LUCARA Diamond Corporation said today it expected to complete financing for the $514m underground expansion of Karowe, a mine in Botswana, in the second half of 2021.
“The company continues to explore debt financing options for the underground expansion for those amounts which are expected to exceed the company’s cash flow from operations during the construction period,” it said.
Lucara was commenting following the renewal of Karowe’s mining licence by the Botswana authorities for 25 years, effective January 4.
Eira Thomas, CEO of Lucara, said the licence renewal paved the way “… for the completion of a supplemental debt financing and full project sanction later this year”. The renewal was approved by Botswana’s Minister of Mineral Resources, Green Technology and Energy Security, the company said.
The underground expansion of Karowe, which is scoped to extend mining by 20 years to 2040, should have started in the middle of last year, according to planning prior to the outbreak of the Covid-19 pandemic.
As a result of the pandemic, tenders in Botswana were suspended amid travel restrictions, however the company generated revenue from tenders in Antwerp, Clara as well as through HB Antwerp under the supply agreement it announced in July 2020.
For the diamond market generally, trading conditions were fraught with logistical problems resulting in the wide scale suspension of the world’s sales via tender.
Despite finding alternative sales routes, Lucara slowed the Karowe project and cut capital expenditure to $22m from $53m in order to accommodate the possibility of lower revenues. It also renewed $50m credit facility with Nova Scotia Bank last year.
Lucara said today work on the expansion had continued with the focus falling on time critical-path items, detailed engineering and design and limited earth works and geotechnical studies. First ore from the expansion is now anticipated to be in 2026.
In the meantime, the diamond market is showing signs of gradual recovery.
In December, Anglo American CEO, Mark Cutifani, said his company was expecting markedly better trading conditions in the diamond market from 2021 which could last for up to three years. Anglo American owns 85% of De Beers.