- Money to fund the underground expansion of Karowe
- Karowe’s lifespan extended to 2040
Canadian precious stone miner Lucara Diamond Corporation has secured P2.4 billion ($220 million) to fund underground expansion at its 100 percent owned Karowe Mine in Botswana, Lucara President and Chief Executive Officer (CEO), Eira Thomas, has said.
Lucara is well known for turning up gemstones at Karowe Mine. According to Thomas, a syndicate of five international financial institutions comprising ING Bank N.V, Natixis, the London branch of Société Générale, Africa Finance Corporation and Afreximbank will act as Mandated Lead Arrangers (MLAs)
“The mandating of five leading international financial institutions with strong mining and metals track records and significant experience in Africa for the arrangement of +$200 million senior debt facilities is a significant achievement for Lucara,” she said. “This debt package will supplement cash flows from continued operations of the Karowe open pit over the next five years, extending Karowe’s mine-life out from 2025 until at least 2040.”
Thomas said the project, which is underpinned by strong economics, is expected to pay back in less than three years and contribute more than $4 billion of additional revenues using conservative diamond pricing assumptions. “We are targeting completion of the project financing package by mid-year, with full project sanction thereafter,” Thomas noted.
The Lucara CEO said the interest of top-tier financial institutions further validates Lucara’s reputation as a leading, high margin diamond producer, which has demonstrated resilience throughout the pandemic. “Karowe is highly levered to strengthening diamond prices and is well positioned to take advantage of the current market as we have observed prices recovering to pre-pandemic levels in early 2021,” she stated.
Thomas added that the execution of the mandate is a key milestone in the project financing process for the Karowe underground expansion, which has an estimated capital cost of US$514 million and a five-year development period. “The balance of development capital is expected to come from operating cash flow generated by open pit operations at Karowe during the development period,” she said.
According to a 2019 feasibility study, the stand-alone underground operations at Karowe are expected to generate an average of 392,000 rough cts. annually at an operating cost of $725 per recovered ct. The underground development would target the south lobe kimberlite below the planned pit bottom with access through a 765-metre production shaft.
Thomas noted that the MLAs have commenced detailed due diligence on all aspects of the financing and that Lucara continues to work with them to conclude the due diligence process in the near-term.