LUCAPA Diamonds Company said it would press ahead with discussing refinancing options despite corporate cost-cutting and a A$5.2m rights issue in the June quarter.
The Sydney-listed firm returned its Angola alluvial diamond mine Lulo to full production by the close of the June quarter, but its Mothae kimberlite mine, situated in Lesotho, remained on care and maintenance. Lockdown regulations were eased in late June in Lesotho.
Lucapa has cash of $4.5m (A$6.5m) at quarter end and Mothae held some 784 carats in diamond inventory. In addition, the company held a cash and receivables balance of $3.5m in its Lulo joint venture company as well as a 2,647 carat diamond inventory.
Executive directors and staff, as well as contractors, took a 60% pay haircut in the June quarter in an effort to preserve cash through the COVID-19 pandemic. Corporate staff has been reduced and non-executive directors waived their fees.
“Lucapa continues to explore refinancing solutions with a number of parties as well as existing financiers,” it said today in a June quarter report. “Lucapa will update the market as these are concluded.”
Shares in the company fell 8% in Sydney and were last trading at 45 Australian cents per share, just above its five-year low of 40c/share.
The company owes $6.3m to Singaporean investment firm, Equigold, down from the initial $15m provided. Lucapa has used shares in lieu of cash repayments such that Equigold has an 8.1% stake in the company from 6.5% previously.
Lucapa produced a total of 2,944 carats from Lulo in the June quarter during which time it was largely at 50% of production in line with lockdown regulations. Recoveries included 86 diamonds of more than 4.8 carats, which in turn included 30 so-called ‘specials’.
Some 3,346 carats of diamonds from Lulo were sold during the quarter for gross revenues of $2m, achieving an average price per carat of $594/carat. Some 3,962 carats were sold from Mothae for $2m in revenue, representing an average price of $505/carat carat.
Lucapa’s has signed a preferential diamond sale agreement with a subsidiary of the UK jewellery, Graff. Diamond sales have been severely reduced owing to international travel restrictions – a factor that has hurt the diamond sector globally.
On June 3, Lucapa issued 105.1 million shares and 113.1 million options. The proceeds will be ploughed into exploring Lulo and preserving Mothae.