VANCOUVER, BC, Aug. 23,
2023 /CNW/ - (TSX: LUC) (BSE: LUC) (Nasdaq Stockholm:
LUC) Please view PDF version.
Lucara Diamond Corp. ("Lucara" or the "Company") announces the
short-term extension of the maturity of its $50 million senior secured working capital
facility (the "WCF") and a deferral to November 1, 2023 of the requirement to place
$52.9 million in a cost overrun
reserve account (the "CORA") by September 2,
2023. The CORA balance is currently $18.3 million. All currency figures are in U.S.
Dollars, unless otherwise stated.
The Company's debt package consists of two facilities (the
"Facilities"), a project finance facility of $170 million to fund the development of an
underground expansion at the Karowe Mine (the "Project Loan"), and
the WCF which is used to support ongoing operations. Presently,
$90 million is drawn from the Project
Loan and $35 million is drawn from
the WCF. The terms of the WCF extension to November 1, 2023, do not permit further
draws.
In connection with the WCF extension and the CORA deferral, both
to November 1, 2023, the Company's
largest shareholder, Nemesia S.a.r.l. ("Nemesia"), has agreed to
provide a liquidity support guarantee in favour of the Lenders of
up to $15.0 million in aggregate
("Liquidity Guarantee") to October 31,
2023, while discussions with the Lenders are ongoing. In
return, the Company has agreed to issue a debenture (the
"Debenture") to Nemesia to be drawn down if Nemesia is required to
make a payment under the Liquidity Guarantee. In consideration for
providing the Liquidity Guarantee, and subject to receipt of all
required regulatory approvals, Lucara has agreed to issue 450,000
common shares as a fee upon execution of the Liquidity Guarantee
and a further 450,000 common shares should the Liquidity Guarantee
be called upon in the event the Company's cash balance decreases
below $10.0 million. As an additional
fee, Lucara has agreed to issue 7,500 common shares per month for
each $500,000 outstanding until the
amounts borrowed are repaid.
William Lamb, CEO, commented: "During this period of ongoing
discussions with our Lenders, we appreciate their willingness to
grant an extension to the Company's working capital facility and a
temporary deferral of the cost overrun reserve account
requirements, to November 1, 2023.
This, together with the support of our largest shareholder in
providing the Liquidity Guarantee, allows management to continue
its focus on operations and the underground project. The Company
would like to thank all involved in this process for their time,
effort, and consideration. The opportunity to expand the operations
through the underground development adds significant value to all
stakeholders for many years to come."
Liquidity Guarantee from
Nemesia
Nemesia is an insider of the Company and, as a result of their
provision of the Liquidity Guarantee and receipt of the Debenture
and 450,000 common shares in connection with the execution thereof,
the transaction contemplated by the Liquidity Guarantee will be
considered a "related party transaction" under Multilateral
Instrument 61-101 – Protection of Minority Security Holders in
Special Transactions ("MI 61-101"). The Company intends to rely
on the exemptions set forth in sections 5.5(a) and 5.7(a) of MI
61-101 from the valuation and minority shareholder approval
requirements of MI 61-101 in respect of Nemesia's provision of the
Liquidity Guarantee as the aggregate fair market value of the
common shares issued to Nemesia upon signing of the Liquidity
Guarantee will be less than 25% of the Company's market
capitalization.
A material change report in respect of the waiver and extension,
including the provision of the Liquidity Guarantee and the
Debenture, will be filed in accordance with MI 61-101, but is not
expected to be filed 21 days in advance of the execution of the
Liquidity Guarantee as the Company wanted to close to implement
these arrangements on an expedited basis for sound business
reasons.
On behalf of the Board,
William
Lamb
President and Chief Executive Officer
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ABOUT LUCARA
Lucara is a leading independent producer of large exceptional
quality Type IIa diamonds from its 100% owned Karowe Diamond Mine
in Botswana. The Karowe Mine has
been in production since 2012 and is the focus of the Company's
operations and development activities. Clara Diamond Solutions
Limited Partnership ("Clara"), a wholly-owned subsidiary of Lucara,
has developed a secure, digital sales platform that uses
proprietary analytics together with cloud and blockchain
technologies to modernize the existing diamond supply chain,
driving efficiencies, unlocking value and ensuring diamond
provenance from mine to finger. Lucara has an experienced board and
management team with extensive diamond development and operations
expertise. Lucara and its subsidiaries operate transparently and in
accordance with international best practices in the areas of
sustainability, health and safety, environment, and community
relations. Lucara has adopted the IFC Performance Standards and the
World Bank Group's Environmental, Health and Safety Guidelines for
Mining (2007). Accordingly, the development of the Karowe
underground expansion project ("UGP") adheres to the Equator
Principles. Lucara is committed to upholding high standards while
striving to deliver long-term economic benefits to Botswana and the communities in which the
Company operates.
