Unearthing Letseng's Promise

Published Oct 20, 2006

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Three of anything, to most journalists, makes a trend. So when Letseng Diamond Mine confidently pronounces that it will continue to produce breathtaking white stones after releasing the third one recently, it is clear that a trend has been set.

Since this mine was discovered in 1959, three unusually big gemstones have been recovered from Letseng La Terai, as the mine is known in Lesotho. The name means "at the wetlands, where we turn". It was given this name by Basotho who were travelling between Tlokweng and Qwaqwa.

First, there was a 601-carat diamond recovered by artisanal miners in 1967. Then there was a 215-carat stone recovered in 2005. And then there was the 603-carat beauty recovered earlier this month.

To reinforce the belief that the recovery of huge white diamonds will continue, a new plant is being constructed at Letseng.

As soon as this is completed, mining will start on the old pit that has not been used since De Beers stopped mining in Letseng in 1982.

Letseng Mine is Lesotho's sole source of gems and at more than 3 200m it is the world's highest diamond mine. It is situated on the bare hills of the Lesotho Highlands and mined by De Beers between 1977 and 1982.

De Beers abandoned the mine after the Lesotho government wanted to introduce a 15 percent tax on all exported diamonds. But De Beers wanted this tax to be postponed. However, the prime minister, Lebua Jonathan, stuck to his guns and De Beers deserted Lesotho.

The new plant will be operational in early 2008 after commissioning in December next year. Gem Diamond Mining Africa will spend R300 million on the expansion. This money will be spent on machinery, infrastructure and labour.

Letseng Diamonds operates the mine, which is jointly owned by Gem Diamond Mining Company of Africa and the Lesotho government. Letseng Diamonds is a Lesotho-registered company that holds the mining rights and operational assets of the mine.

Gem Diamonds owns 76 percent of Letseng and the government of Lesotho owns the remaining 24 percent. Gem Diamonds is a start-up diamond mining firm that began operations in July last year.

The expansion of the mine and the expected recovery of bigger gemstones is expected to make lots of money for the shareholders.

Moruti Mphatsoe, Letseng Diamonds' general manager, is so confident about the prospects of the mine, which has a lifespan estimated at 30 years.

Says Mphatsoe: "The future of this mine is very great. And the recovery of the 603-carat white diamond was not unexpected. There is also the possibility we can recover a 1 000-carat on this mine."

The 603-carat stone, said to be the world's fifteenth-largest rough diamond, was recovered early this month in Letseng mine. The golf ball-sized gem was bought for $12.4 million (R94.3 million).

The diamond was named the Lesotho Promise. Lesotho's natural resource minister, Mamphono Khaketla, says the stone is named so because Letseng, situated on the Lesotho Highlands, was promising more of the same and better in the future.

The minister is echoing the feelings of entire Letseng Mine management.

The largest diamond found, the size of a bowling ball at 3 106 carats in the rough, was mined at Cullinan outside Pretoria.

The stone produced the 530-carat Star of Africa, the second-largest cut diamond in the world, which adorns the sceptre of Britain's Crown Jewels.

Clifford Elphick, the executive chairman of Gem Diamond Mining Africa, says: "The recovery of the Lesotho Promise was a significant historic event for us. However, there is no reason why Letseng Diamond Mine should not produce such stones in the future. In fact, we are expecting it to do so."

The bullishness of those involved in the operation means that Gem Diamond Mining Africa's bottom line would be impressive in the future. Gem Diamond is a closely held South African mining company and its results may not be made public.

John Houghton, the operations manager at Letseng mine, referring to the JSE-listed Matodzi Resources, the previous owners of the 76 percent stake in Letseng mine, says the mine has been doing well since the operation came under new owners in 2004.

"The whole operation is encouraging. The discovery of the Lesotho Promise was a big step from what we have recovered since reopening the mine. We knew that something big was going to come our way," says Houghton.

He says there are hardly slow days at the mine. Although they do not produce big gem stones every week or every month, they are able to produce a reasonable number of carats every day. The mine does not produce large quantities of diamonds everyday. But whatever is produced, it is of high quality.

That is probably the reason the mine's diamonds are the most sought after in the world.

But the living conditions of the people of Letseng Village next to the mine could become a blight on the promising operation.

This is a small village and some of the its residents are employed on the mine. But these people live in squalid conditions with no proper housing.

The elders of this community used to mine illegally at Letseng decades ago. Though these people have been living there for decades, the mining firm believes they cannot claim ownership of the mine. Because the mine is still young, it is hoped that it will also benefit the communities around it when the profits begin to flow in.

Apart from this there are other challenges facing the Letseng mine. Houghton says world economics can affect the diamond market like it did shortly before De Beers left Lesotho.

He says that the quality of diamonds can also decline as the digging gets deeper.

Now that the quality of the mine's diamonds is known all over the world, managers at Letseng think the operation will soon or may have already attracted attention from dangerous quarters from all over the world.

Mphatsoe says the mine does not want the media to point out any individual as the one who recovered the the 603-carat diamond.

"This was a team effort. No single person actually recovered this. Singling out people is not right at all. Big time diamond syndicates from all over the world will be watching us closely now. There were about 60 people involved in the recovery of this diamond. Singling out a person puts unnecessary pressure on them," says the general manager.

Bofihla Makhalane, the head of security, echoed these sentiments, saying the operation has received threats from diamond syndicates in the past. "In August this year, SA Police Service received a tipoff that there were armed bandits headed for Letseng. The police, with the help of the Lesotho Mounted Police acted swiftly and arrested the people.

"I personally think the fact that we are a bit remote can deter many criminals from coming and attacking us … because we are now known all over the world. I think we are well covered. We share intelligence with respected police agencies," says Makhalane.

The mine is also protected by the Lesotho army and police.

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