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Lesotho Renews Letšeng Lease

Rate that Gem Diamonds must pay government increases to 10% of sales.
Oct 6, 2019 7:29 AM   By Rapaport News
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RAPAPORT... Gem Diamonds has obtained a 10-year lease to continue mining at the lucrative Letšeng deposit in Lesotho, but will have to pay a larger proportion of its sales proceeds to the government.

The southern African kingdom has also given the miner an exclusive right to renew the lease for an additional decade, the company said in a statement Friday. Gem Diamonds must pay 10% of diamond sales to the government, an increase from the previous rate of 8%, though the government may waive part or all of the royalty if the company makes a large investment in the mine.

The government also increased the number of work permits the company can obtain to recruit foreign workers if it needs to fill skills gaps at the site.

“The mining-lease renewal will allow the mine to continue to make a very significant economic and social contribution to the people of Lesotho,” said Gem Diamonds CEO Clifford Elphick.

Letšeng is famous for its large, high-value rough. Last year, it yielded its biggest stone to date, the 910-carat, D-color Lesotho Legend, which Gem Diamonds later sold for $40 million.

Gem Diamonds owns 70% of the mine, with the government holding the remaining 30%. Production from the deposit totaled 126,875 carats in 2018, while the average selling price came to $2,131 per carat — the highest for any kimberlite diamond producer in the world, according to the company.

Image: Rough diamonds from the Letšeng mine. (Gem Diamonds)
Tags: Clifford Elphick, Gem Diamonds, Government, Lesotho, Letšeng, mines, Mines and Minerals Act, mining, Rapaport News
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