• Lucara secures full financing for Karowe Underground Expansion Project
  • Amended facilities agreement ensures the successful execution of financing
  • Lucara's largest shareholder provides additional support for the project

Harare - Lucara Diamond Corp. (TSX: LUC, BSE: LUC, Nasdaq Stockholm: LUC) recently announced that it has successfully executed an amended facilities agreement, ensuring full financing for its Karowe Underground Expansion Project. The company has signed amended documentation relating to its senior secured project financing debt package, which amounts to US$220 million.

Under the amended agreement, the repayment profile has been extended to align with the rebase schedule released on July 17, 2023. While the total amount of the facilities remains unchanged, Lucara intends to finance the Karowe underground expansion (UGP) using funds from the Project Loan, along with projected excess cash flow from the Karowe open pit mine operations and stockpiles processed during the underground construction period.

Lucara Botswana Proprietary Limited (Lucara Botswana) will continue as the borrower, with a syndicate of international financial institutions, including African Export-Import Bank (Afreximbank), Africa Finance Corp., ING, Natixis, and Societe Generale, London Branch, remaining as parties to the facilities. Afreximbank will act as the Facility Agent.

The debt package consists of two facilities. The first is a project finance facility, increased from $170 million to $190 million, specifically designated to fund the development of the UGP at the Karowe Mine. The second is a senior secured working capital facility, reduced from $50 million to $30 million, which will support ongoing operations.

To date, Lucara has drawn $125 million from the Project Loan and $15 million from the Working Capital Facility. The remaining balance in the cost overrun reserve account is $33.6 million. All monetary figures are denominated in U.S. Dollars unless otherwise specified.

William Lamb, President and CEO of Lucara Diamond Corp., expressed his satisfaction with the amended facilities agreement, stating that it represents a significant milestone in the company's transformation. Lamb emphasized the exceptional quality of the Karowe asset and highlighted the adjusted repayment schedule, which aligns with the expected cash flow from the underground production profile. He further confirmed that the project is fully funded, thanks to the solid financial backing from the company's largest shareholder, Nemesia S.a.r.l.

To provide additional support for the UGP expansion, Nemesia has agreed to enter into a shareholder guarantee and an amendment to the shareholder standby undertaking, offering up to $63.0 million in aggregate. This support will be utilized if the projected cash flows from Karowe operations, combined with available funds from the Project Loan, prove to be insufficient. In return for the shareholder guarantees, Lucara will issue 1,900,000 common shares to Nemesia, subject to regulatory approvals.

The transaction involving Nemesia is considered a related party transaction and has been unanimously determined by the Board, including independent directors, to be advisable and in the best interests of the company. The transaction is exempt from formal valuation and minority shareholder approval requirements under applicable regulations.

Lucara Diamond Corp., a leading independent producer of high-quality Type IIa diamonds, operates the Karowe Diamond Mine in Botswana. The mine has been in production since 2012 and serves as the focal point of the company's operations and development activities. Lucara's subsidiary, Clara Diamond Solutions Limited Partnership, has developed a secure, digital sales platform that utilizes proprietary analytics, cloud, and blockchain technologies to enhance the diamond supply chain.

Lucara Diamond Corp. operates transparently and adheres to international best practices in sustainability, health and safety, environment, and community relations. The company has adopted the IFC Performance Standards and the World Bank Group's Environmental, Health and Safety Guidelines for Mining (2007).

With the successful execution of the amended facilities agreement, Lucara is well-positioned to create substantial value for its shareholders through the Karowe mine's underground expansion project.

- Equity Axis News