Lucara mandates banks for $220m Karowe Mine project financing

Vancouver-headquartered Lucara Diamond has mandated five lenders for a senior secured project financing package of up to $220 million to fund its 100%-owned Karowe Mine, in Botswana.

A syndicate of five international financial institutions - ING Bank; Natixis; Societe Generale, London Branch; Africa Finance Corporation; and Afreximbank - will act as the Mandated Lead Arrangers. The formal mandate includes a non-binding indicative term sheet for debt facilities of up to $220 million, with closing targeted for mid-2021, and financing in place for the second half of 2021.

The execution of the mandate is a key milestone in the project financing process for the Karowe underground expansion, which has an estimated capital cost of $514 million and a five-year development period. The project has an after-tax net present value, at a 5% discount rate, of $718 million, with a payback of 2.8 years, for the combined openpit and underground mine. 

Terrafranca Advisory Limited is acting as financial advisor to the company. Norton Rose Fulbright LLP is acting as legal counsel.