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Lucara secures P2.4 billion funding for Karowe project

Lucara Diamond Corporation has successfully convinced five international funders to finance its mine life extension project, the company announced on Wednesday.

A statement from Vancouver, Canada, announced the execution of a mandate for a senior secured project financing package of up to US$220 million ( approximately P2.4 billion, in local currency) to fund the underground expansion at Lucaras 100% owned Karowe Mine in Botswana.

Karowe mine is located in the diamond rich fields of Boteti sub-district, a stone throw away from Letlhakane village, adjacent to the Debswana owned Orapa Mine.

The Karowe mine was acquired from De Beers by Lucara in 2009 and has since then roared to unprecedented gem glory, producing by far some most exceptional precious stones in the history of global diamond mining.

Karowe produces large high quality Type IIA diamonds in excess of 10.8 carats, and has since mining inception delivered some magnificent diamonds such as the historic 1 758 carat Sewelo,1,109 carat Lesedi La Rona and the 813 carat Constellation.

All of this was unearthed from its current open cast mining which has been in operation since 2012, and would continue to produce ore until 2025.

In 2019, Lucara announced that feasibility studies of underground mining at Karowe signalled positive results and massive potential for the 8 year old mine.

The Canadian junior miner said the project would be undertaken over a period of 5 years with funding sourced from both internal cash resources and external finance.

On Wednesday, Lucara Diamond Corp President and Chief Executive Officer (CEO), Eira Thomas revealed in a statement that a syndicate of five international financial institutions, including ING Bank N.V. (ING), Natixis Socit Gnrale, London Branch (Socit Gnrale), Africa Finance Corporation (AFC) and Afreximbank (Afrexim) will act as the Mandated Lead Arrangers .

The press release explained that the formal mandate includes a non-binding indicative term sheet for debt facilities of up to US$220 million (over P2.4 billion). Closing of the Facilities is targeted to be mid-2021, with financing in place for the second half of 2021.

The mandating of five leading international financial institutions, with strong mining and metals track records and significant experience in Africa, for the arrangement of +$200 million senior debt facilities, is a significant achievement for Lucara, Eira Thomas said.

She explained that this debt package will supplement cash flows from continued operations of the Karowe open pit over the next 5 years, extending Karowes mine-life out from 2025 until at least 2040.

The project is underpinned by strong economics, and is expected to payback in less than three years and contributes more than $4 billion of additional revenues using conservative diamond pricing assumptions.

We are targeting completion of the project financing package by mid-year, with full project sanction thereafter, she stated.

Thomas further explained that the interest of top tier financial institutions further validates Lucaras reputation as a leading, high margin diamond producer, which has demonstrated resilience throughout the pandemic.

Karowe is highly levered to strengthening diamond prices and is well positioned to take advantage of the current market, as we have observed prices recovering to pre-pandemic levels in early 2021, said Thomas.

Lucara said 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 US$514 million (over P5 billion) and a five-year development period.

The balance of development capital is expected to come from operating cash flow generated by open pit operations at Karowe during the development period.

The MLAs have commenced detailed due diligence on all aspects of the financing and Lucara continues to work with them to conclude the due diligence process in the near term.

Closing of the Facilities is subject to completion of the customary processes including due diligence, final credit approvals and execution of final documentation.

Early this year Botswana Government extended Karowe mining license by 25 years. The multi listed Lucara announced in January that the application for the renewal of Mining Licence No 2008/6L in respect of its AK06 (Karowe) Mine has been approved by Botswanas Minister of Mineral Resources, Green Technology and Energy Security.

The renewal is effective January 4, 2021 for a period of 25 years, securing Lucaras mining rights to 2046. The company said this 25 more years green light marked a critical step in the formal sanction of the Karowe underground expansion project.

Giving a commentary on the good news, in January, Thomas said the mining licence extension to 2046 was an important milestone for the Karowe underground expansion project, paving the way for the completion of a supplemental debt financing and full project sanction later this year.



China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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