Lucapa Diamond Company (ASX:LOM) has secured a US$15 million (A$19 million) financing facility to develop Phase 1 of the Mothae kimberlite diamond project in Lesotho.
Significantly, the debt financing will allow Lucapa to bring Mothae into production in 2018.
Lucapa secured its 70% stake in Mothae through an international tender run by the government of the Kingdom of Lesotho earlier this year.
READ: Lucapa Diamond Company de-risks production strategy with Mothae acquisition
Stephen Wetherall, managing director, commented
“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.
“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.”
Debt facility details
The secured US$15 million three-year debt facility has been arranged with private Singaporean company Equigold Pte Ltd.
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 Equigold facility carries an annual interest rate of 13% and other fees customary to a facility of this nature.
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.
Background
Lucapa is a growing diamond company with a portfolio of high-quality production, development and exploration assets in Angola, Lesotho, Botswana and Australia
Its flagship asset is the Lulo Diamond Project, which is a partnership over a 3,000 square kilometre concession.
It is a joint venture between Lucapa, who holds a 40% operating interest, Endiama (Angolan government) and Rosas & Petalas – a private partner.
LOM Price at posting:
26.0¢ Sentiment: Buy Disclosure: Held
