Thursday, April 18, 2024

Lucara’s week of good news

It has been a great week for diamond miner Lucara Corp which operates the gem churning Karowe mine in Botswana, raising millions from investors and delighting the world with another rare find.

On Monday, the Canadian company announced that it has signed loan documentation in relation to its previously announced senior secured project financing debt package of $220 million (P2.3 billion) through a syndicate of five mandated lead arrangers (“MLAs”). The MLAs are: African Export-Import Bank (Afreximbank), Africa Finance Corp., ING, Natixis, and Societe Generale, London Branch.

The funds will be made available to Lucara by way of a senior secured term loan facility in the principal amount of up to $170 million, termed ‘project facility’ and a senior secured revolving credit facility in the principal amount of up to $50 million.

The proceeds will be used to expand the prolific Karowe mine, with plans to turn the open pit mine into an underground operation over the first year of a five-year period. The underground project has an estimated capital cost of $534 million (P5.4 billion) over the five-year construction period.

Lucara’s 2021 budget for the underground project contemplates approximately $100 million (P1 billion) of capital expenditures and an additional $20 million (P200 million) of contingency funds. The company says it will fund this through $34 million(P340 million) drawn down from the loans and $30 million (P300 million) from selling shares to investors, and with the remaining balance coming from cash flow from operations.

“Lucara is excited to be moving forward with a fully financed underground expansion project, extending Karowe’s mine life to at least 2040 and projected to deliver at least $4 billion (P4 billion) in additional revenues using conservative diamond price assumptions,” said Eira Thomas, President and CEO at Lucara.

“Securing credit commitments for the arrangement of $220 million (P2.3 billion) senior debt facilities from five leading international financial institutions, with significant mining and metals track records and experience in Africa, is an important achievement for Lucara and reflects confidence in the large-stone resource at Karowe and the considerable efforts undertaken over the last five years to scope and define this attractive, highly economic growth opportunity for the company, ” she said.

On Thursday Lucara also disclosed that it has closed its previously announced share offering to investors, raising gross proceeds of approximately $32.6 million (P330 million), raising more than the company initially anticipated.

Besides the successful fund-raising exercises, Lucara dazzled the world with a recovery of a 62.7 carat fancy pink diamond from the Karowe mine. The diamond has been given the name “Boitumelo” meaning “Joy” in Setswana. The diamond has been described as a high-quality, fancy pink, Type IIa gem. A 22.21 carat fancy pink gem of similar quality was also recovered during the same production period along with two additional pink gems of similar colour and purity weighing 11.17, and 5.05 carats.

The company said the 62.7 carat Boitumelo diamond represents the largest fancy pink gem to be recovered in Botswana and one of the world’s largest rough pink diamonds on record.

“Lucara is delighted to announce another historic diamond with the recovery of the Boitumelo, and very pleased to demonstrate the continued potential for large, coloured diamonds from the South Lobe production,” said Thomas.

“These remarkable pink diamonds join a collection of significant diamond recoveries in 2021 produced from the south lobe which forms a key economic driver for the proposed underground mine.”

Karowe mine, commissioned in July 2012, has been responsible for more than 63 diamonds in excess of 200 carats which have been recovered, including 13 diamonds larger than 300 carats in size. The historic recoveries include the 549 carat Sethunya, 998 carat, 1758 carat Sewelô, the 1109 carat Lesedi La Rona, the 342 carat Queen of the Kalahari, and most recently a 1,174-carat diamond discovered on June 23, considered the world’s third largest diamond behind the Sewelô diamond.


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