Photo by: Bloomberg
TORONTO (miningweekly.com) – Aim-listed precious gem explorer Paragon Diamonds will buy Botswana-focused Lurara Diamond Corp’s Mothae diamond project, in Lesotho, for $8.5-million in cash.
The two companies on Monday announced that they had entered into a memorandum of understanding that would see Lucara sell, subject to Lesotho-government approval, its 75% stake in the exploration project.
Lucara, which was listed on the TSX and the Botswana Stock Exchange, in December announced that it would sell its Mothae project, where the company had completed a trial mining programme.
Paragon would acquire Lucara's Lesotho-based subsidiary, which owned its interest in the Mothae project, including all assets such as the plant and equipment, liabilities and the company's rehabilitation obligations. Paragon had agreed that it would employ all of the current Mothae employees.
Paragon planned to polish and sell a selection of diamonds recovered from the Mothae asset, of which Lucara would get 5% of the profits. Such payments would continue while Paragon processed no less than 6.75-million tonnes of ore.
Lucara would also receive 5% of the profits from the sale of rough diamonds not selected for polishing, as well as from the continued ore processing capped at 6.75-million tonnes.
"We are pleased to announce that we have agreed terms with Paragon on the sale of Mothae. The transaction returns cash to Lucara and allows us to participate in future sales of diamonds from Mothae. We are working with the government of Lesotho and Paragon to finalise the transaction and to transition ownership of the Mothae project to Paragon in an efficient manner,” Lucara president and CEO William Lamb said.
While Lucara was focused on its flagship Karowe mine, in Botswana, which had a penchant for producing large exceptional stones, Paragon was focused on starting Stage 1 production during the current quarter at its flagship Lemphane kimberlite pipe project, also in Lesotho.
Paragon billed the Lemphane project as having an “excellent address”, being located close to African Gem Diamonds’ world-class Letšeng pipe, which was Lesotho’s largest with 64.7-million tonnes of kimberlite. Lemphane was located among a cluster of kimberlites known for producing exceptionally large, high-value diamonds.