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The Lesotho government has approved the purchase of the Letseng diamond mine by Clifford Elphick’s Gem Diamond Mining Company of South Africa, effective July 1, 2006. The purchase was approved, contingent upon the government receiving an additional 6 percent stake in Letseng, raising its stake from 24 to 30 percent.
The state did hold 24 percent of the mine until Gem Diamond's purchase of 76 percent for $127.9 million (R879.5 million) from JCI and Matodzi. Gem Diamond agreed to transfer 3 percent to the government free of charge and will advance a loan of $5.5 million (R37.5 million) loan to the Lesotho government to purchase an additional 3 percent.
Lesotho
's minister of natural resources, Mamphono Khaketla, and Gem's CEO, Elphick, welcomed the transaction in a joint statement. Khaketla said Lesotho looked forward to working with Gem Diamonds and praised the company for its technical skills and expertise. Elphick said that Gem looked forward to cooperating with the government in developing the mine further.
"The Letseng mine's management views Gem Diamonds' acquisition as particularly synergistic. As a young and dynamic mining company only in our third year of operations, we are very excited at the prospect of having new owners who are diamond focused and who can substantially supplement our technical base," said Letseng Diamonds CEO Keith Whitelock.
"Equally importantly, Gem Diamonds will ensure that finances are available to fast track the double up of the mine's production. As an Africa-wide operator, we are confident that Gem Diamonds will establish sound relations with their partners in Letseng Diamonds, the Lesotho government," he said.
On July 28, both JCI and Matodzi Resources confirmed in a statement that the boards of both companies had granted approval for the transaction, which was signed in June.
"JCI and Matodzi shareholder approval is now required for the finalisation of the transaction," Gem Diamonds added. Speaking to Mining Weekly in the week of July 24th, Elphick said that the securing of shareholder approval was a formality given that the transaction had already received support from more than 60 percent of JCI's shareholders and 80 percent of Matodzi's shareholders.
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