Vancouver-headquartered Lucara Diamond has secured a short-term extension of the maturity of its $50-million senior secured working capital facility (WCF).
The company says it will defer the placement of $52.9-million in a cost overrun reserve account (CORA) by September 2. The CORA balance is currently $18.3-million.
Lucara’s debt package consists of two facilities: a project finance facility of $170-million to fund the development of an underground expansion at the Karowe mine, in Botswana, and the WCF that is used to support ongoing operations.
Currently, $90-million is drawn from the project loan and $35-million from the WCF. The terms of the WCF facility to November 1, 2023, does not permit further draws.
Lucara’s biggest shareholder, Nemesia, has agreed to provide a liquidity support guarantee in favour of the lenders of up to $15-million to October 31, while talks with the lenders are ongoing.
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 guarantee and a further 450 000 common shares should the guarantee be called upon in the event the company’s cash balance decreases below $10-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.
“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,” said CEO William Lamb, who recently took over from Eira Thompson.
