Lucara Diamond Corp. will sell Mothae diamond project following the penning of a Memorandum of Understanding (MOU) with Paragon Diamonds Limited to sell interest in the Lesotho based project.

Under the deal, Paragon will be acquiring Lucara’s Lesotho based company, which owns its 75% interest in the Mothae project. This will include all assets; plant and equipment, liabilities and the company’s rehabilitation obligations. Paragon has agreed that it will employ all of the current employees working at Mothae.

According to the owners of the Karowe mine in Botswana, Paragon will pay US$8.5 million in cash upon the closing of the acquisition, with the deal subject to the negotiation of a definitive agreement with Paragon and the approval by Lesotho government.

“We are pleased to announce that we have agreed terms with Paragon on the sale of Mothae. The transaction returns cash to Lucara and allows us to participate in future sales of diamonds from Mothae,” Lucara President and Chief Executive Officer, William Lamb said.

“We are working with the Government of Lesotho and Paragon to finalise the transaction and to transition ownership of the Mothae project to Paragon in an efficient manner,” he added.

Lucara stated that Paragon would polish a selection of diamonds recovered from the Mothae asset while Lucara will receive a payment equal to 5% of the profits achieved from the sale of the polished stones. “These payments will continue for the processing of not less than 6.75 million tonnes of ore.”

The MOU states that Lucara will also receive a payment equal to 5% of the profits achieved from the sale of rough diamonds not selected for polishing. These payments will also continue for the processing of not less than 6.75 million tonnes of ore.

Lucara’s two assets are the Karowe Mine in Botswana and the Mothae Project in Lesotho. The 100% owned Karowe Mine is in production. The 75% owned Mothae Project has completed its trial mining program.