Lucapa in diamond marketing talks with Lesotho Govt. in effort to restart idled Mothae

LUCAPA Diamond Company has submitted a marketing proposal to the Lesotho government containing off-take provisions in the hope it can restart the firm’s Mothae mine, currently on care and maintenance.

The Sydney-listed company didn’t detail the proposal which it said was the subject of ongoing negotiations with the government. The Lesotho government has a 30% stake in Mothae which has been struck by the Covid-19 pandemic.

“The Mothae diamond mine is an important contributor to the Basotho nation and Lucapa’s strong marketing proposal, we believe, will see the full value of the Mothae kimberlite mine unlocked,” said Stephen Wetherall, CEO of Lucapa Diamonds in a statement.

The company is only selling diamonds from its Lulo alluvial mine in Angola. It raised A$5.2m in a rights issue in the June quarter and is currently refinancing the balance sheet. Lucapa has cash of $4.5m (A$6.5m) at quarter end and Mothae held some 784 carats in diamond inventory. In addition, the company held a cash and receivables balance of $3.5m in its Lulo joint venture company as well as a 2,647 carat diamond inventory.

The company owes $6.3m to Singaporean investment firm, Equigold, down from the initial $15m provided. Lucapa has used shares in lieu of cash repayments such that Equigold has an 8.1% stake in the company from 6.5% previously.

Lucapa produced a total of 2,944 carats from Lulo in the June quarter during which time it was largely at 50% of production in line with lockdown regulations. Recoveries included 86 diamonds of more than 4.8 carats, which in turn included 30 so-called ‘specials’.

Lucapa’s has signed a preferential diamond sale agreement with a subsidiary of the UK jewellery, Graff. Diamond sales have been severely reduced owing to international travel restrictions – a factor that has hurt the diamond sector globally.