Lucara plans divesting of its Mothae asset

Diamond producer Lucara Diamond Corp., is considering divesting of its Mothae asset in Lesotho. It is a 75 percent stakeholder in the mine. Its decision to divest comes as the company believes the asset does not meet the company’s disciplined investment criteria for its targeted return on capital and its forecast generation of long term free cash flow potential, despite the asset has been proven to be diamondiferous. Lucara took the decision after extensive financial and economic review and has also considered multiple development options for Mothae.

William Lamb, President and Chief Executive Officer commented on the good opportunity to have ‘evaluated the Mothae asset and develop relations with the Government and people of Lesotho.’ He also noted that following reviews and development work on the Mothae asset, “we do not believe that sufficient shareholder value can be gained through the expenditure of current cash reserves on further assessment and development of this project.”

Lucara has received support of the Government of Lesotho towards its approach and also a commitment of support for any potential new owner of the project. The Company intends to report a non-cash impairment of the book value for the Mothae asset in its year-end accounts. Current book value and estimated rehabilitation provision costs total approximately $21 million.

William Lamb further added that, “The company will continue to focus on its Botswana production and exploration assets while assessing other value accretive opportunities. The company believes that this operational and investment strategy, along with our current dividend policy, will continue to deliver maximum return to our shareholders." The company owns the Karowe Mine in Botswana.