Lucara Diamond is under increasing financial pressure as it seeks additional funding to maintain liquidity and complete the delayed underground expansion of its Karowe mine in Botswana — the company’s sole producing asset.
In its first-quarter 2025 results, CEO William Lamb confirmed that Lucara had received approval from lenders to draw $28 million from its cost overrun reserve account.
The reserve is part of a $61.7 million facility provided by Nemesia, Lucara’s largest shareholder and part of the Lundin Group.
Of this facility, $35 million has been earmarked for the Karowe underground expansion project.
The company also said it would continue to rely on working capital generated by the Karowe mine.
However, with diamond prices falling — including a 10% cut by De Beers in its first auction of 2025 — market conditions remain challenging.
Lucara acknowledged this uncertainty, stating the diamond industry is “continuing to navigate structural shifts.”
To secure the necessary capital, Lucara is exploring additional funding options, including debt and equity.
“The company continues to develop plans to raise additional debt or equity financing required for the completion of the underground growth project (UGP),” Lamb said.
Nemesia had previously guaranteed up to $63 million in 2023 to support Lucara’s financing efforts.
In return, Nemesia is to receive 1.9 million Lucara shares and an additional 7,500 shares for every $500,000 withdrawn under the guarantee.
Lucara’s share price has declined by 26% year-to-date on the Toronto Stock Exchange, with the company now valued at C$154 million.
In its earnings report, Lucara acknowledged the risk of future fundraising efforts falling short and noted, as per regulatory requirements, that there is no certainty the company will remain a going concern.
The Karowe underground project, intended to replace open-pit operations, has faced significant delays and cost overruns.
Initially expected to be completed in 2026, the project is now projected to finish in the first half of 2028.
As of February, $347.9 million of the estimated $683 million capital expenditure had been spent.
