Canadian diamond exploration and mining company, Lucara Diamond Corp says it expects to continue to develop its Karowe mine underground expansion, following the signing of amended documentation concerning a senior secured project financing debt package of US$220 million, which was executed in July 2021.
The debt package consists of two facilities, a project finance facility of $190 million (previously $170 million) to fund the development of the underground expansion at the Karowe Mine, and a $30 million (previously $50 million) senior secured working capital facility, which is used to support ongoing operations. Lucara says it has drawn $125 million from the project loan and $15 million from the working capital facility.
“Lucara expects to continue to develop the Karowe underground expansion (the UGP) using funds from the project loan, combined with projected excess cash flow from Karowe open pit mine operations and stockpiles processed during the underground construction period. Parties to the facilities remain Lucara Botswana as the Borrower and a syndicate of five international financial institutions: African Export-Import Bank (Afreximbank), Africa Finance Corp., ING, Natixis, and Societe Generale, London Branch. Afreximbank acts as a Facility Agent in connection with the facilities,” the company said.
President and CEO of Lucara, William Lamb, noted that signing the amended facilities agreement for the Karowe mine’s underground development project marks a significant step in the company’s transformation.
“The adjusting repayment schedule aligns with the expected cash flow from the underground production profile, where we are set to process the most valuable ore from the underground expansion in the first three years of operations. With the solid financial backing from our largest shareholder, who has provided interim funding and guarantees, we can confirm that the underground expansion project is fully funded. Our dedicated team, combined with the support of our strategic shareholder, positions us to create substantial value for our shareholders through the Karowe mine’s underground development project,” he said.
Some of the key terms of the project loan include up to $190 million provided to fund the development, construction costs and construction phase operating costs of the UGP as well as financing costs in relation to the facilities. The loan will have an eight-year maturity term to June 30, 2031, with quarterly repayments commencing September 30, 2028.
Lucara is a leading independent producer of large exceptional quality Type IIa diamonds from its 100 percent-owned Karowe Diamond Mine. The mine has been in production since 2012 and is the focus of the company’s operations and development activities.