Mr. William Lamb reports

LUCARA ANNOUNCES UPDATED FEASIBILITY STUDY FOR KAROWE UNDERGROUND PROJECT

Lucara Diamond Corp. has filed a technical report for the updated feasibility study prepared in accordance with National Instrument 43-101 -- Standards of Disclosure for Mineral Projects on its Underground Expansion project (UGP or project) at the Karowe diamond mine located in Botswana. The report is titled "Karowe Mine - Botswana 2023 Feasibility Study Technical Report," with an effective date of June 30, 2023, and was prepared for Lucara by JDS Energy & Mining Inc. The report is available under the company's profile on SEDAR+ or from the company's website.

Karowe is located in north-central Botswana, one of the world's most prolific diamond-producing areas, and is a producer of large, high-value type 2a diamonds and the only diamond mine to have produced four diamonds in excess of 1,000 carats in size. The underground expansion at Karowe is expected to double the mine life, and to generate significant revenue and cash flow out to 2040, extending benefits to the company, its employees, shareholders, communities surrounding the mine and Botswana. The Report provides an update to the 2019 underground feasibility study (2019 FS) and 2021 financed base case to reflect changes to project duration, capital expenditure, and technical updates to the project. All amounts are in United States dollars unless otherwise noted.

Combined open pit/underground highlights

• Extending mine life by 15 years;
• Total life of mine (LOM) diamond recoveries of 6.8 million carats;
• Operational highlights include approximately 42.4 million tonnes of ore mined and approximately 52.2 million tonnes of ore processed;
• Highest-value EM/PK(S) unit of the South lobe is the dominant rock type mined over the LOM (life of mine) of the underground; a significant source of many large high-value diamonds, including the 1,109-carat Lesedi La Rona, the 549-carat Sethunya and more recently the 1,080-carat Type 2a white stone recovered in August, 2023;
• Preproduction capital costs for the UGP totalling $683-million, to be expended over an eight-year preproduction construction and commissioning period until H2 2027, of which 3.5 years have already been successfully completed;
• The UGP is projected to generate $1.1-billion in cash flow;
• Fully financed project as announced on Jan. 9, 2024, when the company amended its debt package that was originally entered into in 2021;
• The amended facilities consist of a project finance facility (project loan) of $190.0-million (previously $170.0-million) to finance underground development, and a $30.0-million (previously $50.0-million) senior secured working capital facility (the WCF) which is used to support continuing operations along with operating cash flow from the Karowe open pit.

William Lamb, president and chief executive officer of Lucara Diamond, commented: "Lucara is excited to share the updated feasibility study for the Karowe Underground Expansion project, which reinforces our strategic decision to extend mine life and continue to generate benefits for our stakeholders. Karowe is a world-class mine, and we look forward to continuing to recover large, exceptional diamonds from the South lobe at Karowe."

This report is updated from the original 2019 UGP FS and 2021 financed base case and encompasses the following significant modifications:

• Project construction progress (surface infrastructure and underground development) to June 30, 2023;
• Revised economic modelling with updated diamond prices and exchange rates, exclusion of sunk costs and inclusion of financing costs;
• Rebaselining the UGP schedule and as a result, the open pit mine and processing facility production plans;
• Re-estimation of the current operations budgets and project capital and operating cost projections;
• Modifications to the mine design;
• Fine tailings storage and management;
• Advancement of detailed engineering designs;
• Remodelling of the hydrogeological conditions;
• Underground dewatering and grouting methodology;
• Groundwater management on surface.

Project description:

• The UGP is focused on the South lobe of the AK06 kimberlite;
• The UGP is designed to support operation of a 2.7 million tonnes per annum underground mine and processing plant;
• 8.5-metre finished internal diameter production shaft approximately 767 metres deep equipped to hoist a nominal 7,400 tonnes per day of ore and additional development waste;
• Six-metre finished internal diameter unequipped ventilation shaft with a planned final depth of 729 metres;
• Extraction of approximately 400 vertical metres of the South lobe of the AK06 kimberlite from 310 metres above sea level (masl) (700 metres below surface) to the bottom of the depleted open pit (approximately 710 masl or 300 metres below surface).

