Mining to spark growth spurt

Rose Moremoholo

BUTHA-BUTHE – TWO Lesotho diamond mines could spark a new phase of economic growth for Lesotho over the next four decades following expansion of the mining projects this year.

Deputy Prime Minister Mothetjoa Metsing last Wednesday described Liqhobong Diamond Mine and Kao Diamond Mine, both in Butha-Buthe district, as potential centres of economic growth.

Kao Mine is in the last phase of completing its expansion project.

Kao’s main kimberlite pipe is the largest in Lesotho and the fourth largest in Southern Africa at 19.8 hectares.

It is situated at an altitude of 2 500m approximately 200km north of Maseru. It lies within a 20km radius of the diamond producing Letšeng and Liqhobong mines.

Resources for the Kao Pipe total 173 million tons (27Mt measured, 63Mt indicated and 83Mt inferred) containing an estimated 12.4 million carats.

Metsing said the expansion and upgrade of the mine is going to increase the life span of the mine and that “is a responsible move by those mining these diamonds”.

“The extension of the life of this mine means the retaining of people working in this mine,” Metsing said during a tour.

Kao Mine has spent at least M250 million for the expansion and M20 million for the upgrade of security.

Metsing said the mine was model of development that has brought pride to the country.

“The mining industry has become something we are able to sell out there. This industry is holding our flag high on the international scene,” Metsing said.

“When we talk of Lesotho people think of big diamonds.”

The production at Kao mine is set to increase from 3 000 tons to 4 000 tons per month when the expansion has been completed.

The total cost invested in the project is M2.1 billion.

Kao is set to become the biggest mine where it shall produce the best diamonds with the best value per carat surpassing that of Letšeng Diamond.

Metsing also visited Liqhobong Mine to assess progress in the building of structures and the mining camp.

Liqhobong is owned 75 percent by a London-based company Firestone Diamonds and 25 percent by the government of Lesotho.

At the end of June this year, Firestone Diamonds announced that the reconstruction of the mine was 85 percent complete, ahead of revised target of 81 percent.

Also 18 percent of the mining plant had been commissioned ahead of target.

The initial production is expected in the early fourth quarter of this year or next month, with full production rates expected to take at least six months.

Firestone also announced that the revised capital budget of M2.1 billion, remains within the original project budget of US$185.4 million (approximately M2.5 billion).

The cash on hand at the end of June 2016 was US$10.7 million (M149.4 million) and the company also had US$39.0 million (M544.8 million) available pursuant to the ABSA debt facility, resulting in forecast headroom available to the company of approximately US$9.0 million (M125.7 million) as at the end of December 2016.

This does not include the US$15.0 million (M209.5 million) standby facility available to the company.

The company also announced the production guidance for the financial year ending June 2017 between 1.8 – 2.0 million tonnes (“Mt”).

The company says the first diamond sales are expected in January next year.

Currently the company’s total workforce at Liqhobong stands at 779, which includes both employees and contractors.

The operational staffing of the mine is progressing well with all senior positions filled and the remaining required positions to be completed prior to the start of production.

In May 2016 the company received approval for the updated Environmental Management Plan and the revised standards and targets have been implemented.

The company says following the successful construction progress achieved in the second quarter of 2016, Liqhobong is expected to commence initial production in early fourth quarter.

It says once initial production has started, Firestone anticipates that the ramp up process to full nameplate capacity, being 3.6 million tonnes per annum or 500 tonnes per hour to recover up to 1 million carats per annum, will take at least six months.

The company expects to treat between 1.8 and 2.0 Metric tonnes of ore during the financial year ending June 2017.

Within this period, it is estimated that between 380 000 and 450 000 carats will be produced at Liqhobong.

Firestone has scheduled its first diamond sale for January 2017, in Antwerp, Belgium.

Thereafter the company will aim to host two sales per quarter.

“This will shift our country from where we are at number nine in the world to at least number seven. We will be taken as serious diamond operators by the world and that is exactly the space we want to play in,” Metsing said.

Speaking during the tour, Mining Minister Lebohang Thotanyana said the mining industry has significantly contributed to the economic growth of the country where it contributed 10 percent to the GDP.

“For most of us who live in Maseru, it is hard to understand where this contribution comes from, hence the tour. Kao had to go through expansion so that it has a longer life span,” Thotanyana said.

The CEO of Liqhobong, Stuart Brown, said they have a strong belief that Lesotho through Liqhobong mine will be the top mining country in the world in the near future.

Thotanyana said Lesotho has been lauded for being the first country to adopt a mining policy. The policy was successfully launched earlier this year.

“This policy sets plans and objectives of mining in the country and this shall increase the level of investment in the sector.”

Metsing said Liqhobong is the biggest investment project in the country where M5 billion has been injected in the mine for a five-year project.

“We are hoping to open more mines to answer to the unemployment (crisis) in the country and to become the best economic enabler of this country,” Metsing said.