THE government is at an advanced stage of finding a buyer for Mothae Diamond Mine, Mining Minister Lebohang Thotanyana has said.
The mine was put up for sale in February this year after prospective buyer, Paragon Diamonds Limited, failed to secure the requisite funding within the given time frame. Paragon had, on 14 July 2015, finalised an agreement with Mothae’s erstwhile majority owner, Lucara Diamond Corporation, to purchase its 75 percent stake in Mothae for $8.5-million (about M92.42 million).
Situated on the southern edge of the Kaapvaal Craton, which hosts the diamondiferous northern Lesotho kimberlite field, Mothae Diamond Mine is 25 percent-owned by the government of Lesotho.
Next to Gem Diamonds’ Letseng Mine, Mothae has an indicated resource of one million carats and an inferred resource valuation of $1 billion.
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 for the acquisition of the mine.
In an interview with the Lesotho Times this week, Mr Thotanyana said they had received positive responses from potential investors and would soon finalise the sale of the mine.
“The process of finding a mining company to acquire a 75 percent stake and operatorship of Mothae Diamond Mine is at an advanced stage,” he said.
“The responses from the private sector have been very good because we have so far received 10 applications, although I am not at liberty to disclose names at this stage.”
Mr Thotanyana said the applicants had been afforded an opportunity to undertake due diligence of the mine to ensure they make an informed investment decision. On its part, the government expected the applicants to demonstrate their capacity to meet all the requirements of the sale.
“The process will continue until 15 April 2016 when we will reduce the number of prospective buyers to three companies from which we will then choose one,” he said, adding that most of the applicants were foreign investors.
“This is a rigorous process in which we have to carefully consider the type of investment we want to bring.
“Someone may prefer foreign investors because it means a cash injection into our economy, while someone else may prefer a domestic investor who has the experience of mining in Lesotho. Another person may prefer a foreign investor who has the experience of mining in Lesotho. Such as investor may not need to invest a lot of resources to avoid duplication of resources.
“These are some of the dynamics we have to consider with an open mind before making a decision.”
Mr Thotanyana said the mine had already completed the trial mining phase before the government instigated its sale.
“So, we hope it will commence operations within the next 24 months,” he said.
The minister added that more than four mines were likely to be opened before 2020.
“We are trying to improve our world diamond mining rankings by moving from position nine to seven. So, we intend to open new mines in the country. We are likely to open more than four mines before 2020,” he said.
Meanwhile, Gem Diamonds has confirmed to British investment magazine, Shares, that it is undertaking due diligence to potentially acquire a majority stake in Mothae.
Gem Diamonds Chief Executive Clifford Elphick is quoted as saying that his company was among the parties in the running for the asset.
He said Gem Diamonds would not have been involved in the bidding if it did not already have the infrastructure, people and power close to the project.
“Our theory is that whatever is required, we can do it cheaper (than others),” Mr Elphick said.