Lucapa Secures A$19 Million Funding for High-Value Mothae Diamond Project in Lesotho

Lucapa Diamond Company Limited (ASX: LOM) has successfully concluded a significant funding package, valued at up to A$19 million, to propel the acquisition and advancement of its high-value Mothae kimberlite diamond project. Located in the renowned diamond-producing nation of Lesotho, Southern Africa, this strategic move underscores Lucapa’s commitment to consolidating its position as a leading producer of large, premium-quality diamonds globally.

The comprehensive funding strategy is designed to ensure a seamless transition for Mothae into its commissioning phase, leveraging a staged, low-risk development plan. This announcement marks a pivotal moment for Lucapa, as it positions the company to expand its portfolio of exceptional diamond assets and build upon the success of its existing operations.

Strategic Funding Unlocks Mothae’s Potential

Lucapa elaborated on the intricate details of the financial arrangement, which strategically combines several components to provide robust capital for the Mothae project. The funding package primarily encompasses:

• The underwriting of LOMOA options, providing a solid foundation for future capital.
• A crucial bridging loan, ensuring immediate liquidity to meet development milestones.
• The issuance of new options, offering additional long-term financial flexibility and growth potential.

This substantial capital injection, when synergised with the cash repatriated from Lucapa’s highly successful Lulo diamond mine in Angola, places the company firmly on track. The aim is to commence the commissioning of the Mothae kimberlite diamond project in the first quarter of 2018. This methodical approach highlights Lucapa’s dedication to prudent financial management and a strategic, risk-mitigated pathway to production.

Mothae: A Premium-Quality Asset in a World-Class Region

Lucapa Diamond Company views Mothae not merely as an acquisition, but as a critical extension of its core strategy: focusing on premium-quality diamond assets. Much like its acclaimed Lulo alluvial diamond mine, Mothae is anticipated to yield high-value diamonds that will significantly complement and enhance Lucapa’s overall production profile. The company proudly highlighted that its Lulo mine achieved the distinction of delivering the world’s highest average US$ per carat prices in 2016, a testament to its operational excellence and the exceptional quality of its diamond recoveries.

The inherent quality and strategic location of the Mothae project further solidify Lucapa’s conviction in its immense potential. Extensive historical bulk sampling results from Mothae have consistently demonstrated the presence of large and remarkably valuable diamonds. Furthermore, the project’s geographical positioning is unparalleled, placing it squarely within the heart of the world’s highest-price cluster of kimberlite diamond mines. This prestigious cluster includes:

• Letseng Diamond Mine: Located within a mere 5 kilometres of Mothae, Letseng is globally recognized as the highest US$ per carat kimberlite mine in the world, renowned for its colossal and exquisite diamonds.
• Liqhobong Diamond Mine: A significant producer in the region, known for its consistent output.
• Kao Diamond Mine: Another prominent player in Lesotho’s rich diamond landscape.

The close proximity to such esteemed neighbours not only validates Mothae’s geological promise but also suggests a shared geological heritage indicative of large, high-value diamond occurrences. This unique geological setting in Lesotho is a key differentiator, attracting exploration and investment from major players in the diamond industry.

Unlocking Value Through Defined Resources and Proven Potential

Lucapa’s confidence in committing to the development of Mothae stems from the project’s exceptionally well-defined geological characteristics. The 8.8-hectare kimberlite pipe at Mothae has undergone extensive and meticulous evaluation, benefiting from a rigorous program of drilling and trial mining. This thorough preliminary work has provided critical insights into the pipe’s morphology, grade distribution, and diamond characteristics, significantly de-risking the development phase.

The trial mining operations at Mothae were particularly illuminating, yielding more than 23,000 carats of diamonds. This substantial recovery was not only significant in volume but also in quality, featuring individual stones of up to an impressive 254 carats. Additionally, the recoveries included highly sought-after Type IIa diamonds, which achieved actual sale prices of up to US$41,500 per carat. These remarkable results underscore Mothae’s capacity to produce extremely rare and valuable diamonds, positioning it as a significant asset for the global luxury market.

Further bolstering the project’s credibility and long-term potential is an independent JORC (Joint Ore Reserves Committee) resource estimate. The JORC code is an internationally recognized standard for reporting mineral resources and ore reserves, ensuring transparency and reliability of geological data. For Mothae, this estimate confirmed a robust resource of more than 1 million carats of diamonds, with a modelled average diamond value of US$1,063 per carat. This valuation positions Mothae as having the second highest JORC average price per carat in the world, a truly exceptional metric that highlights the project’s high-value proposition and economic viability.

Lesotho: A Premier Destination for High-Value Diamonds

Lesotho, often referred to as the “Kingdom in the Sky,” has firmly established itself as a premier destination for diamond mining, particularly for large, high-quality stones. Its unique geological setting, characterized by prolific kimberlite pipes, consistently yields some of the world’s most valuable diamonds. The country’s stable mining policies and supportive regulatory environment further enhance its attractiveness for international investors like Lucapa.

The proximity of Mothae to other world-class operations such as Letseng creates a synergistic environment for shared knowledge, infrastructure, and expertise. This cluster effect not only validates the geological prospectivity of the region but also contributes to a skilled local workforce and established supply chains, which are crucial for efficient mining operations. Lucapa’s investment in Mothae is a testament to the enduring appeal and significant potential of Lesotho’s diamond sector, reinforcing the nation’s reputation as a treasure trove of exceptional gems.

A Strategic Partnership for Growth

The A$19 million funding package was meticulously arranged through agreements with two prominent entities in the financial sector: Westar Capital Limited and First Class Securities Pty Ltd. These partnerships reflect strong investor confidence in Lucapa Diamond Company’s management team, its proven track record with the Lulo mine, and the robust potential of the Mothae project. Such collaborations are instrumental in providing the necessary capital to transition promising diamond projects from exploration and evaluation into full-scale production, contributing significantly to regional economic development and job creation.

The Road Ahead: Commissioning and Future Prosperity

With the funding now secured, Lucapa Diamond Company is poised to execute its strategic vision for Mothae. The planned commissioning in the first quarter of 2018 under a staged, low-risk development plan underscores a commitment to operational efficiency and sustainable growth. This phased approach allows for optimal resource allocation, progressive scaling of operations, and continuous optimization of processing techniques, minimizing initial capital expenditure risks while maximizing long-term returns.

The integration of Mothae into Lucapa’s existing operational framework is expected to create significant synergies. By leveraging the expertise and best practices honed at the Lulo mine, Lucapa can accelerate Mothae’s path to profitability. This expansion reinforces Lucapa’s strategy of focusing on projects with the potential to generate high average dollar-per-carat values, thereby maintaining its market leadership in the high-end diamond segment. The successful development of Mothae promises to elevate Lucapa’s production profile, diversify its asset base, and solidify its reputation as a consistent producer of exceptional diamonds for the global market.

In conclusion, the successful procurement of this A$19 million funding package represents a monumental step forward for Lucapa Diamond Company and its high-value Mothae project. It not only ensures the timely development of a world-class diamond asset in a premier mining jurisdiction but also reaffirms Lucapa’s strategic focus on delivering unparalleled value from premium diamond resources.