REG - Lucara Diamond Corp - LUCARA ANNOUNCES EXECUTION OF FACILITIES AGREEMENT

Lucara DiamondAnnouncement

10/01/2024 07:00

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RNS Number : 1696Z  Lucara Diamond Corp  10 January 2024

January 9, 2024

 

PRESS RELEASE

 

LUCARA ANNOUNCES SUCCESSFUL EXECUTION OF AMENDED FACILITIES AGREEMENT; KAROWE
UNDERGROUND EXPANSION PROJECT REMAINS FULLY FINANCED

 

VANCOUVER, January 9, 2024 /CNW/ - (LUC - TSX, LUC - BSE, LUC - Nasdaq
Stockholm)

 

Lucara Diamond Corp. ("Lucara" or the "Company") is pleased to announce that
it has signed amended documentation in relation to the senior secured project
financing debt package of US$220 million (the "Facilities") executed in July
2021.   While the total quantum of the Facilities has not changed, the
repayment profile has been extended in line with the rebase schedule released
July 17, 2023 (link
(https://lucaradiamond.com/newsroom/news-releases/lucara-provides-karowe-underground-expansion-proje-122862/)
). Lucara expects to continue to develop the Karowe underground expansion (the
"UGP") using funds from the Project Loan (as hereinafter defined), combined
with projected excess cash flow from Karowe open pit mine operations and
stockpiles processed during the underground construction period.   Parties
to the Facilities remain Lucara Botswana Proprietary Limited ("Lucara
Botswana") as the Borrower and a syndicate of five international financial
institutions: African Export-Import Bank (Afreximbank), Africa Finance Corp.,
ING, Natixis, and Societe Generale, London Branch.  Afreximbank acts as
Facility Agent in connection with the Facilities.

 

The Company's debt package consists of two facilities, a project finance
facility of $190 million (previously $170 million) to fund the development of
an UGP at the Karowe Mine (the "Project Loan"), and a $30 million (previously
$50 million) senior secured working capital facility (the "WCF") which is used
to support ongoing operations.  The Company has drawn $125 million from the
Project Loan and $15 million from the WCF. The balance in the cost overrun
reserve account (the "CORA") stands at $33.6 million. All currency figures are
in U.S. Dollars, unless otherwise stated.

 

William Lamb, President and CEO commented: "The recent signing of the amended
facilities agreement for the Karowe mine's underground development project
marks a significant step in our company's exciting transformation. This
achievement continues to underscore the exceptional quality of the Karowe
asset. The adjusting repayment schedule aligns with the expected cash flow
from the underground production profile, where we are set to process the most
valuable ore from the underground expansion in the first three years of
operations. With the solid financial backing from our largest shareholder, who
has provided interim funding and guarantees, we can confirm that the
underground expansion project is fully funded. Our dedicated team, combined
with the support of our strategic shareholder, positions us to create
substantial value for our shareholders through the Karowe mine's underground
development project."

 

Key terms of the Project Loan:

·     Up to $190 million provided to fund the development, construction
costs and construction phase operating costs of the UGP as well as financing
costs in relation to the Facilities;

·     8 year maturity, to June 30, 2031, with quarterly repayments
commencing on September 30, 2028;

·    Interest rate and Margin: LIBOR (or replacement benchmark) plus margin
of 6.5% annually from Rebase Date to the Project Completion, 6.0% annually
from Project Completion to June 30, 2029, and 7.0% annually thereafter;

·    Commitment Fee: Lucara Botswana to pay 35% of the Margin per annum
applicable to the Project Loan Facility on the Available Commitment for the
Project Loan Facility;

·     CORA: Amount of $61.7 million to be funded by June 30, 2025;

·     First ranking security over all assets of the Borrower on a fixed
and floating basis, as well as all shares in and shareholder loans into the
Borrower and all shares in and shareholder loans into the intermediary
companies between the Sponsor and the Borrower;

·   The project facility will require interest rate hedging of at least 75%
of the Borrower's exposure to be arranged as a condition subsequent to
Financial Close;

·    Positive and negative covenants, including financial ratios, as well
as events of default and a cash flow waterfall customary to a financing of
this nature are set out in the amended Facilities agreement.

