MASERU — Kopane Diamond Developments has announced it is involved in merger talks with a United Kingdom-based company, Firestone Diamonds.
Kopane holds a 75 percent stake in Liqhobong Mine with the government of Lesotho controlling the remaining 25 percent.
Liqhobong Mine is in Mokhotlong district, about 120 kilometres north-east of Maseru.
It is one of the largest mining leases in the country covering 390 hectares.
The plant has a capacity to process 420 000 tonnes per year.
“The Kopane board believes the value that the offer from Firestone places on Kopane is fair in current market conditions and that the share offer will give Kopane shareholders the opportunity of benefiting from the attractive growth profile,” Kopane chairman Frank Scolaro said in a statement.
Liqhobong Mine mothballed operations in 2008 in the wake of falling diamond prices on the world market.
The company had however appeared to have struggled to raise finance to resume operations after diamond prices began picking up again.
Firestone Diamonds has operations in Botswana and South Africa.
The enlarged mining firm is expecting significant potential future cash flows from the exploitation of the substantial resource that has been identified at the main pipe at Kopane’s Liqhobong project.
Liqhobong is believed to be one of the largest undeveloped kimberlites in the world in terms of resource capacity and in tonnage.
Liqhobong Mine is believed “to be the third largest undeveloped kimberlite resource as measured by contained carats and the fourth largest as measured by resource tonnage”.
The statement said Firestone Diamonds directors consider the Liqhobong mine to be one of the most attractive undeveloped kimberlites in the world.
Preliminary resource grade studies carried out at the mine last year indicated that the Liqhobong kimberlite contains a total resource of 90.09 million tonnes with an estimated gross diamond reserve of 29.7 million carats.
Based on the 2008 bulk sample the carat capacity of the mine is estimated at US$2.6 billion (M19.34 billion).
Lesotho’s mining sector contributes about seven percent to the country’s gross domestic product.