The $13 million loans was largely acquired by the company in 2018/19 to improve its financial position shortly after taking charge of the Mothae mine in 2017. Its lenders include Equigold and New Azilian, as well as the Industrial Development Corporation of South Africa (IDC). But now due to the weak global markets, the company finds itself having to defer such debts to 2022. The restructuring of debt allows the Australian based company more freedom to focus on navigating the weak diamond market.
“The refinancing arrangements will give Lucapa and Mothae more flexibility to navigate the pandemic affected diamond and investor markets and the support to continue driving the company’s strategy on its niche high-end operations and exciting exploration projects,” the mine said in a statement this week. In October 2018, Lucapa announced receiving $7 million (R100 million) from South Africa’s IDC to boost development at its 70 percent owned Mothae mine in Lesotho.
The company said the loan would considerably strengthen Mothae’s cash position. “Lucapa Diamond Company and the government of Lesotho are pleased to announce the receipt of an approved term sheet from IDC for US$ 7 million (M100 million) development facility for the high-quality Mothae Kimberlite diamond mine in Lesotho.
“The financing agreement with IDC, which is one of the largest development financiers in Southern Africa, followed an extensive period of due diligence and site visits where the legal, technical and financial modeling of the two-phased development of Mothae mine were reviewed,” Lucapa announced in 2018.
The government, through the Ministry of Mining also endorsed IDC support. In 2019 again, Lucapa announced further funding and refinancing arrangements to reduce the higher cost debt used to fund the development of Mothae diamond. The company entered into another US$7 million one-year loan facility with New Azilian at an annual interest rate of 10 percent, payable quarterly. Lucapa would utilize the New Azilian funding to pre-pay two quarterly US$1.9 million capital repayments on the company’s Equigold debt facility of October 2017.