Karowe boost as Lucara renews P440m facility
Brian Benza | Thursday May 8, 2014 12:24
In a statement Lucara said that the applicable interest rate of any loan under the facility would be determined by the company’s leverage ratio at any given time.
“We are delighted with the continued demonstration of Scotiabank’s support of our business plan and strategy. While Lucara continues its strong cash flow generation the credit facility provides for future risk mitigation and allows the company to react quickly to potential growth investment opportunities,” Lucara president and chief executive officer, William Lamb said. Lucara’s two assets are the active Karowe mine, in Botswana, and the Mothae project, in Lesotho, where the company had completed a trial mining programme.
Last month, Lucara held its first exceptional stone tender of the year, which garnered gross proceeds of $50.47-million (P442 million). The miner, listed on both the Toronto Stock exchange (TSX) and Botswana Stock Exchange said it had sold 20 diamonds in single lots totaling 1,191 carat, which resulted in an average price per carat of $42,347.
Of the 20 diamonds on offer, 15 sold for more than a million dollars each, including eight that sold for more than $2-million each.
The company’s next exceptional stone tender was scheduled for the third quarter. Lucara realised revenues amounting to $180 million in 2013 to surpass a target of $118 million largely due to the recovery of large and exceptional diamonds from its Flagship asset, Karowe Mine.
In its 2013 year ending financial statement, Lucara stated that the Karowe 2013 year-end target of 440,000 carats recovered was also surpassed.
The company plans holding eight diamond tenders and two exceptional stone tenders during 2014. “The timing of these tenders will be based on Karowe’s production profile as well as commercial decisions to maximise diamond revenue,” Lamb said. Karowe is forecast to process 2.2 to 2.4 million tonnes of ore and to produce and sell 400,000 to 420,000 carats of diamond in 2014, and its revenue is forecasted between $150 - $160 million.
The company said it is upgrading and building a plant at Karowe to improve large diamond recovery following continued occurrence of exceptional stones and to enable sustainable processing of harder ore in the south lobe.
Construction is scheduled to begin soon and finish later this year at a projected cost of between $45-$50 million. A sustaining capital expenditure of $3.5 million is expected.
Karowe is forecast to increase waste mined during 2014, in line with the original feasibility mine plan, as it opens up the full extent of the south lobe.
“The Karowe mine plan, therefore, expects more that 10 million tonnes of waste will be stripped and stockpiled or used to expand the tailings in 2014,” the company directors have stated.
However, the company forecasts cash costs per tonne of ore treated to rise to between $31-$33 per tonne as compared to the 2013 figure of $23 per tonne.