Mothae mine will soon restart operations after the signing of a new diamond marketing deal between the government and Lucapa Diamond Company.
The mine has been on care and maintenance since July this year when Lucapa presented a new marketing proposal to the government. The proposal entailed that Lucapa would be given exclusive rights to market Mothae diamonds for the next five years.
Although Mining minister Serialong Qoo yesterday said the government had rejected the initial proposal, he said they had given Mothae a greenlight to open next month
Lucapa is the majority shareholder in the mine with a 70 percent stake while the remaining 30 percent is controlled by the government. The mine started commercial mining in January 2019.
"Lucapa Diamond Company and the government of Lesotho are pleased to announce that a restart plan to recommence diamond mining operations at the Mothae diamond mine and a new diamond marketing channel have been approved," Lucapa said in a statement yesterday.
"The government, Lucapa and the Mothae board of directors have approved a mine restart plan which will, with the appropriate health and safety protocols implemented, see the mine return to operations in Q4 2020."
The statement said Mr Qoo, has approved a proposal to implement a new diamond marketing channel which "provides Mothae the opportunity to realise more value for its unique high-value production".
In July this year, the mine management made a refinancing proposal to the government that included selling all its diamonds directly to Lucapa for five years without any tendering or auction process.
However, Mr Qoo said that the mine's initial proposal had been revised.
"We have concluded the talks for resumption of operations at Mothae mine... the terms of their initial marketing proposal were not approved as they wanted them and they had to revise them before we agreed. We will reveal the rest of the details later this week," Mr Qoo said.
Lucapa said Mothae would now be able to sell its diamonds at full and transparent rough market value into direct off-take arrangements with diamond processors.
"This approval will allow Mothae to implement value accretive polishing partnerships with its diamantaire partners where Mothae will see additional benefit accruing in the form of shared polished margins from beyond the mine gate.
"This additional marketing optionality, together with an expansion programme that could see the Mothae mine production increase by 60 percent, will result in a substantial increase in the mine's contribution to all its stakeholders."
Lucapa managing director Stephen Wetherall said the past few months have been "tough" because of the Covid-19 pandemic.
"Our valued teams and contractors have been very understanding and supportive during the suspension and we look forward to having them back at the mine, in a safe and healthy manner, as soon as possible.
"Mothae is a unique mine and an important contributor to the Basotho nation. The recommencement of operations and implementation of the new marketing channel will see the full potential of the Mothae kimberlite mine unlocked. This is a similar marketing channel successfully implemented at Lucapa's Lulo mine in Angola which has already shown its value to the mine," Mr Wetherall said.