Lucara Diamond mulls divesting from Mothae asset

Lucara blue diamondLucara Diamond Corp. said it plans to divest its Mothae asset following an extensive financial and economic review. According to the company, it has considered multiple development options for the asset and revealed that while the resource has been proven to be diamondiferous, Mothae 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.

“As a result the Company has decided to enter into a process of divestiture of the asset.

Discussions have been held with the Government of Lesotho and they are supportive of the Company’s approach and have committed to provide 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.

President and Chief Executive Officer of Lucara Diamond, William Lamb, said the company has been very fortunate to have the opportunity to evaluate the Mothae asset and develop relations with the Government and people of Lesotho.

“Based on our development strategy and the extensive work conducted on understanding the economics of 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,” he said.

“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.”

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