Name of the Project
Karowe diamond mine underground expansion.

Location
Botswana.

Project Owner/s
Lucara Diamond Corp.

Project Description
The Karowe mine is an existing conventional drill-and-blast openpit operation, with diesel excavators and trucks providing an average of 2.6-million tonnes a year of kimberlite feed for the mill. The openpit mine operation is expected to terminate in mid-2025, ending at an elevation of about 700 m above sea level.

The combined openpit and underground indicated resource is estimated at 54.27-million tonnes at 15.3 carats per hundred tonnes for a contained diamond resource of 8.3-million carats, excluding stockpiles, effective from  July 1, 2019.

The feasibility of the proposed project has focused on the substantial resources remaining below the economic extents of the openpit.

Longhole shrinkage underground bulk mining has been selected to provide early access to higher-value ore and allow for a short payback period.

The underground project is designed to access the South lobe kimberlite resource below the current planned bottom of the openpit, which is expected to be at about 700 m above sea level, to a depth of 310 m above sea level.

Access to the South lobe underground will be through two vertical shafts – production and ventilation – of about 765 m and 715 m respectively.

All underground mined kimberlite will be processed at the existing Karowe processing plant over a 13- to 15-year period, following the cessation of the current openpit operations, which is expected to occur in 2025.

Life-of-mine production (remaining openpit and underground) is estimated at 7.8-million carats.

The underground expansion is expected to extend Karowe’s mine life by 15 years.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
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.

Capital Expenditure
Preproduction capital costs for the underground project are estimated at $513.7-million.

Planned Start/End Date
Based on construction starting in mid-2020, ore from underground mining will seamlessly integrate into current operations providing mill feed in 2023, with a ramp-up to 2.7-million tonnes a year to the processing plant by 2026.

Latest Developments
Lucara Diamond has signed a loan agreement with regard to its previously announced senior secured project financing debt package of $220-million between Lucara Botswana as the borrower and a syndicate of five mandated lead arrangers (MLAs).

The MLAs are African Export-Import Bank (Afreximbank), Africa Finance, ING, Natixis and Societe Generale’s London Branch.

Afreximbank is acting as facility agent in connection with the facilities.

The facilities mainly include a project finance facility of $170-million to fund the development of the underground project, and a $50-million working capital facility to refinance the company's existing debt and support ongoing operations.

The facilities, combined with the recently announced equity financings totalling about $30-million, and projected cash flows from the Karowe openpit mine during the underground construction period, have resulted in the Karowe underground expansion project being fully financed.

First drawdown under the facilities is expected to occur early in the third quarter of this year, after certain conditions precedent, which are customary to a financing of this nature, have been met.

Key Contracts, Suppliers and Consultants
None stated.

Contact Details for Project Information
Lucara Diamond Corp investor and public relations, tel +1 604 674 0272 or email info@lucaradiamond.com.