Lucara Announces Successful Execution of Amended Facilities Agreement; Karowe Underground Expansion Project Remains Fully Financed
January 9, 2024
PRESS RELEASE
LUCARA ANNOUNCES SUCCESSFUL EXECUTION OF AMENDED FACILITIES AGREEMENT; KAROWE
UNDERGROUND EXPANSION PROJECT REMAINS FULLY FINANCED
VANCOUVER, January 9, 2024 /CNW/ - (LUC – TSX, LUC – BSE, LUC – Nasdaq Stockholm)
Lucara Diamond Corp. (“Lucara” or the “Company”) is pleased to announce that it has signed amended
documentation in relation to the senior secured project financing debt package of US$220 million (the “Facilities”)
executed in July 2021. While the total quantum of the Facilities has not changed, the repayment profile has been
extended in line with the rebase schedule released July 17, 2023 (link). Lucara expects to continue to develop the
Karowe underground expansion (the “UGP”) using funds from the Project Loan (as hereinafter defined), 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 Proprietary Limited (“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 Facility
Agent in connection with the Facilities.
The Company’s debt package consists of two facilities, a project finance facility of $1 90 million (previously $170
million) to fund the development of an UGP at the Karowe Mine (the “Project Loan”), and a $30 million (previously
$50 million) senior secured working capital facility (the “WCF”) which is used to support ongoing operations . The
Company has drawn $125 million from the Project Loan and $ 15 million from the WCF. The balance in the cost
overrun reserve account (the “CO RA") stands at $33.6 million. All currency figures are in U.S. Dollars, unless
otherwise stated.
William Lamb, President and CEO commented: "The recent signing of the amended facilities agreement for the
Karowe mine's underground development project marks a significant step in our company's exciting transformation.
This achievement continues to underscore the exceptional quality of the Karowe asset. 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 sha reholder, 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."
Key terms of the Project Loan:
• 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;
• 8 year maturity, to June 30, 2031, with quarterly repayments commencing on September 30, 2028;
• Interest rate and Margin: LIBOR (or replacement benchmark) plus margin of 6.5% annually from Rebase
Date to the Project Completion, 6.0% annually from Project Completion to June 30, 2029, and 7.0% annually
thereafter;
• Commitment Fee: Lucara Botswana to pay 35% of the Margin per annum applicable to the Project Loan
Facility on the Available Commitment for the Project Loan Facility;
• CORA: Amount of $61.7 million to be funded by June 30, 2025;
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• First ranking security over all assets of the Borrower on a fixed and floating basis, as well as all shares in and
shareholder loans into the Borrower and all shares in and shareholder loans into the intermediary
companies between the Sponsor and the Borrower;
• The project facility will require interest rate hedging of at least 75% of the Borrower’s exposure to be
arranged as a condition subsequent to Financial Close;
• Positive and negative covenants, including financial ratios, as well as events of default and a cash flow
waterfall customary to a financing of this nature are set out in the amended Facilities agreement.
Key terms of the WCF:
• Up to $ 30 million for a senior, secured WCF for working capital and other corporate purposes of the
Borrower;
• Interest rate and Margin: LIBOR (or replacement benchmark) plus margin of 6.5% annually for the period
commencing from the date of the amendment to Projection Completion, 6.25% from Project Completion
to June 30, 2029, and 7.25% annually thereafter;
• Commitment Fee: Lucara Botswana to pay 35% of the Margin per annum applicable to the Working Capital
Facility on the Available Commitment for the Working Capital Facility.
Shareholder Undertaking from Nemesia
In connection with the amended Facilities, the Company’s largest shareholder, Nemesia S.a.r.l. (“Nemesia”), has
agreed to enter into a shareholder guarantee and an amendment to the shareholder standby undertaking, in favor
of the Lenders of up to $63.0 million in aggregate (collectively, the “Shareholder Guarantees”), which will support
the UGP expansion if the projected cash flows from Karowe operations, combined with funds available from the
Project Loan, are insufficient. The Shareholder Guarantees may also be drawn in the event of a shortfall in the
Company’s ability to fund the CORA by June 30, 2025. As consideration for providing the Shareholder Guarantees
and subject to receipt of all required regulatory approval s, the Company will issue 1,900,000 common shares to
Nemesia, subject to receipt of TSX approval and a further 7,500 common shares per $500,000 drawn, calculated
monthly, should any amount be drawn under the Shareholder Guarantees , subject to TSX and other regul atory
approvals (the “Nemesia Consideration”).
Nemesia is an insider of the Company, and the Shareholder Guarantees and corresponding issuance of the Nemesia
Consideration (collectively, the “Transaction”) is considered a “related party transaction” pursuant to Multilateral
Instrument 61 -101 – Protection of Minority Security Holders in Special Transactions (“MI 61 -101”). All of the
Company’s board of directors (the “Board”) and all of th e Company’s “independent directors” (as determined in
accordance with Part 7 of MI 61-101) have unanimously determined that the Transaction is advisable and in the best
interests of the Company, and that the Transaction is exempt from the formal valuation and minority shareholder
approval requirements of MI 61-101 pursuant to the “financial hardship” exemptions provided, respectively, under
Section 5.5(g) and 5.7(1)(e) of MI 61-101.
