…Lucapa announced plans to divest Mothae mine stake in May this year
Silence Charumbira
MASERU, Lesotho – Executive Transport, the haulage company owned by Lesotho’s Home Affairs minister, Lephema Lebona, has “entered into a conditional binding sales and purchase agreement” with Lucapa Diamond Company for the purchase of Mothae Mine.
“Lucapa Diamond Company Limited is pleased to announce it has entered into a conditional binding Sales and Purchase Agreement with local Lesotho company, Lephema Executive Transport (Pty) Ltd, to divest its 70% stake in Mothae Diamonds (Pty) Ltd which owns the Mothae Diamond Mine in the Kingdom of Lesotho,” Lucapa managing director Nick Selby said in a statement Tuesday.
He said the followed “a strategic review of the Company’s portfolio of assets undertaken by the newly restructured board of directors”.
“The divestment of the stake in the non-core asset enables the Company to focus on developing its Angolan and Australian assets.
“This agreement is the result of a period of offer and negotiation involving Lucapa and several interested parties. Executive has a successful history with the Mothae Diamond Mine, having provided long-term contract mining services. Lucapa wanted to, as far as possible, see this mine continue to operate and Executive are best placed to achieve this. The signing of this agreement is a key step towards Lucapa streamlining its portfolio and executing the new strategy which will focus on assets in Australia and Angola,” Selby said.
Under the Agreement, Lucapa will receive a nominal purchase price of A$10,000 from Executive as well as approximately A$1 million from Mothae in outstanding technical services payments. Executive will assume all liabilities and guarantee obligations relating to Mothae currently held by Lucapa. Following completion, Lucapa will continue to provide technical services to Mothae under the technical services agreement on normal commercial terms for a minimum of three months.
“Lucapa has received confirmation from the ASX that shareholder approval is not required under ASX Listing Rule 11.1 and 11.2 and as a result, the Company will not seek shareholder approval for the transaction,” the statement said.
“Completion of the divestment is subject to the satisfaction of certain key conditions precedent, as detailed below:
• receipt of consent from the Lesotho Minister of Natural Resources for the Transaction;
• execution of a Delegation Agreement between Lucapa, the Government and Executive whereby Lucapa assigns and delegates its rights and obligations in the Mining Agreement to Executive;
• confirmation from SAFDICO that the Offtake Agreement between the Mothae and SAFDICO remains valid following completion of the Transaction;
• amendment of the Technical Services Agreement between Lucapa and Mothae to incorporate a three-month no fault cancellation provision; and
“Subject to satisfaction of the relevant conditions, completion is expected to occur on or before 30 September 2024.”
Limited warranties are provided with the shares in Mothae largely sold on an as is basis. The Agreement otherwise contains customary provisions for an agreement of this nature, Selby said.
In May this year, Selby said in a statement : “Lucapa Diamond Company Limited wishes to provide a corporate update following a review of the asset portfolio by the Company’s newly restructured board of directors”.
He said the Lucapa board was “considering all options for the divestment of its 70 percent stake in Mothae and the Company is discussing the options with the Government of the Kingdom of Lesotho, the 30 percent partner in the mine”.
He said Lucapa was “finalising a data room” for parties interested in the open cast mine located in the diamond-rich Maluti Mountains of Lesotho.
The mine began operations in 2019 and has been known to produce large, high-value diamonds which command the second highest dollar per carat for kimberlite diamonds worldwide.
The Board intended to prioritise the divestment process and will update the market in the coming weeks, Selby said at the time.
Although no specific reasons have been revealed yet, Lucapa chairperson, Stuart Brown said it was “clear the company should streamline” its portfolio.
“On review, it is clear the company should streamline the portfolio to focus on our core assets in Africa and Australia.
“The company’s collaboration with the Lesotho Government on the Mothae Diamond Mine has been rewarding and our management have worked exceptionally well to optimise the plant to recover large diamonds. We expect there will be significant interest from those within the diamond industry and on a wider scale,” Brown said.
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Lucapa boss speaks on Mothae’s “solid performance” in 2023
Breaking: Global diamond giant Lucapa exits Lesotho mine
In January this year, Selby had touted Mothae and its sister mine, Lulo, in Angola for a strong 2023 Q4 performance. At the time, Lucapa said both Mothae and Lulo delivered solid performances in the quarter ending 31 December 2023.
The company said Mothae had performed well despite a lower dollar per carat average.
Nevertheless, Selby said Mothae’s performance had positively impacted the overall diamond price for that year. The position had further been bolstered by Lulo’s high value recoveries in 2023.
Mothae set new annual records for tonnes mined and processed, carats recovered, and average price per carat achieved. All Q4 performance targets were achieved at Mothae the company adds.
That year, Mothae met full year guidance in all categories except price per carat mainly due to the absence of quality Type IIa diamond recoveries during Q4.
However, amid the softening of diamond prices and an uncertain capital market environment, in Q4, a decision was announced to scale back the original Merlin Diamond Project Feasibility Project in favour of a smaller scale and lower capital development study.
The alternative study was examining a lower-cost pathway to developing the mine and was expected to investigate, among other things, using existing resources such as the trial mining plant and front-end scrubber to get Merlin into production. As the smaller scale development option used some of the existing modelling and key workstreams, work was well advanced.
