Profits up at Letseng, Mothae mines

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Keiso Mohloboli

BUSINESS is booming in the country’s fledgling diamond mining industry amid revelations that Gem Diamonds and Lucapa Diamond Company yielded significant multi-million dollar gains from their Letseng and Mothae mines respectively in Mokhotlong.

A trading update released this week by Gem Diamonds detailing the company’s operational and sales performance for the period from 1 October, 2017 to 31 December, 2017 (fourth quarter) shows that the company moved to a net cash position of US$ 1.4 million.

This represented “a US$ 13.2 million improvement from the third quarter 2017 net debt position of US$ 11.8 million”.

The strong performance was achieved on the back of significant diamond finds during 2017 including seven gem quality diamonds greater than 100 carats of which the largest was a 202.16 carat Type IIa diamond, recovered in November.

“Thirty eight diamonds sold for more than US$ 1 million each, generating revenue of US$ 94.8 million during 2017,” Gem Diamonds revealed in its trading update, adding, “This is an improvement on 2016 where 34 diamonds sold for more than US$ 1 million each, generating revenue of US$ 73.7 million”.

Gem Diamonds Chief Executive Officer, Clifford Elphick, commented, “It is also pleasing to see carats sold during the (fourth quarter) period up by 21 percent over the previous (third quarter) period”.

“The market for Letšeng’s high-quality diamonds remained robust over the period, achieving an average price of US$ 2 217 per carat, up 19 percent from the previous quarter.

“Significant progress has also been made on the business efficiency and optimisation programme,” he said, adding that further details will be released in the Full Year 2017 results on 14 March, 2018.

All in all, Gem Diamonds sold 31 476 carats during the fourth quarter, up 21 percent from 25 909 carats in the third quarter of 2017.

The robust trend is likely to continue as the company recovered five diamonds greater than 100 carats in January 2018.

The highlight of the January 2018 finds has undoubtedly been the “landmark recovery of an exceptional quality 910 carat, D Colour Type IIa diamond” whose recovery was announced on 15 January, 2018.

The diamond, which has been valued at approximately half a billion maloti, is the largest to be mined to date at Letšeng and it is also believed to be the fifth largest gem quality diamond ever recovered in the world.

The other four diamonds greater than 100 carats, weigh 149.43, 117.67, 116.98 and 110.63 carats respectively. In addition to these, a high quality 8.53 carat pink diamond was also recovered.

Letšeng Mine is jointly owned by British firm, Gem Diamonds, with a 70 percent stake and the government of Lesotho which owns the other 30 percent.

It is situated close to Mothae Mine which is operated by Australia-based Lucapa Diamond Company.

Meanwhile, Lucapa Diamond Company also reported higher profit margins from its Mothae Mine which has been operating on trial mining basis since the Australian company acquired a 70 percent stake from the government in April 2017.

The Lesotho Times has in its possession a document that was presented on Tuesday by Lucapa Diamonds Chief Executive Officer, Stephen Wetherall, at the Mining Indaba in Cape Town, South Africa which shows that the company has recorded significant gains during the trial mining period. The Mining Indaba which brings together various stakeholders including mining companies and government officials to discuss the state of the mining sector began on Monday and ends today.

“Extensive trial mining of more than 600 000 tonnes demonstrates that Mothae hosts large and premium-value diamonds and 23 400 carats were recovered from trial mining with sales of US$17 million. The sale prices were up to US$41 500 per carat,” reads part of Mr Wetherall’s presentation which is titled ‘Lucapa Diamond Company: A growing producer of large and premium value diamonds’.

The presentation lists the following as some of the major diamond recoveries during the trial mining period from 2017:

  • 254 carat boart diamond
  • 84 carat octahedron
  • 56 carat Type IIa- sold for US$1, 7 million
  • 29 carat Type IIa- sold for US$1, 2 million
  • 14 carat Type IIa- sold for US$0, 4 million
  • 96 diamonds larger than 10 carats

Following the successful trial mining period, Lucapa Diamonds has announced plans to begin full scale operations in the second quarter of this year.

In a statement to this publication, the company says it is constructing a “150 tonne per hour (90 000 tonnes per month) diamond treatment plant, complete with X-Ray transmission recovery technology (XRT), under its Phase 1 mining development programme and is scheduled to commence high value production at Mothae in the second half of 2018”.

“Bulk sampling will commence at Mothae in the March 2018 quarter.”

Lucapa has budgeted US$17 million to commence Phase 1 of full scale mining in 2018. Phase 1 of mining will run from 2018 to 2021.

The company documents show that Lucapa have 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.

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