Feasibility study approach

The FS has been prepared following Canadian Institute of Mining Guidelines for the development of an underground mine. Production from the underground is planned after open pit operations have been completed and the company will rely on the processing of stockpiled material during the latter part of the underground development and ramp up to full production in Q1, 2028.

The results of the FS represent forward-looking information that are subject to a number of risks, uncertainties and other factors that may cause results to differ materially from those presented herein.

Operating and capital cost estimates

The mine operating cost estimate for the Karowe project is based on a combination of experience, reference projects, first principle calculations, budgetary quotes and factors as appropriate for a FS.

The capital cost estimate was prepared using a combination of first principles, applying project experience and using vendor/ contractor provided budgetary quotes while avoiding the use of general industry factors. The estimate is derived from engineers, contractors and suppliers who have provided similar services to existing operations and have demonstrated success in executing the plans set forth in the study.

Economics

The main assumptions with respect to the economic model are listed in Table 4. Table 5 shows the baseline diamond prices by zone.

Sensitivities

A univariate sensitivity analysis was performed to examine which factors most affect the project economics when acting independently of all other cost and revenue factors. Each variable evaluated was tested using the same percentage range of variation, from negative 20 per cent to positive 20 per cent, although some variables may actually experience significantly larger or smaller percentage fluctuations over the LOM. The project is most sensitive to diamond prices and grade and the least sensitive to capital costs.

Mineral resources

The 2023 mineral resource estimate for Karowe incorporates drilling and sampling data obtained prior to 2018, and additional drilling and sampling information obtained in 2018/2019 which targeted delineation of the deep extension of South lobe (deeper than approximately 600 metres from surface). In 2019, the geological data were used to develop an updated internal geology model for the South lobe and to update the external contacts for the South, Centre and North lobes. The 2023 update also includes geological information and production data derived from open pit mining to the end of June 30, 2023.

The 2023 mineral resources for Karowe, as summarized in Table 7, have been classified as either indicated or inferred mineral resources, according to CIM Definition Standards for Mineral Resources and Mineral Reserves (CIM, 2014). Mineral resources reported are inclusive of those portions of the mineral resource that have been converted to mineral reserves and have an effective date of June 30, 2023.

Mineral reserves

The effective date for the mineral reserve estimate contained in the updated FS report is June 30, 2023, and was prepared by qualified person (QP) Brandon Chambers, PEng. All mineral reserves in Table 8 are classified as probable mineral reserves. The mineral reserves, except stockpiles, are not in addition to the mineral resources, but are a subset thereof.

The QP has not identified any legal, political or environmental risks that would materially affect potential mineral reserves development.

Geotechnical

A geotechnical investigation program was carried out to support underground mine design, building on the open pit and underground preliminary economic assessment (PEA) geotechnical modelling carried out in 2017. The geotechnical drilling, sampling and testing program was designed to comply with the data confidence requirements of a FS, in support of a feasibility-level mine design and leading into optimization of the design implementation. The investigation focused on defining the geotechnical characteristics of the surrounding country rock as well as the South lobe kimberlite, and involved the drilling, geotechnical logging and sampling of 37 diamond drill holes, totalling more than 23,500 m, with field and laboratory testing of the core samples. Almost 11,000 tests were conducted on samples across the various lithologies.

Hydrogeology

Water control and hydrogeological context of the deposit and host rocks are key elements in the mine plan. The AK6 deposit sits within layered, sedimentary, regional aquifers that have been documented since the 1980s.

Since the release of the 2019 feasibility study report, five key updates were made:

• The groundwater flow model was updated;
• A planned drainage gallery at the 680 level (680 L) was not implemented;
• The groundwater flow model in the 2019 FS assumed that grouting in the granites will take place in all underground development and will be 75-per-cent successful. The predicted inflow rate in the updated model (2023) only assumed 66-per-cent successful grouting during shaft sinking and station development up to Jan. 1, 2026; the model also assumes that no grouting activities are undertaken once underground pumping capacity is available unless particularly high inflows are encountered that hinder development;
• The underground drainage systems were updated;
• The depressurization target for the open pit slope was updated.

