Mothae Diamonds, which is owned 75% indirectly by Lucara through Mothae Diamonds Holdings Inc. and 25% by the Lesotho Government, holds a 100% interest in the Mothae Project. Mothae Diamonds Holdings Inc. is operator of the Mothae Project and is currently funding 100% of project costs. 12.5% of such costs (or 50% of the Lesotho Government's interest in the Mothae Project) will be reimbursed by the Lesotho Government only from its share of dividends declared and paid by Mothae Diamonds and the remaining 12.5% interest is a free carried interest. During an initial pre-production test mining stage a royalty of 4% of the sales value of diamonds produced from the Mothae Project will be payable to the Lesotho Government. At full production, the royalty will increase to 8% of diamond sales value. The Mothae Project is comprised of a mining lease that is valid until September 2019 and renewable for a further period of ten years. The Mothae Project is subject to the Lesotho mining code as promulgated in the Mines and Minerals Act (Act No 4 of 2005).
The Mothae Project is located in the Maluti Mountains of Lesotho, approximately 150km northeast of Maseru the capital of Lesotho. The Mothae mining lease covers an area of 20.0 km².
The information in this section which is of a scientific or technical nature has been derived in part from the technical report entitled "Mothae Kimberlite Project, Lesotho, Independent Technical Report" dated February 12, 2007 prepared by Dr. Norman Lock (BSc, PhD, CGeol FGS, MGSSA, PrSciNat) of MSA Geoservices (Pty) Ltd., who is a "qualified person" within the meaning of this term in National Instrument 43-101. A copy of the report is available on SEDAR at www.sedar.com.