NG Bank N.V., Natixis, Societe Generale (London Branch), Africa Finance Corporation and Afreximbank which will all act as Mandated Lead Arrangers (MLAs) make up the syndicate of project financiers that in March 2021 extended a package of to $220 million (P2.4 billion to Lucara for expansions at Karowe
Canadian precious stone miner, Lucara Diamond Corporation, spent $9.9 million (P107 million) on project execution activities for Karowe Mine underground expansion during first quarter (Q1) of 2021, this publication can reveal.
According to the CEO of the dual listed mining company, Eira Thomas, the underground expansion activities included shaft and geotechnical engineering, surface infrastructure, dewatering and power line engineering and procurement.
“Site construction work commenced early in the quarter and in March the production and ventilation shaft box cuts were drilled and blasted to bulk excavation elevations,” Thomas noted in the company’s 2021 Q1 financial results released recently. “A significant amount of time and effort was also spent on due diligence related to technical, environment and social matters as part of ongoing project financing efforts.”
The CEO stated that the 2021 Q1 figure of 107 million follows the $18.7 million (P202 million) that was spent on project execution activities in 2020, including site earthworks, geotechnical test pitting and drilling, power line engineering, and works on the shaft design and engineering.
“In Q4 2020, the Government of Botswana approved the proposed power line route and granted a 25-year extension to the Karowe Mine Licence to 2046, sufficient to cover the remaining open-pit life (to 2026) and the expected life of the proposed underground expansion, currently planned to 2040,” Thomas said.
This is the company that in March 2021 secured a project financing package of up to $220 million (P2.4 billion) to fund the underground expansion at Karowe with a syndicate of five international financial institutions, ING Bank N.V., Natixis, Societe Generale (London Branch), Africa Finance Corporation and Afreximbank which will all act as Mandated Lead Arrangers (MLAs). “In May 2021, Lucara received credit approved commitments for a senior secured project financing debt package of up to $220 million from the MLAs,” Thomas noted.
“Closing of the facilities is targeted to be mid-2021, with financing in place for the second half of 2021. The receipt of credit approved commitments is a key milestone in the project financing process for the Karowe underground expansion, which has an estimated capital cost of $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.”
Thomas also noted that Lucara recognised revenue of $53.1 million or $579 per carat in Q1 2021 which was 56 percent higher than Q1 2020. She said in the three months that ended March 31 2021, Lucara recorded net income of $3.4 million (earnings per share of $0.01), as compared to a net loss of $3.2 million for Q1 2020 (loss per share of $0.01). Thomas noted that in 2021 Q1, two diamonds were recovered greater than 300 carats in weight and two other diamonds were recovered greater than 200 carats in weight.
“Lucara has bounced back in the first quarter of the year, demonstrating its resiliency at a time of continued uncertainty in respect of the ongoing COVID-19 pandemic,” she said. “Our solid performance in the first quarter reflects a stronger business environment, Lucara’s continued focus on operational discipline and our innovative approach to sales.”