Lucapa Refinancing Agreement To Improve Financial Position

Finance and Trade
08/04/2019 16:59

Lucapa Diamond Company last week has agreed on funding and refinancing arrangements which will improve its financial position and reduce its financing costs, the company said in an ASX announcement. The move will enable Lucapa to reduce the higher-cost debt used to fund the development of the new high-value Mothae diamond mine in Lesotho. (pictured) The funding and refinancing arrangements with New Azilian Pty and Equigold "reflect the successful delivery and de-risking of Mothae, which commenced commercial production in January 2019 following a successful commissioning and ramp-up phase and has already produced five +50 carat diamonds." 

New Azilian will enter into a US$7 million (A$10 million) one-year loan facility with Lucapa, the principal of which will be repayable at the end of the term. The companies will each have the right to convert up to 50% of the interest payments into ordinary fully-paid Lucapa shares. Lucapa will utilise the New Azilian funding to pre-pay two quarterly US$1.9 million capital repayments on the Equigold debt facility entered into in 2017. Equigold has agreed to waive the early repayment fees in the loan agreement as part of this refinancing. The agreement also enables Equigold to convert a US$1.9 million quarterly capital repayment into ordinary fully-paid Lucapa shares. The effect of these to options will be to significantly reduce that debt.

"These new refinancing arrangements will provide Lucapa with added financial strength to continue to build our strategic position in this niche high-value diamond sector,” said Lucapa Managing Director Stephen Wetherall. He says the funds from New Azilian will also provide Lucapa and Mothae with flexibility on the scheduling of future diamond tenders in order to maximise diamond revenues. The next tender of Mothae diamonds is scheduled via Bonas tender house in mid-May in Antwerp.