The sale is subject to approval by the Government of Lesotho.
The terms outlined in the MoU state that Paragon will pay Lucara US$8.5 million in cash upon the closing of the acquisition. The transaction is subject to the negotiation of a definitive agreement with Paragon.
The acquisition includes all plant and equipment assets, liabilities and the company's rehabilitation obligations. Paragon has agreed that it will employ all of the current employees working at Mothae. The 75% owned Mothae project to date has completed a trial mining programme.
Paragon plans to polish a selection of diamonds recovered from the Mothae asset. 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 Mt of ore.
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 Mt of ore.
William Lamb, President and CEO, comments, "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. We are working with the Government of Lesotho and Paragon to finalize the transaction and to transition ownership of the Mothae project to Paragon in an efficient manner."
Post the acquisition, Lucara will be entirely focused on diamond mining and new project development. Its primary asset is the Karowe mine in Botswana. The 100% owned Karowe Mine is in production.