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Africa-focused Gem Diamonds (LON:GEMD) said Thursday that it has sold its mothballed Ghaghoo mine in Botswana to local company Pro Civil for $5.4 million.
Gem Diamonds acquired the mine from De Beers in 2007, hoping it would help it diversify its portfolio away from Lesotho, where its only asset — the prolific Letšeng mine — is located.
Instead, and after spending more than $85 million developing an underground mine, the company ended up having to write off $170 million in March 2017 against the asset, which it had placed on care and maintenance the month before.
Gem Diamonds acquired the mine from De Beers in 2007, hoping it would help it diversify its portfolio away from Lesotho
The London-listed diamond producer intended to resume operations once market conditions improved, but it later decided to offload the operation.
“This sale is in line with our strategic objective to dispose of non-core assets,” chief executive Clifford Elphick said in a statement.
Proceeds from the Ghaghoo sale, expected to close in the third quarter, will be used for general corporate purposes, said Gem Diamonds.
Pro Civil will assume the environmental liability currently associated with Gem Diamonds. “The Government of Botswana has been consulted throughout the process and is fully conversant with the relevant details of the transaction,” the company noted.
Ghaghoo is not Gem Diamonds’ only failed attempt to extend operations beyond Lesotho. In 2008, the company shut down the Cempaka alluvial mine in Indonesia. Four years later, it had to sell its Ellendale mine in Australia, a source of rare yellow diamonds, for $15 million.
Since acquiring Letšeng in 2006, Gem Diamonds has found five of the 20 largest white gem quality diamonds ever recovered, which makes the mine the world’s highest dollar per carat kimberlite diamond operation.
At an average elevation of 3,100 metres (10,000 feet) above sea level, Letšeng is also one of the world’s highest diamond mines.
