Lucapa Diamond Company signs funding and refinancing agreements; strengthens financial position

Lucapa Diamond Company Limited (ASX: LOM) is an emerging diamond company with high-value mines and exploration projects in Africa and Australia. Its flagship property is the Lulo Diamond Project in Angola, Africa along with early stage exploration projects at Orapa Area F in Botswana and Brooking in Western Australia.

On April 4th, 2019, Lucapa announced that it has received strong support through funding and refinancing arrangements with New Azilian Pty Ltd and Equigold Pte Ltd, that would improve its financial position and reduce financing costs associated with the development of its second new high-value value 1.1-Mtpa Mothae kimberlite mine in diamond-rich Lesotho. The agreements will ensure successful delivery and de-risking of Mothae, at which the company commenced commercial diamond recoveries in January 2019 following a successful commissioning and ramp-up phase.

On April 2nd, 2019, Lucapa and the Government of the Kingdom of Lesotho reported the recovery of a total of five +50 carat diamonds in its sampling and commercial mining operations.

As per the first agreement, New Azilian will enter into an AUD 10-million one-year loan facility with Lucapa at an annual interest rate of 10%, payable quarterly while the loan principal repayable at the end of the term. Both parties may convert up to 50% of the interest payments into ordinary fully-paid Lucapa shares under a standard market-related volume weighted average price calculation, subject to shareholders’ and ASX approval.

Meanwhile, New Azilian has extended AUD 6-million advance of the loan facility to Lucapa, with the balance to be drawn in May 2019 following Lucapa’s 2019 Annual General Meeting.

Under another agreement, Lucapa will utilise the New Azilian funding to pre-pay two quarterly USD 1.9 million capital repayments on the Company’s Equigold debt facility while Equigold has waived off the early repayment fees in the loan agreement. In addition, both parties have agreed to bring forward the right to convert a USD 1.9-million quarterly capital repayment into ordinary fully-paid Lucapa shares, which will overall reduce Equigold debt facility to ~ USD 7.5 million.

In another announcement, the company informed the exchange about allotting ~20.2 million fully paid ordinary shares w.r.t USD 1.875 million quarterly capital repayment, with regards to USD 15 million Equigold loan facility. Besides, the company issued 1.87 million performance rights to key operational staff.

Furthermore, the company also announced that one of its directors, Miles Kennedy has disposed off 90K performance rights (Expiring 31 May 2020) and ~15k performance rights (Expiring 7 June 2021) and acquired  15,416 ordinary shares, effective 1 April’19.

The funds from New Azilian will facilitate scheduling of future diamond tenders such as the one scheduled for Q2 2019 in Antwerp.

As per the Annual Report for the year ended December 31st, 2018, released on March 23rd, 2019, the company reported a loss after tax of USD 7.1 million, up on USD 3.4 million in the prior year 2017.

The Lulo alluvial diamond company Sociedade Mineira Do Lulo (SML), Lucapa 40% owner and operator, achieved gross diamond sale revenues of USD 26.4 million during the year at an average price USD 1,313 per carat. Besides, SML reported an EBITDA loss for the year of USD 2 million, down on the EBITDA profit of USD 7.6 million in 2017. In December 2018, SML executed a pro-rata USD 4-million distribution to the Lulo partners and a USD 4-million loan repayment to Lucapa.

The net cash and cash equivalents amounted to ~ USD 8.2 million as of December 31st, 2018.

At the end of the day’s trading on Thursday, April 4th, 2019, the LOM stock price was trending at AUD 0.182, up 1.111% by AUD 0.002.


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