Lucara Diamond Secures Karowe Mine Future with 25-Year License Renewal, Paving Way for Major Underground Expansion

Lucara Diamond Corp, a leading Canadian diamond miner renowned for its exceptional quality and large stone recoveries, has achieved a pivotal milestone in its long-term strategic plan. The company proudly announced the renewal of its mining licence for the world-class Karowe diamond mine in Botswana. This crucial extension, granted by Botswana’s Ministry of Mineral Resources, Green Technology and Energy Security, secures Lucara’s mining rights for an impressive period of 25 years, effective from January 4, 2021, and extending through to 2046. This development not only ensures operational continuity but also marks a critical step forward in the formal sanctioning and execution of the ambitious Karowe underground expansion project.

A Testament to Partnership and Stability in Botswana

The renewal of the Karowe mining licence underscores the robust and mutually beneficial partnership between Lucara Diamond Corp and the Government of Botswana. Botswana is globally recognized as a stable, investor-friendly jurisdiction for diamond mining, a reputation built on clear regulatory frameworks, a commitment to economic development, and a track record of successful collaborations with international mining entities. This 25-year extension is a strong vote of confidence from the Botswanan government in Lucara’s operational capabilities, its commitment to ethical mining practices, and its significant contribution to the nation’s economy.

Eira Thomas, President and CEO of Lucara Diamond Corp, emphasized the profound significance of this achievement, stating, “The receipt of our mining licence renewal and extension to 2046 is an important milestone for the Karowe underground expansion project, paving the way for the completion of supplemental debt financing and full project sanction later this year. Lucara is grateful for the confidence and support demonstrated by the Government of Botswana as we work to expand our operations at Karowe underground, for the benefit of the Government and the people of Botswana together with Lucara’s shareholders. We look forward to continued cooperation and a mutually rewarding partnership with the Government of Botswana.” Her comments highlight the integral role of government support in de-risking major capital projects and fostering a sustainable mining environment.

Karowe Mine: A Source of Extraordinary Diamonds

Since commencing production in 2012, the Karowe mine has solidified its reputation as one of the world’s most prolific sources of large, high-quality, Type IIa diamonds. It has consistently delivered exceptional stones that have captured global attention and redefined perceptions of diamond rarity and value. Notably, Karowe is celebrated for being the source of several of the largest and most significant diamonds discovered in recent history, including:

• **The Lesedi La Rona:** A breathtaking 1,109-carat, Type IIa diamond, discovered in 2015, which was the second-largest gem-quality diamond ever recovered.
• **The Sewelô:** A spectacular 1,758-carat diamond, unearthed in 2019, making it the third-largest gem-quality diamond in history.
• **The Sethunya:** A magnificent 549-carat white diamond, discovered in 2020.

These discoveries not only underscore the unique geological endowment of the Karowe kimberlite but also showcase Lucara’s advanced XRT (X-ray Transmission) recovery technology, which enables the efficient and safe retrieval of large diamonds without breakage. The continued operation of Karowe, particularly through its underground expansion, ensures that this exceptional source will continue to contribute significant and rare treasures to the global diamond market for decades to come.

The Vision for Karowe: An Ambitious Underground Expansion

The Karowe underground expansion project represents a natural evolution for the mine. With the open-pit operations nearing their economic limit in the coming years, transitioning to underground mining is essential to unlock the deeper, high-value diamond resources that extend beneath the current pit. This strategic move is designed to extend the mine’s life significantly, ensuring long-term value creation for all stakeholders.

Project Scope and Financial Commitment

The underground expansion program is a substantial undertaking, with an estimated capital cost of $514 million. This significant investment will cover a comprehensive development plan over a five-year period, transforming the existing open-pit operation into a sophisticated underground mine. Key components of the project are expected to include:

• **Shaft Sinking:** Development of multiple shafts for hoisting ore, personnel, and materials, as well as for ventilation.
• **Underground Development:** Extensive tunneling and excavation to create access ramps, production levels, and ore handling systems.
• **Infrastructure Development:** Installation of advanced ventilation systems, dewatering pumps, electrical networks, and communication systems critical for deep underground operations.
• **Processing Plant Enhancements:** Potential upgrades to the existing processing plant to optimize efficiency for underground ore.

First ore from the underground mining operations is anticipated in 2026, marking a new chapter in Karowe’s production history. The transition from open-pit to underground mining is a complex engineering feat, requiring meticulous planning, advanced technology, and a highly skilled workforce.

Economic and Social Impact of the Expansion

The Karowe underground expansion is poised to deliver substantial economic and social benefits to Botswana. Beyond securing the long-term viability of the mine, it is expected to:

• **Job Creation:** Generate hundreds of direct and indirect employment opportunities during the construction phase and throughout the extended operational life of the mine, contributing significantly to local economies.
• **Increased Government Revenues:** Contribute substantial royalties, taxes, and dividends to the Botswanan government, which are vital for national development initiatives in education, healthcare, and infrastructure.
• **Local Business Development:** Stimulate growth for local suppliers and service providers, fostering a robust local economy.
• **Skills Development:** Facilitate the transfer of advanced mining skills and technologies to the local workforce, enhancing human capital development within the country.
• **Community Engagement:** Reinforce Lucara’s commitment to community development programs, ensuring that the benefits of mining extend to local communities through sustainable initiatives.

Lucara’s proactive approach to environmental, social, and governance (ESG) principles will be integral to the expansion project, ensuring that the development proceeds with the highest standards of safety, environmental stewardship, and community responsibility.

Navigating the Future: Financing and Market Dynamics

The mention of “supplemental debt financing” by CEO Eira Thomas highlights the significant financial planning involved in a project of this scale. Securing the necessary funding from a consortium of financial institutions is a critical next step following the licence renewal. This financing will underpin the construction and development phases, ensuring that the project can proceed without undue financial constraints. The successful securing of the mining licence renewal provides a strong foundation for these financing efforts, demonstrating regulatory certainty and long-term project viability to potential lenders.

In the broader context of the global diamond market, continued supply from a reliable and ethically-sourced mine like Karowe is of paramount importance. As consumer demand increasingly shifts towards transparency and provenance, diamonds from Botswana, particularly those recovered using Lucara’s responsible mining practices, hold a premium value. The Karowe underground expansion will ensure a consistent supply of exceptional diamonds, bolstering Lucara’s position as a key player in the high-value segment of the diamond industry.

Conclusion: A Bright Future for Lucara and Botswana

The 25-year mining licence renewal for the Karowe mine is a monumental achievement for Lucara Diamond Corp. It not only provides long-term operational stability but also unequivocally signals the go-ahead for one of the most significant diamond mining projects globally – the Karowe underground expansion. This venture, with its substantial investment and multi-year development timeline, promises to extend the life of a truly extraordinary mine, continuing its legacy of producing some of the world’s most magnificent diamonds. More importantly, it reaffirms the enduring and beneficial partnership between Lucara and the Government and people of Botswana, promising continued economic prosperity, job creation, and sustainable development for decades to come. The future for Lucara Diamond Corp, the Karowe mine, and the Botswanan diamond sector shines brightly, promising continued innovation, discovery, and shared success.