Lucara Secures Karowe's Future with High-Stakes $350M Bond Deal

VANCOUVER, BC – March 12, 2026 – Lucara Diamond Corp. has successfully closed a critical US$350 million bond issuance, securing the final piece of a complex financing puzzle for its ambitious underground expansion at the Karowe mine in Botswana. The move pulls the company back from the brink of a liquidity crisis and fully funds its path to a new phase of high-value diamond production, albeit at a steep cost.

The announcement marks a pivotal moment for the diamond producer, which had been grappling with funding shortfalls that threatened to derail the Karowe Underground Project (UGP), a nearly US$780 million endeavor to extend the life of one of the world's most prolific sources of large, exceptional diamonds.

A High-Stakes Financial Rescue

The new financing consists of a five-year senior secured bond with a high-yield coupon rate of 12.5 percent per annum. This bond placement follows a C$165 million equity offering completed in January 2026 under a "financial hardship" exemption from the Toronto Stock Exchange—a move that underscored the severity of the company's financial predicament. At the time, Lucara had warned of an immediate liquidity shortfall, having fully drawn its existing credit facilities while facing project cost escalations.

Proceeds from the US$350 million bond will be used to repay the company's existing US$220 million project finance debt, set aside funds for two years of interest payments on the new bonds, and cover the remaining capital costs for the UGP.

"Following our upsized and highly successful equity private placement in January, we are very pleased to announce the completion of this bond issuance marking the completion of the final step in securing the full financing package for the Karowe Underground Project," commented William Lamb, President and CEO of Lucara, in a statement. He noted that the bond attracted "strong interest from a broad range of international investors," including a US$30 million allocation to the Lundin Family Trust, a key long-term shareholder.

With the project's US$779.2 million capital cost now fully funded, Lucara can shift its entire focus from financial survival to project execution. As of the end of 2025, US$469.4 million had already been spent on the massive undertaking.

The Billion-Dollar Bet Beneath Botswana

The Karowe Underground Project is an engineering feat designed to transform the mine from an open-pit operation, which has been in production since 2012, into a state-of-the-art underground mine. The project is essential for Lucara's future, as it will provide access to the highest-value sections of the Karowe orebody, a kimberlite pipe renowned for yielding exceptionally large and valuable Type IIa diamonds.

The transition has not been without challenges. The project has faced significant hurdles, including a year-and-a-half delay and cost increases announced in mid-2023 due to unexpected geological challenges and higher-than-anticipated water volumes encountered during shaft sinking. These issues pushed the project's final cost up and delayed the timeline for full production.

Despite these setbacks, major construction milestones have been achieved. The production and ventilation shafts reached their final depths in 2025, and contracts are in place for the lateral development that will connect them and establish the necessary underground infrastructure. The company anticipates that ore from underground development will begin supplementing production in 2027, with full-scale underground operations slated to commence in the first half of 2028. The expansion is expected to extend Karowe's mine life to at least 2040, with a projected recovery of 4.5 million carats over a ten-year period from the underground portion alone.

Navigating a Turbulent Diamond Market

Lucara's massive investment comes at a time of significant upheaval in the global diamond industry. The market is currently bifurcated, with demand and prices for smaller, commercial-grade natural diamonds under severe pressure from the proliferation of cheaper lab-grown diamonds (LGDs). Furthermore, a sluggish economic recovery in China and geopolitical tensions have dampened overall consumer sentiment for luxury goods.

However, Lucara's strategy hinges on its unique position at the very top of the market. The Karowe mine is a rare source of the world's largest and most valuable rough diamonds. This niche market for exceptional, multi-carat stones has proven far more resilient to the pressures affecting the broader industry. While the LGD market is capturing a share of the fashion jewelry segment, the demand for large, unique, and natural "heritage" stones from collectors and high-end jewelers remains stable.

The success of the UGP is entirely dependent on this high-end market remaining robust. By securing access to the richest part of its orebody for the next decade and a half, Lucara is making a calculated bet that the allure of its rare and spectacular diamonds will continue to command premium prices, justifying the immense cost and complexity of the underground expansion.

Botswana's Enduring Sparkle

Beyond the corporate balance sheets, the successful financing of the Karowe UGP is a significant development for the nation of Botswana. The diamond industry is the backbone of the country's economy, and the extension of the Karowe mine's life to 2040 secures thousands of direct and indirect jobs, as well as substantial revenue through taxes and royalties for years to come.

Lucara has established itself as a key partner in the region, operating under stringent international standards, including certification from the Responsible Jewellery Council and adherence to the Equator Principles for the UGP's development. The company's social investment programs, such as the Karowe Village Initiatives, fund sustainable community-owned projects in agriculture and education, aiming to create economic benefits that outlast the mine's operational life.

With the funding now in place, the focus returns to the ground in Botswana. The next two years will be critical as Lucara's team works to complete the complex underground development on schedule and within budget. The successful execution of this final phase will ensure that the Karowe mine continues to be a source of the world's most magnificent diamonds and a vital economic engine for Botswana for another generation.