Absa loans $82.4 to Firestone

Boitshepo Majube | Thursday November 28, 2013 16:37

The loan is meant to finance the operations of Liqhobong Mining Development Company (Pty) Limited (LMDC).

LMDC is owned 75% by Firestone and 25% by the government of Lesotho. The company owns 100% of the Liqhobong Diamond Mine in the Lesotho highlands. 

Firestone has said the initial infrastructure and capital costs for the mine are estimated to be approximately $185.4 million. The loan will support the development of the Main Treatment Plant (MTP) at Liqhobong. “The facility will have a total term of 6.5 years, with an 18 month draw down period for construction and with the repayment of capital occurring in the final 4.5 years of the loan term,” Firestone stated.

It said the it is required to fund its contribution to the project - the balance required for completion prior to first draw down of the facility. 

The company says the loan is conditional on: approval of both commercial and political risk insurance by an Export Credit Agency; and Firestone successfully raising the balance of capital required to complete the project. The customary conditions standard for facilities of this nature include completion of legal and environmental due diligences, documentation and the signing of material contracts.

Stuart Brown, incoming CEO of Firestone is quoted saying: “Receipt of Absa committee approval to provide LMDC with the facility for the development of the MTP at Liqhobong, is a major step forward on our journey”. In addition, Brown said it marks an independent endorsement of Firestone and the project in what they believe has been one of the most challenging periods that mine funding has encountered in recent years. “The approval underpins the management’s approach and commitment to developing Liqhobong and realising the true value of this asset for our shareholders,” he said.

Recent discoveries has shown that Lesotho is emerging as one of Africa’s significant new diamond producers. The country hosts Gem Diamonds’ Letseng Mine, Liqhobong Mine and as Namakwa Diamonds’ Kao Mine and Mothae development project.