RAPAPORT... Sierra Leone raised its tax on high-value diamond exports from 6.5 percent to 15 percent, Reuters reported. The tax hike applies to stones valued at more than $500,000 and went into effect on December 28, 2009.
In addition, the country’s Parliament recently passed a new minerals law to boost revenues. Under the new law, which still needed to be signed by the president at press time, diamond royalties would rise from 5 percent to 6.5 percent and gold royalties would increase from 4 percent to 5 percent, according to The Wall Street Journal.
Lazare Kaplan Disputes Credit Facility Termination
Antwerp Diamond Bank (ADB) notified Lazare Kaplan Belgium NV, a subsidiary of Lazare Kaplan International (LKI), that it was terminating a credit facility originally granted on February 20, 2008 in the amount of $45 million, effective March 1, 2010. The bank notified LKI that the outstanding principal balance of $43 million was due and payable under the agreement, along with accrued and unpaid interest, costs, charges and fees. LKI, however, disputed the bank’s claim that the credit agreement gives it the right to terminate the facility.
A second $25 million facility, originally granted on February 19, 2008, will also be terminated, effective January 28, 2010. As of December 29, 2009, no amounts were outstanding.
Meanwhile, on January 2, “certain insurers and underwriters” agreed to provide LKI an interim payment of $28 million, pursuant to claims made by the company under insurance policies, as well as its “sue and labor” costs and expenses, the company stated. As part of the agreement, the underwriters committed to reaching a decision by May 3 regarding whether the company’s claims are covered under its insurance policies.
LKI also requested that its current New York Stock Exchange (NYSE) delisting deadline be extended to May 31, 2010. At press time, the NYSE was reviewing this request. The NYSE notified LKI on September 16, 2009 that it had fallen out of compliance for failing to file its annual report on Form 10-K for the fiscal year that ended on May 31, 2009.
In a statement to the U.S. Securities and Exchange Commission (SEC), LKI reported that it expects a year-over-year sales decline of 44 percent to an estimated $23 million for its second fiscal quarter, which ended on November 30, 2009. LKI also predicted that its net sales for the first half of 2009 would be found to have declined by 19 percent to an estimated $41.3 million.
In other company news, the Israel Diamond Exchange (IDE) reported that Maurice Tempelsman, LKI’s chairman, met with Avi Paz, IDE’s president, to discuss LKI’s plans to move a significant portion of its polishing business to Ramat Gan.
IDB Postpones Start-Up
Major participants in the new International Diamond Board (IDB) have postponed its start-up phase, pending ALROSA’s response to the group’s plans, as well as confirmation of the Russian miner’s participation going forward. The group was formed to institute worldwide generic diamond marketing initiatives for the industry. Despite the delay, IDB intends to continue its incorporation in the U.K. A letter from representatives of BHP Billiton, De Beers and Rio Tinto stated that they expect to hear from ALROSA by the end of October 2010.
Israel Begins KP Chairmanship
Israel assumed the role of Kimberly Process Certification Scheme (KPCS) chair for 2010 on January 1, taking responsibility for the scheme’s implementation and effectiveness, as well as the activities of its working groups. Boaz Hirsch, Israel’s deputy director general for foreign trade, was appointed as the KPCS chairperson.
AML Divests from Sierra Leone Diamond Projects
African Minerals Limited (AML) divested from its diamond operations in Sierra Leone after signing an agreement with Obtala Resources Plc, the company announced. Under the terms of this sale, Obtala will issue 21,170,422 fully paid shares valued at $7 million (GBP 4.3 million), a 9.9 percent stake in the company, to AML. In return, AML will transfer the entire share capital of its subsidiary, Sierra Leone Hard Rock Limited (SLHR), including the company’s mining leases and exploration licenses for the Konoma project, to Obtala.
Article from the Rapaport Magazine - February 2010. To subscribe click here.