The information is information that Lucara is obliged to make
public pursuant to the EU Market Abuse Regulation and the Swedish
Securities Markets Act. This information was submitted for
publication, through the agency of the contact person set out
above, on August 23, 2023 at
5pm Pacific Time.
CAUTIONARY NOTE REGARDING FORWARD
LOOKING STATEMENTS
Certain of the statements made and contained herein and
elsewhere constitute forward-looking statements as defined in
applicable securities laws. Generally, these forward-looking
statements can be identified by the use of forward-looking
terminology such as "expects", "anticipates", "believes",
"intends", "estimates", "potential", "possible" and similar
expressions, or statements that events, conditions or results
"will", "may", "could" or "should" occur or be achieved and
include, without limitation, receipt of regulatory approvals for
the issuance of common shares to Nemesia in connection with the
Liquidity Guarantee; whether any amounts will be drawn under the
Liquidity Guarantee; future value to be delivered by the UGP and
the Company's ability to continue as a going concern in the event
that the Facilities are not available to them longer-term.
Forward-looking statements are based on the opinions and
estimates of management as of the date such statements are made,
and they are subject to a number of known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially
different from any future results, performance or achievement
expressed or implied by such forward-looking statements. The
Company believes that expectations reflected in this
forward-looking information are reasonable, but no assurance can be
given that these expectations will prove to be accurate and such
forward-looking information included herein should not be unduly
relied upon. The value of the Company's shares, its financial
results and its mining activities are significantly affected by the
price and marketability of the diamonds recovered. The sales price
of a diamond is determined by its characteristics. While the Karowe
Diamond Mine has produced several large, high-value diamonds in
excess of 100 carats, there is no assurance that the diamonds
recovered which are 100 carats or larger will have the
characteristics required to achieve a high sales price. Statements
with respect to the length by which the Karowe underground
expansion project will extend the life of mine are based on key
underlying assumptions including, but not limited to: future
diamond prices, future diamond recoveries, expected operating and
capital costs, the timing to achieve key construction milestones,
the availability of sufficient financing, people, equipment and
materials when needed for construction and operation of the
underground mine, the economic potential of a mineralized area, the
size and tonnage of a mineralized area, the estimation of mineral
resources.
There can be no assurance that such forward looking statements
will prove to be accurate, as the Company's results and future
events could differ materially from those anticipated in this
forward-looking information as a result of those factors discussed
in or referred to in Note 1 of the condensed interim consolidated
financial statements for the three and six months ended
June 30, 2023, and in the related
interim MD&A under the headings "Liquidity and Capital
Resources", "COVID-19 Global Pandemic, Economic and Geopolitical
Risks" and under the heading "Risks and Uncertainties" in the
Company's most recent Annual Information Form, both available at
http://www.sedarplus.com, as well as changes in general business
and economic conditions, the ability to continue as a going
concern, changes in interest and foreign currency rates, changes in
inflation, the supply and demand for, deliveries of and the level
and volatility of prices of rough diamonds, costs of power and
diesel, impacts of potential disruptions to supply chains, acts of
foreign governments and the outcome of legal proceedings,
inaccurate geological and recoverability assumptions (including
with respect to the size, grade and recoverability of mineral
reserves and resources), and unanticipated operational difficulties
(including failure of plant, equipment or processes to operate in
accordance with specifications or expectations, cost escalations,
unavailability of materials and equipment, government action or
delays in the receipt of government approvals, industrial
disturbances or other job actions, adverse weather conditions, and
unanticipated events relating to health safety and environmental
matters).
Accordingly, readers are cautioned not to place undue reliance
on these forward-looking statements which speak only as of the date
the statements were made, and the Company does not assume any
obligations to update or revise them to reflect new events or
circumstances, except as required by law.
SOURCE Lucara Diamond Corp.