LUCARA Diamond Corp. would finalise its spending plans for the underground expansion of its Karowe mine in Botswana by the end of August, said CEO, Eira Thomas.
Commenting in an interview with Miningmx on June 11, Thomas said: “Within the next, I would say realistically, eight weeks we will be putting the pin in the wall on the plan of final anticipated spend”.
The expansion of Karowe was scoped at about $518m in a feasibility study, published in November. Spending on the expansion this year, which is intended to double Karowe’s life of mine, was put at $53m for 2020 before the COVID-19 pandemic.
“The good thing is either way we can accommodate a minimum spend and accommodate a larger spend,” said Thomas of the new capital plans.
Preparatory construction for the expansion has been interrupted by COVID-19. Production guidance from Karowe’s open pit section was also withdrawn. It had been put at 370,000 to 420,000 carats. Sales were estimated to fall between 350,000 and 390,000 carats.
A consequence of the delay caused by COVID-19 is that Lucara may have to shoulder more debt than first planned in order finance Karowe’s expansion. Thomas acknowledged the diamond market had been hit hard by the pandemic.
“There’s a lot of caution I would say on the banking side particularly for diamond projects,” said Thomas. “The sector has not performed particularly well leading up to COVID-19 and through COVID-19, so that certainly presents a more challenging macro environment.
“But I have to say we have been really pleased with the response that we’ve been getting from the banks. We’ve had broad engagement with a number of potential lenders and the response that we’ve been getting back has been very positive.”
“We’ll be able to put together financing to support our underground strategy before the end of the year,” said Thomas.
Karowe has a spectacular record for producing high value gems. The Lesedi la Rona diamond was recovered from the mine which at 1109 carats was the second largest ever recorded. The $63.1m, 813 carat Constellation was also mined at Karowe.
Shares in Lucara halved in February but they have improved 50% since May. Thomas said that notwithstanding the difficulties in the market, Lucara was a fundamentally sound company. “There’s a certain reality sinking in that Lucara has tumbled along with our peer group of companies and yet our outlook is completely different,” she said.
“We don’t have a balance sheet that’s encumbered, we are in a situation where we can and will weather this storm. So I think that there’s a differentiation starting to happen.”