A material change report in respect of the signing of the loan documentation in relation to the amended Facilities,
including the provision of the Shareholder Guarantees, will be filed in accordance with MI 61-101, but is not expected
to be filed 21 days in advance of the closing of the Facilities as the Company wanted to close the Facilities on an
expedited basis for sound business reasons.
Norton Rose Fulbright acted as legal counsel to the Company with support from Lawrence Khupe Attorneys in
Botswana. Mayer Brown LLP acted as legal counsel for the MLAs with support from the Botswana law firm
Armstrongs.
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On behalf of the Board,
William Lamb
President and Chief Executive Officer
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For further information, please contact:
Hannah Reynish Investor Relations & Communications
+1 604 674 0272| [email protected]
Sweden Robert Eriksson, Investor Relations & Public Relations
+46 701 112615 | [email protected]
UK Public Relations Charles Vivian / Jos Simson, Tavistock
+44 778 855 4035 | [email protected]
ABOUT LUCARA
Lucara is a leading independent producer of large exceptional quality Type IIa diamonds from its 100% owned
Karowe Diamond Mine in Botswana. The Karowe Mine has been in production since 2012 and is the focus of the
Company’s operations and development activities. Clara Diamond Solutions Limited Partnership (“Clara”), a wholly-
owned subsidiary of Lucara, has developed a secure, digital sales platform that uses proprietary analytics together
with cloud and blockchain technologies to modernize the existing diamond supply chain, driving efficiencies,
unlocking value and ensuring diamond provenance from mine to finger. Lucara has an experienced board and
management team with extensive diamond development and operations expertise. Lucara and its subsidiaries
operate transparently and in accordance with international best practices in the areas of sustainability, health and
safety, environment, and community relations. Lucara has adopted the IFC Performance Standards and the World
Bank Group’s Environmental, Health and Safety Guidelines for Mining (2007). Accordingly, the development of the
Karowe underground expansion project (“UGP”) adheres to the Equator Principles. Lucara is committed to upholding
high standards while striving to deliver long-term economic benefits to Botswana and the communities in which the
Company operates.
The information is information that Lucara is obliged to make public pursuant to the EU Market Abuse Regulation
and the Swedish Securities Markets Act. This information was submitted for publication, through the agency of the
contact person set out above, on January 9, 2024 at 3:30pm Pacific Time.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain of the statements made and contained herein and elsewhere constitute forward -looking statements as
defined in applicable securities laws. Generally, these forward -looking statements can be identified by the use of
forward-looking terminology such a s "expects", "anticipates", "believes", "intends", "estimates", "potential",
"possible" and similar expressions, or statements that events, conditions or results "will", "may", "could" or "should"
occur or be achieved.
Forward-looking statements are based on the opinions and estimates of management as of the date such statements
are made, and they are subject to a number of known and unknown risks, uncertainties and other factors which may
cause the actual results, perfo rmance or achievements of the Company to be materially different from any future
results, performance or achievement expressed or implied by such forward -looking statements. The Company
believes that expectations reflected in this forward -looking information are reasonable, but no assurance can be
given that these expectations will prove to be accurate and such forward-looking information included herein should
not be unduly relied upon.
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In particular, forward-looking information and forward-looking statements in this news release may include, but are
not limited to, expectations regarding the funds to be used for the development of the UGP; the ultimate use of
proceeds from the Facilities and the use of the Shareholder Guarantees; receipt of regulatory approvals for the
issuance of common shares to Nemesia in connection with the Shareholder Guarantees; the issuance of common
shares to Nemesia; and whether any amounts will be drawn under the Shareholder Guarantees.
There can be no assurance that such forward looking statements will prove to be accurate, as the Company's results
and future events could differ materially from those anticipated in this forward -looking information as a result of
those factors discussed in or referred to under the heading “COVID-19 Global Pandemic, Economic and Geopolitical
Risks” in the Company’s most recent MD&A and under the heading "Risks and Uncertainties" in the Company's most
recent Annual Information Form, both available at http://www.sedarplus.com, as well as changes in general business
and economic conditions, the ability to continue as a going concern, changes in interest and foreign currency rates,
changes in inflation, the supply and demand for, deliveries of and the level and volatility of prices of rough diamonds,
costs of power and diesel, impacts of potential disruptions to supply chains, acts of foreign governments and the
outcome of legal proceedings, inaccurate geological and recoverability assumptions (including with res pect to the
size, grade and recoverability of mineral reserves and resources), and unanticipated operational difficulties
(including failure of plant, equipment or processes to operate in accordance with specifications or expectations, cost
escalations, unavailability of materials and equipment, government action or delays in the receipt of government
approvals, industrial disturbances or other job actions, adverse weather conditions, and unanticipated events
relating to health safety and environmental matters).
Accordingly, readers are cautioned not to place undue reliance on these forward -looking statements which speak
only as of the date the statements were made, and the Company does not assume any obligations to update or
revise them to reflect new events or circumstances, except as required by law.