Lucapa Diamond Company Limited announced today the receipt of an “approved Term Sheet” from the Industrial Development Corporation of South Africa Limited (IDC) for a ZAR 100 million (US$7 million) development facility for the high-quality Mothae kimberlite diamond mine in Lesotho in which Lucapa has a 70% interest and its partner, the Government of Lesotho (GoL), owns a 30% share.

“The financing agreement with IDC, which is one of the largest development financiers in southern Africa, followed an extensive period of due diligence and site visits where the legal, technical and financial modelling of the two-Phase development of the Mothae mine were reviewed,” Lucapa said in its announcement statement.

The Lesotho Minister of Mining, the Honourable Keketso Sello, expressing delight  on  IDC’s  support to the the development of Lesotho’s newest diamond mine,  said, “The IDC’s support for the new Mothae mine, coupled with the significant investment being made by our partner Lucapa, underlines Lesotho’s reputation as having the world’s highest average $ per carat diamond production.” He expressed his confidence that the mine would “bring considerable economic benefits to the country”.

The Company explained that the commercial terms of the IDC facility are standard for a loan of this nature. “The facility is for a period of four years and includes a 12-month moratorium on capital repayments,” Lucapa elaborated. “Interest is calculated at the Johannesburg Interbank Average Rate (JIBAR) plus 8.6%, which currently equates to a rate of 15.6% per annum.”

The new financing facility will not only  “considerably strengthen” Mothae’s cash position, but will also --  subject to the IDC loan covenants being met --  “enable repayments of shareholder loans from Mothae to Lucapa” the Company stated.

This  financing agreement with IDC comes even as   the commissioning phase commences at the 1.1Mtpa Mothae diamond plant, with first commercial diamond recoveries scheduled for early November 2018, as the Company had announced on October 22, 2018. 

In that announcement, Lucapa had said that production from the 1.1Mtpa Mothae treatment plant,  which incorporates two XRT diamond recovery circuits, will be ramped up to its nameplate capacity throughout the December quarter.

The Company said that more than 4,100 carats of diamonds have been recovered from the bulk sampling of areas within the Mothae kimberlite pipe which had not previously been tested (and thus not included in the Mothae JORC resource), or had been “inadequately tested” during the previous trial mining phase. “These included Specials (large diamonds >10.8 carats) of up to 89 carats,” Lucapa said.

Mothae is located within 5km of Gem Diamonds’ Letseng mine, which produces the world’s highest average US$ per carat kimberlite diamond production.

Pic Cap: The 1.1Mtpa Mothae diamond treatment plant in Lesotho

Pic Courtesy: Lucapa Diamond Company Limited