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Mothae mine operator skips paying dividends

Business

Bereng Mpaki

Mothae diamond mine’s majority shareholder, Lucapa Diamond Mining Company, has not declared or paid dividends to its shareholders for the financial year ended December 31, 2023.

Like several diamond mining companies operating in Lesotho, the government of Lesotho holds a 30 percent minority stake in Mothae Diamonds (PTY) LTD.  

“No dividends were paid or declared by the Company during the current or prior financial year,” reads parts of Lucapa’s financial report for the year ended December 31, 2023.

The no dividends announcement by Lucapa comes on the back of running a US$17.2 million (about M326 million) loss after tax for the year in review, which was preceded by another loss the year before.

“The Group reported a loss after tax of US$17.2 million for the year (2022: US$15.1 million) after recognising a non-cash impairment charge of US$13.4 million in respect of Mothae’s Property Plant and Equipment (“Mothae’s PPE”) and a US$3.5 million unrealized foreign exchange loss on the intergroup loan from Lucapa to Mothae due to the weakening of the South African rand against the United States dollar,” Lucapa’s report continues.  

The report indicated, however, that Mothae mine recorded earnings before tax of US$2.9 million (about M55 million) during 2023.

“Mothae recorded an EBITDA of US$2.9 million for 2023 (2022: a loss of US$1.1 million) due to an improved operational performance during H1 after plant modifications made during the first quarter.”

The report further said in 2023 Mothae achieved records in volumes processed and carats recovered following plant upgrades the year prior.

“However, in the fourth quarter of the year, the quality of the diamonds recovered dropped significantly. There were very few high-quality large Type IIa diamonds recovered, and this challenged the year’s overall performance.”

It is not yet clear whether Mothae Diamonds will declare dividends for the year ended 2023 to its two shareholders, Lucapa and the government of Lesotho.

However, the government through its head Prime Minister Samuel Matekane has previously raised concern about the worrying trend of state-linked enterprises failing to pay dividends.

Upon his assumption of office in October 2022, the premier indicated that he would urgently cause for preparation of a report on all companies in which the government has shares, explaining which companies are paying their due dividends and which are not and why.

The government controls seven state-owned entreprises and holds minority shareholding in 16 other companies, according to the 2019/20 audit report of the consolidated financial statements government of Lesotho.

Of these, only Letšeng Diamonds and the Central Bank of Lesotho (CBL) paid dividends to the government during the 2020/21 financial year based on the 2020/21 audit report.

“In my last year’s report, I expressed my dissatisfaction on the monitoring of dividends receivable by the government. The situation has not improved as out of 15 entities, only two paid dividends totalling M238 million,” said Auditor General Monica Besetsa in her 2020/2021 audit report.

Maluti Mountain Brewery and Standard Lesotho Bank paid M4.97 million and M24.13 million respectively for the 2019/2020 financial year, according to the 2020/21 audit report.

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