Liqhobong mine owes ABSA M900 million

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Liqhobong mine owes ABSA M900 million
Liqhobong mine owes ABSA M900 million

Africa-Press – Lesotho. Liqhobong Diamond Mine’s quarterly update on operations for the quarter ended June 30, released yesterday reveal the mine has over M900 million in outstanding loan with South Africa’s ABSA bank.
This is after the mine made the first capital repayment to ABSA of US$1.9 million (over M26 million), following an 18-month grace period which came to an end on June 30.
The repayment reduced the outstanding loan to US$65.9 million (M926 million), down from US$67.8 million (M953 million). The mine reported a cash balance of US$26.3 million at the end of Quarter Four.
Liqhobong mine is partly owned by the United Kingdom-based Firestone Diamonds through a 75 percent shareholding with the Lesotho government owning the rest of the shares.

Public Eye
could not immediately establish whether the mine’s debt is guaranteed by the government but precedence shows that government is not shy to assume the debt obligations of its partners if such partners default.

This paper reported last year that an over M600 million loan that was provided by the Development Bank of South Africa to partly finance construction of the Queen ’Mamohato Memorial Hospital “Tsepong” was underwritten by government yet the debt was registered as a private sector contribution.

The Public Accounts Committee (PAC) this year found that Liqhobong mine had not been paying the dividends due to the government since they started mining diamonds in the country.

The mine’s Chief Financial Officer, Grant Ferriman, explained to the PAC that they secured the mining lease in 2014 and they had been engaged in prospecting mining since then till December 2016.

Ferriman said within this period, there was no income realised as there were no diamond sales. In its report, the PAC stated: “The most shocking revelation made by the Chief Accounting Officer was that the company hopes to pay dividends from the year 2027.

” The mining lease that Firestone Diamonds holds is reportedly valid until June 2021, with options to renew it by two additional periods of 10 years.

The project primarily involves the development of an open-pit mine to a depth of 393m and construction of a main treatment plant. The mine is considered the world’s third biggest underdeveloped kimberlite resource, based on the contained carats.
As of September 2015, it was estimated to contain probable reserves of 36.04 million tonnes of ore. Lesotho is one of Africa’s significant new diamond producers, hosting Gem Diamonds’ Letšeng Mine, Firestone’s Liqhobong Mine, Namakwa Diamonds’ Kao Mine and Lucapa’s Mothae Mine.
The quarterly update further shows that in the fourth quarter which ended on June 30, a total of 177 521 carats diamonds were sold with the company realising revenue of US$12.7 (M177. 022) million, at an average value of US$71 (M989.654) per carat.
The mine said this is lower than US$16.8 (M243. 192) million registered in the third quarter. Up to 177 521 carats sold in the fourth quarter is also lower than the 211 368 sold in the third quarter.
“The fourth quarter performance was solid from an operational perspective, helping us achieve our guidance range for all items for FY 2019,” Chief Executive Officer, Paul Bosma said.
Bosma said from a market and pricing perspective, it was a tough financial year, particularly for the smaller, lower value goods and “these conditions are expected to persist for the rest of 2019 and possibly improve during 2020 when global rough supply is expected to reduce”.
He said as reported previously, “the company has actively engaged with its debtholders to ensure it can sustain operations through the current downturn and be well positioned to benefit when the global supply-demand dynamics improve”.

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