Lesotho Mining RAAA

Letšeng Diamonds (Pty) Limited (“Letseng”), one of the diamond mining companies operating in Lesotho, is jointly owned by Gem Diamonds (a UK incorporated company) which owns 70% and the Government of Lesotho (“GoL”), which holds 30 %. In 1999, the GoL granted Letseng a 25-year mining lease which is set to expire in 2024. In February 2018, the Government of Lesotho (“GoL”) through its Ministry of Mining (“MoM”) received a letter from Letseng requesting the renewal of its mining lease six years before its expiration, accompanied by a draft mining lease renewal agreement. According to the draft renewal agreement, Letseng would be granted a new lease for a period of ten years, subject to an exclusive option to renew the lease for a further ten years. Letseng has made subsequent requests for the GoL to expedite the signature of this “renewal agreement”. Due to the urgency of this matter, the ALSF commenced its support to Lesotho via a Rapid Assessment and Assistance Allocation in October 2018 (“RAAA”). The RAAA required the appointed legal counsel (ENS Africa) to conduct a review of the current Letseng mining lease and other relevant documents and provide a legal opinion on the documents. The initial legal opinion was provided in December 2018. Based on the support of ALSF and the legal counsel, the GoL was prevented from renewing Letseng’s mining lease based on unfair terms contained in the draft mining lease renewal agreement, which would have been detrimental to the economy of the Kingdom of Lesotho.