

“The applicant therefore does not only have interest in the outcome of criminal proceedings but also the outcome of the tender process itself. The applicant therefore has clear and substantial interest in the outcome of the tender process. Any unlawful actions or omissions done by the first respondent to manipulate the outcome of the tender process have a bearing on the business interest of the applicant and will directly and unfairly prejudice it.”

Meanwhile, the High Court is on Monday expected to determine a date on which the respondents should respond to the application.

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