Name of the Project
Karowe diamond mine underground project (UGP).

Location
Karowe diamond mine, north-central Botswana.

Project Owner/s
Canadian diamond mining company Lucara Diamond Corp.

Project Description
Lucara is developing a UGP at Karowe to extend the mine’s life and continue the production of large, high-value Type IIa diamonds. The UGP is focused on the highest-value domain of the South Lobe of the AK6 kimberlite, which remains open at depth. The project has a diamond reserve grade of 12.2 carats per hundred tonnes.

The project is designed to support a 2.85-million-tonne-a-year underground mine and processing plant to recover an estimated 4.5-million carats of diamonds over the UGP’s ten-year mine life. 

Mining will use a hybrid method, comprising longhole shrinkage drill-and-blast bulk mining, transitioning to block/free caving at higher elevations where unassisted caving is expected. 

The underground mine will use a combination of existing and newly built infrastructure at the mine. All current and planned surface installations have been designed to fully support the long-term operation of the underground mine and the processing plant.

Run-of-mine material will be handled by an underground jaw crusher and conveyor system to shaft skips, with surface conveying and rehandling to the plant and waste facilities.

The openpit is expected to terminate in the first half of 2026. Surface stockpiled reserves will be processed as required while the underground mining operations ramp up to commercial production.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has an after-tax unlevered net present value, at an 8% discount rate, of $432.1-million.

Capital Expenditure
Preproduction capital costs to production are estimated at $779-million (over an eight-year preproduction construction and commissioning period), of which more than $436-million has been spent to date. The remaining preproduction capital costs of $343.2-million will be funded through a combination of operating cash flow, as well as new equity/debt financing. 

Planned Start/End Date
Production is planned to start in the first half of 2028.

Latest Developments
Lucara has applied to the TSX for a financial hardship exemption that will enable it to proceed with a C$165-million nonbrokered private placement without shareholder approval, citing severe liquidity constraints and the risk of disruption to the development of the UGP.

Under the proposed financing, Lucara plans to issue more than one-billion new shares at C$0.16 a share, a price representing a discount of about 23.6% to the five-day VWAP ending January 9, and about 22.4% to the five-day VWAP ending January 14. The placement is expected to close in late January, subject to final documentation and regulatory approvals.

The proceeds are intended to cover an immediate funding shortfall and sustain UGP development while longer-term project financing is pursued. Funds will support key underground works, including shaft equipping, conveyance commissioning, lateral development, extraction and drill horizon development, as well as general working capital and corporate purposes.

Without the exemption, Lucara will require approval from a majority of disinterested shareholders because the transaction breaches multiple TSX thresholds. The placement would result in new shares equal to about 225.5% of currently issued shares. Insider participation would also exceed key limits, owing to the involvement of the Lundin Family Trusts, which are subscribing for more than C$54-million. After closing, the trusts would hold about 30.8% of Lucara, though the company said no new control person would be created.

Lucara has attributed its financial position to increasing funding needs and limited access to capital as it advances the UGP. The company has fully drawn its debt facilities and relied on shareholder guarantees. By December 31, 2025, it had fully drawn a $190-million project facility, a $30-million working capital facility and a $28-million shareholder standby undertaking, and it disclosed covenant breaches that were waived by lenders on December 30, 2025.

The TSX has placed Lucara under delisting review as part of the hardship exemption process, and the company has noted it may need to consider an alternative TSX Venture Exchange listing if required.

Key Contracts, Suppliers and Consultants
JDS Energy & Mining Inc and leading independent consultants (updated feasibility study); Matthew Moss (P.Eng) (project manager and independent qualified person; and Lucara’s VP mineral resources and qualified person Dr Lauren Freeman.

Contact Details for Project Information
Lucara Diamond Corp. Tel: +1 604 674 0272 or Email: info@lucaradiamond.com.