Lerala Mine's P81m sale stuck in limbo

Mbongeni Mguni | Friday August 10, 2018 12:35

 

Lerala Mine was auctioned off on May 30, 2018 having closed on May 29, 2017, with the winning bidder offering US$8.1 million (about P81m). Under the conditions of the sale, a portion of the funds should have been paid over within a certain period, before mining rights could be transferred, followed by the balance.

BusinessWeek is informed that a citizen-led consortium with ties to the Tswapong area put in the winning bid, but failed to close the deal due to financing challenges.

Negotiations shifted to the second highest bidder, with a discount on the US$8.1 million initial offer for Lerala.

This week, Lerala Mine’s liquidator, Kopanang Thekiso confirmed that the focus had shifted to the second highest bidder, a UK-firm called DEW, which was in turn battling to obtain local company registration in order to wrap up the deal. It’s taking a bit of time to register the company locally, but we have not made a decision on whether to grant them extensions,” he said on Wednesday. It is understood DEW has already signed an offer to buy Lerala, as creditors push for a finalisation of the transaction, a full year sinc the mine closed.

Lerala’s new owner will have access to five million tonnes of probable reserves at a grade of 31 carats per 100 tonnes and inferred resources of 10.3 million tonnes at a grade of 31 carats per 100 tonnes. Lerala has a troubled history, having shut down in February 2009 and July 2012. Originally opened in 2008 by Australian firm DiamonEx, Lerala battled cycles in the diamond market, being sold to UK junior, Mantle before passing to another Australian firm, Kimberly Diamonds in 2013.

Kimberly squeezed 59,000 carats out of Lerala Mine last year, before closing shop and filing for liquidation last May.

The Tswapong area mine closed on May 29, throwing some 130 workers onto the streets, as its Australian owners cited weak diamond sales and high operating costs, particularly around the need to power the Mine through diesel generators.

The Mine’s closure caused acrimony between government and unionists, with the latter using the issue as a rallying call against alleged unfair labour practices and lack of protection of workers’ rights.