Jun 20, 2018

Gem Diamonds Reports on Payments Made to Governments as Per Regulations

As per the regulations of the United Kingdom (UK) – which are enactments of EU Directives for application in its domestic territory to companies involved in mining – Gem Diamonds Limited yesterday released a report of payments made to governments of territories in which they are carrying out “extractive” or mining activities

“This report is also intended to satisfy the requirements of the Disclosure and Transparency Rules of the Financial Conduct Authority in the United Kingdom,” the Company added.

While Gem Diamonds’ headquarters are in the UK, it carries out diamond mining – through its subsidiaries – in the Kingdom of Lesotho (where it operates the Letšeng mine); it also owns the Ghaghoo mine, currently on care and maintenance, in Botswana.

Gem Diamonds’ report covered payments made to governments by subsidiaries within the Group for the financial year ended 31 December 2017.

“During the 2017 financial reporting period, extractive activities were conducted in Lesotho and Botswana,” the Company stated.

The Company reported that there were no payments made, for the period, under several heads including production entitlements; signature, discovery and production bonuses; payments for infrastructure improvements; and dividends.

Gem Diamonds explained about dividends saying: “These are dividend payments, other than dividends paid to a government as an ordinary shareholder of an entity unless paid in lieu of production entitlements or royalties. There were no dividend payments of this nature to governments for the year ended 31 December 2017.”

Similarly, with relation to licence fees, Gem Diamonds stated: “These payments were not above the reportable threshold at entity level and have therefore not been reported.”

The remaining heads cover taxes and royalties.   

Gem Diamonds’s subsidiary Letšeng Diamonds (Proprietary) Limited paid to Lesotho authorities a total of US$ 18,346,000 (US$ 229,000 as taxes to the Lesotho Revenue Authority; and US$ 17,887,000 as royalty payment to the Government of the Kingdom of Lesotho).

In Botswana the Company’s subsidiary Gem Diamonds Botswana (Proprietary) Limited paid the Government of Botswana US$ 230,000 as royalties.

Gem Diamonds explained all payments below the threshold level of US$ 111,000 (£86 000) have been excluded in the report as it is required only to provide details of a single or a series of related payments more than the above-mentioned sum.