Lucapa Secures $15M Debt Financing for Mothae Mine

Mining and Exploration
09/10/2017 11:24

Australian junior miner Lucapa Diamond Company today announced it has secured $15 million in debt financing to bring its high-value Mothae kimberlite diamond project in Lesotho into production in 2018. The secured US$15 million three-year debt facility has been arranged with private Singaporean company Equigold. It is repayable in eight quarterly payments commencing December 2018, by when Lucapa expects Mothae to be in steady state production under its Phase 1 development plan. The facility includes a provision for Equigold, at their election, to convert the last two scheduled quarterly payments (totalling US$3.75 million) into ordinary shares in Lucapa at the lowest one-day VWAP in the 15 days preceding the conversion request. On Friday October 6, the company had  requested a trading halt to be placed on the company’s securities pending an announcement on financing, which has now taken place.

Lucapa Managing Director Stephen Wetherall said “the US$15 million financing facility enables Lucapa to meet one of its key strategic objectives of growing diamond production in the large and premium-value sector – a segment of the global market where sales and pricing has remained robust.” He adds, “This facility is a significant result for Lucapa and its shareholders. It ensures that the Company, together with the Government of Lesotho, will bring Mothae on stream in 2018, adding a second cash producing asset and high-value producing mine to the group that will complement the top-quality diamond production from Lulo.”

Lucapa acquired 70 percent of Mothae this year from the government of Lesotho for $9 million in staged payments. It was also awarded a new 10-year mining licence as part of the acquisition. Lucapa was planning to commission Mothae in the first quarter of 2018. An independent JORC resource estimate for Mothae was 1 million carats of diamonds at a modelled average diamond value of $1,063/carat – the second highest JORC average price per carat in the world. Lucapa was targeting to produce about 44,000 carats of diamonds at Mothae over the first three years. Lucapa notes, "The advanced nature of the Mothae kimberlite project - which has historical expenditure of US$36 million and recovered more than 23,000 carats of diamonds during an extensive trial mining phase - has enabled Lucapa to fast-track its development under a staged, low-risk plan."