Lucapa Diamond Company has secured a ZAR100 million (US$7 million) development facility from the Industrial Development Corporation of South Africa (IDC) for the high-quality Mothae kimberlite diamond mine in Lesotho.
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.
The Lesotho Minister of Mining, the Honourable Keketso Sello, said he was delighted the IDC was supporting the development of Lesotho’s newest diamond mine, which would bring considerable economic benefits to the country.
“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,” said Hon Sello.
“We look forward to the new Mothae mine coming into production very soon as the next step in the continued growth of Lesotho’s diamond mining industry.”
The financing agreement with IDC comes as the commissioning phase commences at the 1.1Mtpa Mothae diamond plant, with first commercial diamond recoveries scheduled for early November 2018.
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. 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 loan is secured through notarial bonds against assets of Mothae, its mining right and a proportionate guarantee from Lucapa in line with its 70% ownership. Following approval by GoL and Lucapa as shareholders, Mothae and the IDC are working to finalise the loan and respective security agreements in the next few weeks.
The IDC facility will considerably strengthen Mothae’s cash position, which, subject to the IDC loan covenants being met, will also enable repayments of shareholder loans from Mothae to Lucapa.
Source: Company Press Release