The Karowe diamond operation in Botswana
Canadian mining company Lucara Diamond has mandated five international financial institutions for a secured project financing package of up to $220-million to fund the underground expansion of the Karowe mine, in Botswana.
The syndicate comprises ING Bank, Natixis, Société Générale, London Branch, Africa Finance Corporation and Afreximbank.
Debt PackagePresident and CEO Eira Thomas says the debt package will supplement cash flows from continued operations of the Karowe openpit over the next five years, extending Karowe’s mine life out from 2025 until at least 2040.
“The project is underpinned by strong economics, is expected to pay back in under three years and contribute more than $4-billion of additional revenues using conservative diamond pricing assumptions.”
Lucara is targeting completion of the project financing package by midyear, with full project sanction thereafter.
The Karowe underground expansion has an estimated capital cost of $514-million and a five-year development period. The balance of the development capital is expected to come from operating cash flow generated by openpit operations at Karowe during the development period.
The project has an after-tax net present value, at a 5% discount rate, of $718-million, with a payback of 2.8 years, for the combined openpit and underground mine.
Life-of-mine production (remaining openpit and underground) is estimated at 7.8-million carats.
“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 prepandemic levels in early 2021,” says Thomas.