Mineral processing

The Karowe processing plant has been treating unweathered South lobe ore since 2015 and mineral processing characteristics are very well understood.

A comminution test program was conducted to test the milling characteristics of the South lobe material below the open pit to determine if the mill is suitable for deeper EM/PK(S) ore.

The second test involved testing of Tomra's X-ray transmission (XRT) machines and associated software to determine their ability to differentiate between diamonds, coal, carbonaceous shale and other waste rock. Due to the high carbon content of coal and carbonaceous shales, they were of greatest concern. The dilution of ore with carbonaceous shales (and the small, sporadic, coal seams contained therein) is anticipated to occur during the later stages of mine life. Testing was conducted by Tomra at their testing facilities in Germany.

Mining

The currently operating open pit at Karowe is a conventional load and haul operation. Open pit mine operations are expected to terminate mid-2025 at an elevation of 713 masl. The mine currently has over three years of surface stockpiled reserves, which will be consumed as required while the Underground mine operations ramp up to commercial production.

The 2019 FS investigated several underground mining methods based on data and information from an exhaustive field program conducted in 2018 and 2019 to define mineral resource, geotechnical and hydrogeological characteristics necessary for making informed decisions at a FS level study.

The inability for natural or preconditioned caving to occur has resulted in the development of the long hole shrinkage (LHS) mine method, which is essentially a fully assisted cave. The method involves a combination of long-hole drilling and blasting to create a large muck pile within the South lobe, followed by the managed drawdown of the blast material through a panel cave extraction level.

The benefits of the LHS mining method include:

• Highest value ore to be extracted first due to the bottom-up mining approach;
• Minimal development in weak, water-bearing lithologies near surface;
• Dilution will be delayed (occurring after the payback period) as the weaker host rock is not exposed until later in the mine life;
• Development of the underground mine can occur simultaneously with the open pit operations;
• Low operating costs;
• Ease of operation after the drilling and blasting phase is complete and small underground work force requirements;
• Early exclusion of precipitation into the underground workings until the crown pillar is blasted;
• Significant ability to increase production after the drill and blast phase is complete;
• Designed to manage natural caving should it occur.

Infrastructure

The UGP at Karowe will include the use of existing and new infrastructure at the Karowe mine. Current and planned infrastructure is designed to support the operation of the mine and processing plant. Project construction over the past two years has led to the completion of most of the surface infrastructure components of the project.

Permitting

Karowe, which has been operating since 2012, completed its latest environmental impact assessment/ Environmental Management Plan in 2020 (to incorporate the UGP) and received approval from the Botswana Department of Environmental Affairs during the same year.

The mining licence was renewed in 2021 for a period of 25 years and expires on Jan. 3, 2046.

Conclusions

It is the conclusion of the qualified persons (QPs) that the FS summarized in this press release contains adequate data and information to support a FS. Standard industry practices, equipment and design methods were used in the FS. Since the 2019 FS, the UGP has advanced considerably in terms of financing, detailed engineering and construction while the open pit mine and processing facility have operated well and maintained targeted production.

To date, the QPs are not aware of any fatal flaws for the UGP.

Qualified person (QPS)

The FS was prepared under the direction of JDS Energy & Mining Inc. and by leading independent industry consultants. Gord Doerksen, PEng, is the project manager and responsible for the study completion and an independent qualified person under National Instrument 43-101. Dr. J.P. Armstrong, PhD, PGeo, the company's vice-president of technical services and a qualified person under National Instrument 43-101, and Mr. Doerksen have reviewed and approved the contents of this news release.

The results of the Karowe Underground FS will be summarized in a technical report prepared pursuant to Canadian Securities Administrators' National Instrument 43-101 that will be filed on SEDAR+ within 45 days of this press release and will also be available on the company's website.

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 Diamond Solutions LP, a wholly owned subsidiary of Lucara, has developed a secure, digital sales platform which ensures 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 IFC performance standards and the World Bank Group's Environmental, Health and Safety Guidelines for Mining (2007). Accordingly, the development of the Karowe underground 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.

We seek Safe Harbor.