Key terms of the WCF:

·   Up to $30 million for a senior, secured WCF for working capital and
other corporate purposes of the Borrower;

·    Interest rate and Margin: LIBOR (or replacement benchmark) plus margin
of 6.5% annually for the period commencing from the date of the amendment to
Projection Completion, 6.25% from Project Completion to June 30, 2029, and
7.25% annually thereafter;

·    Commitment Fee: Lucara Botswana to pay 35% of the Margin per annum
applicable to the Working Capital Facility on the Available Commitment for the
Working Capital Facility.

 

Shareholder Undertaking from Nemesia

In connection with the amended Facilities, the Company's largest shareholder,
Nemesia S.a.r.l. ("Nemesia"), has agreed to enter into a shareholder guarantee
and an amendment to the shareholder standby undertaking, in favor of the
Lenders of up to $63.0 million in aggregate (collectively, the "Shareholder
Guarantees"), which will support the UGP expansion if the projected cash flows
from Karowe operations, combined with funds available from the Project Loan,
are insufficient.  The Shareholder Guarantees may also be drawn in the event
of a shortfall in the Company's ability to fund the CORA by June 30, 2025.
As consideration for providing the Shareholder Guarantees and subject to
receipt of all required regulatory approvals, the Company will issue 1,900,000
common shares to Nemesia, subject to receipt of TSX approval and a further
7,500 common shares per $500,000 drawn, calculated monthly, should any amount
be drawn under the Shareholder Guarantees, subject to TSX and other regulatory
approvals (the "Nemesia Consideration").

 

Nemesia is an insider of the Company, and the Shareholder Guarantees and
corresponding issuance of the Nemesia Consideration (collectively, the
"Transaction") is considered a "related party transaction" pursuant to
Multilateral Instrument 61-101 - Protection of Minority Security Holders in
Special Transactions ("MI 61-101"). All of the Company's board of directors
(the "Board") and all of the Company's "independent directors" (as determined
in accordance with Part 7 of MI 61-101) have unanimously determined that the
Transaction is advisable and in the best interests of the Company, and that
the Transaction is exempt from the formal valuation and minority shareholder
approval requirements of MI 61-101 pursuant to the "financial hardship"
exemptions provided, respectively, under Section 5.5(g) and 5.7(1)(e) of MI
61-101.

 

A material change report in respect of the signing of the loan documentation
in relation to the amended Facilities, including the provision of the
Shareholder Guarantees, will be filed in accordance with MI 61-101, but is not
expected to be filed 21 days in advance of the closing of the Facilities as
the Company wanted to close the Facilities on an expedited basis for sound
business reasons.

 

Norton Rose Fulbright acted as legal counsel to the Company with support from
Lawrence Khupe Attorneys in Botswana.  Mayer Brown LLP acted as legal counsel
for the MLAs with support from the Botswana law firm Armstrongs.

 

On behalf of the Board,

 

William Lamb

President and Chief Executive Officer

 

Follow Lucara Diamond on Facebook (https://www.facebook.com/LucaraDiamond/) ,
Instagram (https://www.instagram.com/lucaradiamond/) , and LinkedIn
(https://www.linkedin.com/company/lucara-diamond-corp-)

 

For further information, please contact:

 

 Hannah Reynish       Investor Relations & Communications
                      +1 604 674 0272| info@lucaradiamond.com (mailto:info@lucaradiamond.com)

 Sweden               Robert Eriksson, Investor Relations & Public Relations
                      +46 701 112615 | reriksson@rive6.ch (mailto:reriksson@rive6.ch)

 UK Public Relations  Charles Vivian / Jos Simson, Tavistock
                      +44 778 855 4035 | lucara@tavistock.co.uk (mailto:lucara@tavistock.co.uk)

 

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 January 9, 2024 at 3:30pm 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.

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.

In particular, forward-looking information and forward-looking statements in
this news release may include, but are not limited to, expectations regarding
the funds to be used for the development of the UGP; the ultimate use of
proceeds from the Facilities and the use of the Shareholder Guarantees;
receipt of regulatory approvals for the issuance of common shares to Nemesia
in connection with the Shareholder Guarantees; the issuance of common shares
to Nemesia;  and whether any amounts will be drawn under the Shareholder
Guarantees.

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 under the heading
"COVID-19 Global Pandemic, Economic and Geopolitical Risks" in the Company's
most recent MD&A 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.

 

 

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