LUCAPA Diamond Company said its Mothae mine in Lesotho would restart production by the fourth quarter following agreement with the government.
The Sydney-listed firm also said it had agreed to establish a new marketing channel in which it would sell its goods directly to diamantaires and participate in the margins of the polished goods.
Given that Mothae is setting about a 60% expansion project, the firm expected a “substantial increase” in the mine’s contribution to stakeholders. Mothae had been placed on care and maintenance from March when the Covid-19 pandemic hit South Africa.
The establishment of a new marketing channel is similar to that implemented by Lucara Diamond Corporation, a Toronto-listed firm that operates the Karowe mine in Botswana. By selling through direct offtake agreements, the tender system is by-passed.
In April, Lucapa said it had sold 3,963 carats into a “cutting & polishing partnership” at an average price of $505 per carat.
In terms of the partnership with the buyer, Lucapa will receive the rough price for the diamonds upfront and then take on the subsequent procurement and diamond manufacturing costs.
“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,” it said in a statement.
“This is a similar marketing channel successfully implemented at Lucapa’s Lulo mine in Angola which has already shown its value to the mine,” said Lucapa MD, Stephen Wetherall.