LUCAPA Diamonds has been handed a massive boost by the Industrial Development Corporation of South Africa (IDC) which has approved a M100 million (US$7 million) loan to the mining company which operates the Mothae Mine in Mokhotlong.
The company has also received an additional US$1, 5 million (M20, 6 million) from the sale of diamonds recovered through the bulk sampling programme that was conducted ahead of the commencement of full-scale diamond mining in November 2018.
The loan deal was first agreed in October 2018, with Lucapa Diamonds Managing Director, Stephen Wetherall, saying it would “considerably strengthen Mothae’s cash position, which…will also enable repayments of shareholder loans from Mothae to Lucapa”.
And in a recent email to the Lesotho Times, Mr Wetherall said that “Lucapa Diamond Company and the government of Lesotho are pleased to announce the finalisation of R100 million (US$7 million) in development funding for the Mothae kimberlite diamond mine in Lesotho from the IDC”.
“The funding from the IDC, which is one of the largest development financiers in southern Africa, followed the execution of the loan and ancillary agreements and completion of all conditions precedent to the approved term sheet, as announced to the Australian Securities Exchange (ASX) on 25 October 2018,” Mr Wetherall said.
He added: “The financing agreement with IDC…followed an extensive period of due diligence and site visits where the legal, technical and financial modelling of the two-phase development of the Mothae mine were reviewed.
“The loan is secured through notarial bonds against assets of Mothae, its mining right and a proportionate guarantee from Lucapa in line with its 70 percent ownership.”
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. It cost Lucapa US$9 million to acquire a 70 percent stake in the Mothae Mine. The government owns the remaining 30 percent share in the mine.