REG - Lucara Diamond Corp - LUCARA ANNOUNCES EXTENSION OF WORKING CAP FACILITY

Lucara DiamondAnnouncement

01/11/2023 07:15

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RNS Number : 9564R  Lucara Diamond Corp  01 November 2023

October 31, 2023

 

NEWS RELEASE

 

LUCARA ANNOUNCES EXTENSION OF WORKING CAPITAL FACILITY TO NOVEMBER 15, 2023

 

VANCOUVER, October 31, 2023 /CNW/ (LUC - TSX, LUC - BSE, LUC - Nasdaq
Stockholm)

 

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 of the requirement to place $52.9 million
in a cost overrun reserve account (the "CORA") to the earlier of the
conclusion of discussions with its Lenders or November 15, 2023.  An earlier
extension granted by the Lenders on August 23, 2023, was due to expire on
November 1, 2023.

 

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 do not permit further draws from either the Project Loan or the
WCF.  The CORA balance is currently $18.4 million. All currency figures are
in U.S. Dollars, unless otherwise stated.

 

In connection with the second extension of the WCF maturity and deferral of
the CORA requirement, the Company's largest shareholder, Nemesia S.a.r.l.
("Nemesia"), has also agreed to extend its liquidity support guarantee in
favour of the Lenders to align with the new deadline.  In August 2023 as part
of the first WCF extension, Nemesia agreed to provide the Company with
liquidity support of up to $15.0 million in aggregate ("Liquidity Guarantee")
while discussions with the Lenders continued. The Company is required to
maintain a minimum cash balance of $10.0 million.  The terms of the second
extension of the Liquidity Guarantee remain the same, and no further
consideration is payable to Nemesia for the extension. The TSX has
conditionally approved the extension of the Liquidity Guarantee.

 

In August 2023, the Company issued a debenture (the "Debenture") to Nemesia
which will be drawn down if Nemesia is required to make a payment under the
Liquidity Guarantee. In consideration for providing the Liquidity Guarantee,
Lucara issued 450,000 common shares as a fee upon its execution. A further
450,000 common shares will be issuable should the Liquidity Guarantee be
called upon in the event the Company's cash balance decreases below $10.0
million. For each $500,000 drawn down under the Liquidity Guarantee, the
Company will be required to issue, subject to the receipt of all required
regulatory approvals, 7,500 common shares per month to Nemesia until the
amounts borrowed are repaid.

 

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 was considered a "related party transaction" under
Multilateral Instrument 61-101 - Protection of Minority Security Holders in
Special Transactions ("MI 61-101"). The Company relied 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 was less than 25% of the Company's market capitalization.  A
material change report in respect of the first waiver and extension, including
the provision of the Liquidity Guarantee and the Debenture, was filed on
September 1, 2023.

 

On behalf of the Board,

William Lamb

President and Chief Executive Officer

 

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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 October 31, 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 extension and issuance of common shares to
Nemesia in connection with the Liquidity Guarantee; whether any amounts will
be drawn under the Liquidity Guarantee and the timing of the same; 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.

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