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, however, diamond revenues dried up as tenders were suspended amid travel restrictions. Border closures also prevented the importation of equipment and provision of critical skills required to progress the Karowe project.
In response, Lucara slowed the project and cut capital expenditure to $22m from $53m in order to accommodate 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.