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Gem Diamonds pays Botswana and Lesotho

Gem Diamonds has announced a payment of over $18 million to the governments of Lesotho and Botswana for extractive activities which were completed in the financial year ended December 31, 2017.

The payment to Lesotho included taxes of about $229 000 and $17.8 million in royalties whereas the $230 000 payment to Botswana comprised only royalties. On this said figure about $17.1-million was paid to the government of Lesotho, with the balance of $230 000 paid to the Botswana government

Gem Diamonds, a leading producer of high-value diamonds has registered a Net cash position of US $ 48 million compared to US$46.7 million of the previous year. This is an improvement from the fourth Quarter (Q4) of 2017 which accumulated a net cash position of US$1.4 million. US$91.3m cash on hand of which US$66.7m is attributable to Gem DiamondsUS$43.2m of available facilities have been drawn down with US$41.1m worth of undrawn and available facilities


The Group, which has its head office in the United Kingdom and sales, marketing and manufacturing capabilities in Antwerp, owns the Letšeng mine in Lesotho and the Ghaghoo mine in Botswana has also reported an on track business module. It has noted that its initiated business transformation process in 2017 is on track to deliver US$100m o cumulative cash cost saving and productivity improvement over the next four years which will End in 2021.It has been noted that the ongoing identification of opportunities to increase this target. Significant improvement in large diamond recoveries in 2017 and 2018 Q1 2018 achieved average price of US$ 3276 per carat, up 48 percent from US$ 2217 per carat in Q4 2017.

The Letšeng mine is renowned for the regular production of large, top colour, exceptional white diamonds, making it the highest average dollar per carat kimberlite diamond mine in the world. Since Gem Diamonds acquired the mine in 2006, Letšeng has produced over 60 +100 carat, predominantly high value, white diamonds. Amongst these diamonds recovered are the iconic 603 carat Lesotho Promise, the 550 carat Letšeng Star and the 493 carat Letšeng Legacy

Cumulative target of $100 million over 4 years Sustainable annual saving of $30 million by 2022 Implemented initiatives contributing $ 27 million of the $100 million (Sept 2017 –April 2018) Once off $4m Recurring $23m Achieved $ 3.5 million cash saving (Sept 2017 -April 2018) mainly once off.

In 2015, Letšeng produced the 357 carat Letšeng Dynasty and the 314 carat Letšeng Destiny. In addition it is noted that Letšeng has produced high quality pink and blue diamonds, with a rare blue diamond achieving a sales price of US$ 603 047 per carat in 2013 and an exceptional pink diamond achieving $187 700 per carat in 2016. Letšeng

Q1 sales highlights seven gem quality diamonds greater than 100 carats recovered (ten including post period end. The Lesotho Legend, sold on 12 March for US$40 million 16 diamonds sold for more than US$1.0m each, generating revenue of US$70.7m. Gem Diamonds has reported Two tenders held in Q1 2018 a total of 32 412 carats which were sold for US$106.2 million 66.27 carat Type II a. The white diamond achieved the highest price per carat of US$56 028 per carat for the period.

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Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020
Botswana-on-high-alert-as-AML-joins-Covid-19-to-plague-mankind-

This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.

The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.

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Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.

He was speaking in  Parliament on Tuesday delivering  Parliament’s Finance Committee report after assessing a  motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.

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Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.

The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.

The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.

The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.

This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.

Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.

Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.

However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.

Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.

When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.

This  as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.

Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.

The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.

Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.

In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.

Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.

Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.

Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.

Acknowledging the need to draw down from GIA no more, current Minister of Finance   Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”

He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”

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