Ms. Eira Thomas reports

LUCARA ANNOUNCES Q1 2023 RESULTS; UNDERGROUND EXPANSION CONTINUES

Lucara Diamond Corp. today released its results for the quarter ended March 31, 2023.

Q1 2023 highlights:

• Guidance maintained;
• All key operational metrics were on plan, with 500,000 tonnes of ore and 800,000 tonnes of waste mined, 700,000 tonnes of ore processed and 89,640 carats recovered;
• The Q1 2023 operating cash cost of $26.65 per tonne of ore processed was well below the expected annual operating cash cost range of $32.50 to $35.50 per tonne of ore processed;
• Revenue for the quarter ended March 31, 2023, totalled $42.8-million, including $5.3-million through Clara;
• Cash flow generated from operating activities was $20.4-million;
• $30.5-million invested in the Karowe underground expansion project (UGP) in Q1 2023 focused on:
  • Main shaft sinking activities in both the ventilation shaft, currently at 213 metres below collar, and the production shaft, currently at 187 metres below collar;
  • The successful completion of the first grout programs in each shaft during the first quarter of 2023;
  • Completion and energization of the 11-kilovolt transmission line from the new Karowe substation to the UGP;
  • Stage two of the bulk power supply upgrade to connect all mine power requirements to the new Karowe substation and 132 kV power line. Both the existing operations and the UGP are now fully powered through the upgraded grid-supplied electricity.

Eira Thomas, president and chief executive officer, commented: "As anticipated, Q1 delivered lower revenues than in the comparative period, owing to the change in ore mix processed and diamond pricing weakness resulting from continued geopolitical and economic uncertainty. Lucara's outlook for the year remains unchanged as the largest influence on our revenue in Q1, ore mix, returns to higher contributions of south lobe ore in subsequent quarters. Sinking continued in both the production and ventilation shafts with material improvement to planned sinking rates achieved for the production shaft and mitigations under way in the ventilation shaft to achieve the same. Water management remains a key focus area. An update to the schedule and budget for the underground project has been initiated in response to slower than planned ramp up to expected sinking rates, and, to account for time incurred and anticipated for future grouting programs. We remain on track to complete the results of this analysis before the end of Q2 2023."

Review for the quarter ended March 31, 2023

• Operational highlights from the Karowe mine for Q1 2023 included:
  • Ore and waste mined of 500,000 (Q1 2022: 800,000) and 800,000 tonnes (Q1 2022: 500,000), respectively;
  • 700,000 tonnes (Q1 2022: 700,000) of ore processed;
  • A total of 89,640 carats recovered (Q1 2022: 83,917) at a recovered grade of 12.8 carats per hundred tonnes of direct milled ore (Q1 2022: 12.6).
    • A total of 98 specials were recovered, with two diamonds greater than 100 carats including one diamond greater than 300 carats in weight;
    • Recovered specials equated to 4 per cent of the weight percentage of total recovered carats from ore processed during Q1 2023 (Q1 2022 -- 6.9 per cent).
  • The 12-month total recordable injury frequency rate of 0.36 (Q1 2022: 0.23) trended downwards following a three-month period with no recordable injuries;
  • The Karowe mine has operated for over two years without a lost-time injury.
• Financial highlights for the three months ended March 31, 2023, included:
  • Revenues of $42.8-million (Q1 2022: $68.2-million) reflected a planned change in product mix beginning in early 2023 combined with the continuation of weaker diamond prices when compared with the strong diamond pricing observed in Q1 2022. During Q1 2023, 64 per cent of the carats processed were recovered from the Centre and North Lobes and 36 per cent were recovered from South Lobe material (Q1 2022: 100 per cent South Lobe ore);
  • Karowe's plus 10.8 production, sold through HB, accounted for 57 per cent (Q1 2022: 66 per cent) of total revenues recognized in Q1 2023;
  • Sales of non-Karowe diamonds through Clara were $1.5-million in Q1 2023 (Q1 2022: $1.0-million);
  • Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $15.3-million (Q1 2022: $36.0-million), with the change directly attributed to a decrease in revenues;
  • Cash flow of $20.4-million (Q1 2022: $30.8-million) from operating activities.
• Cash position and liquidity at March 31, 2023:
  • Cash and cash equivalents of $31.2-million;
  • Financed $18.0-million into a cost overrun facility in the first quarter of 2023;
  • Drew $25.0-million from the $170.0-million project finance facility for the Karowe UGP resulting in $90.0-million drawn at quarter-end;
  • The outstanding balance on the working capital facility increased from $15.0-million to $23.0-million through Q1 2023, resulting in available liquidity of $27.0-million.

Diamond market

Despite a positive, longer-term outlook for natural diamonds, anchored on improving fundamentals around supply and demand, softer diamond prices observed in the latter half of 2022 have continued into 2023 as global economic concerns combined with geopolitical uncertainty, including the continuing conflict in Ukraine continue to play out in the market, particularly in North America. Prices are beginning to show signs of stabilization as China begins to open-up post-COVID, a trend which is anticipated to continue toward the end of the year. Though sales of lab-grown diamonds increased during the period, intense competition combined with improvements in technology continue to drive prices of lab grown diamonds down. This further differentiates this market segment from the natural diamond market and highlights the unique nature and inherent rarity of natural diamonds. The longer-term market fundamentals remain unchanged and positive, pointing to strong price growth over the next few years as demand is expected to outstrip future supply.

2023 outlook

This section of the press release provides management's production and cost estimates for 2023. These are "forward-looking statements" and subject to the cautionary note regarding the risks associated with forward-looking statements. Diamond revenue guidance does not include revenue related to the sale of exceptional stones (an individual rough diamond which sells for more than $10-million), or the Sethunya.

No changes were made to the company's 2023 guidance (released in December, 2022).

Conference call

The company will host a conference call and webcast to discuss the results on Friday, May 12, 2023, at 5 a.m. Pacific Time, 8 a.m. Eastern Time.

Conference ID:  33643944/Lucara Diamond

Dial-in numbers:

Toll-free participant dial-in:   North America 1-888-390-0605

United Kingdom toll-free:  0800-652-2435

Local Vancouver:  1-416-764-8609

Conference replay:

A replay will be available until May 19, 2023. The pass code for the replay is: 643944 followed by the pound key.

Replay number (toll-free North America):  1-888-390-0541

Replay number (local):  1-416-764-8677

About Lucara Diamond Corp.

Lucara is a leading independent producer of large exceptional-quality Type 2a diamonds from its 100-per-cent-owned Karowe diamond mine in Botswana. The Karowe mine has been in production since 2012 and is the focus of the company's operations and development activities. Clara, a wholly owned subsidiary of Lucara, has developed a secure, digital sales platform that uses proprietary analytics, together with cloud and blockchain technologies, to modernize the existing diamond supply chain, driving efficiencies, unlocking value and ensuring diamond provenance from mine to finger. Lucara has an experienced board and management team with extensive diamond development and operations expertise. Lucara and its subsidiaries operate transparently and in accordance with international best practices in the areas of sustainability, health and safety, environment, and community relations. Lucara has adopted the International Finance Corp. Performance Standards and the World Bank Group's Environmental, Health and Safety Guidelines for Mining (2007). Accordingly, the development of the Karowe underground expansion project adheres to the Equator Principles. Lucara is committed to upholding high standards while striving to deliver long-term economic benefits to Botswana and the communities in which the company operates.

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