TIDM0QUI
RNS Number : 1696Z
Lucara Diamond Corp
10 January 2024
January 9, 2024
PRESS RELEASE
LUCARA ANNOUNCES SUCCESSFUL EXECUTION OF AMED 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 $190 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 "CORA") 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 shareholder, 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;
-- 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
approvals, 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 regulatory 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 the 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.
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| info@lucaradiamond.com
Sweden Robert Eriksson, Investor Relations & Public
Relations
+46 701 112615 | reriksson@rive6.ch
UK Public Relations Charles Vivian / Jos Simson, Tavistock
+44 778 855 4035 | lucara@tavistock.co.uk
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 as "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,
performance 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.
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 respect 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.
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END
AGREAEFEFEALEEA
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January 10, 2024 02:00 ET (07:00 GMT)
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