PRESSURE is growing on Lucara Diamond which said it will draw on additional financing facilities to remain liquid.
Commenting in notes to its first quarter results, the company’s CEO William Lamb said the firm’s lenders approved the drawdown of $28m from emergency funding account known as the cost overrun reserve account.
The $61.7m Cora is supplied by Lucara’s largest shareholder Nemesia, which represents the Lundin Group. Of this account, $35m is to complete the underground expansion of Karowe, Lucara’s only asset, in Botswana.
Lucara said the company would also draw from working capital generated by Karowe.
Diamond prices have slumped with De Beers cutting prices 10% in the first auction of 2025.
Lucara said in its first quarter announcement it was cautious on diamonds as the market “continues to navigate structural shifts”.
In this context, Lucara is looking for additional funding, including the possibility of issuing more shares. “The company continues to develop plans to raise additional debt or equity financing required for UGP completion,” said Lamb.
In 2023 Nemesia provided a guarantee consisting of up to $63m to lenders in return for which it will receive 1.9 million Lucara shares and a further 7,500 shares for each $500,000 withdrawn under the guarantee.
Lucara shares have fallen by 26% year-to-date on the Toronto Stock Exchange. The company is valued at C$154m.
“While the Company has previously been successful in raising debt and equity financing, future fundraising efforts may not succeed or may fall short of the required amounts,” said Lucara in its quarterly notes, adding in a regulatory standard statement there was no guarantee Lucara would remain a going concern.
The project, which is planned to replace mining from the Karowe open pit, ran into development problems in 2023 resulting in a project overshoot on budget and timeline. It is expected to be completed in the first half of 2028, two years late. Lucara said in February $347.9m of the $683m project capex has been spent to date.
