Ms. Eira Thomas reports

LUCARA CONTINUES TO DE-RISK POTENTIAL FOR KAROWE UNDERGROUND - FEASIBILITY SCHEDULED FOR COMPLETION IN H2 2019

Lucara Diamond Corp. has provided an update on the continuing feasibility study for a potential underground operation at the company's 100-per-cent-owned-and-operated Karowe diamond mine located in the Republic of Botswana.

In 2018, following the release of a positive preliminary economic assessment (PEA) (see Lucara's press release dated Nov. 2, 2017), the company embarked on a $29-million (U.S.) technical program to support a feasibility-level study for a potential underground operation at the Karowe diamond mine, with the aim of extending mine life from 2026 to at least 2036. This program included a mineral resource update, geotechnical drilling of the country rock and AK06 kimberlite, hydrogeological drilling and modelling, and mining trade-off studies to address risks and issues identified during the PEA. A total of $23-million (U.S.) was spent out of a 2018 budget of $29-million (U.S.) in support of this work and resulted in significant derisking of the key technical components associated with the potential underground development.

2018 underground feasibility highlights:

• Updated resource model in Q2 2018; indicated resources increased by 54 per cent in the south lobe and confirms increased contribution of EM/PK(S), a higher-grade, higher-value ore unit, with depth;
• Four deep hydrogeological drill holes completed which encountered minimal water strikes at depth (over 400 metres) and successfully derisked key water aspects of the project;
• 20,000 plus metres of geotechnical drilling completed to help inform selection of a final underground mining method; sublevel cave, block cave and hybrid scenarios under consideration;
• $14.8-million (U.S.) budget approved to complete 2019 technical program and final feasibility study;
• JDS Energy and Mining Inc. has been appointed to lead the feasibility study;
• Feasibility study on track for release in second half of 2019.

Eira Thomas, chief executive officer, commented: "The updated mineral resource completed in 2018 highlighted the important contribution of the higher-grade, higher-value EM/PK(S) geological unit as we mine deeper in the south lobe and has necessarily refocused our approach to the Karowe underground study. Historically, we now know that the EM/PK(S) has produced some of Karowe's most valuable diamonds, including the 1,109-carat Lesedi La Rona and the 813-carat Constellation. In 2019, we will be evaluating various mining scenarios that have the potential to access this valuable ore as early as possible in the underground mining schedule. Other highlights from our 2018 work program included the successful completion of a deep hydrogeological drilling campaign, which did not encounter significant water and has substantially derisked the overall underground project. Finally, we are delighted to be welcoming Gord Doerksen and JDS to the feasibility team to direct the study and provide Lucara with a fit-for-purpose underground mine design that will work to optimize and maximize the economic returns of the underground project. The feasibility study will be completed by in the second half of 2019."

Mineral resource

The company announced the results of a comprehensive mineral resource update (see Lucara's press release dated June 26, 2018, and Aug. 9, 2018) with the successful reclassification from inferred to indicated resources for the AK06 kimberlite between 600 metres and 400 metres above sea level. The new base of the indicated mineral resource is at 400 metres above sea level (600 metres below surface). Modifications to the internal geological model for the south lobe of the AK06 kimberlite resulted in the recognition of the EM/PK(S) unit as the volumetrically dominant unit at depth within the south lobe, with 75 per cent of the south lobe indicated recoverable carats between 600 metres and 400 metres above sea level being attributed to the EM/PK(S) unit. Historical recoveries from the EM/PK(S) unit have included several large and high-value diamonds such as the 1,109-carat Lesedi La Rona and the 813-carat Constellation. Deep drilling, which started in 2018 and will continue into early 2019 for geotechnical purposes, has intersected the south lobe kimberlite below the current base of the inferred resource (256 metres above sea level) at elevations around 66 metres above sea level.

Geotechnical and hydrogeological drilling

During 2018, 33 core holes totalling 20,283 metres were drilled, representing approximately 83 per cent of the originally planned drilling. Drilling will continue into late Q1 2019 and will focus on deep granite/kimberlite intersections, with the final receipt of all data by mid- to late Q2 2019. Data collection is under way, consisting of detailed geotechnical and geological logging, density measurements, point load testing, and other geotechnical rock strength testing. No major risks have been identified during drilling or with data collected from geotechnical rock testing.

The main objective of the hydrogeological program was to quantify the mine dewatering and depressurization requirements to continue the successful dewatering of the open pit and to identify the immediate and continuing dewatering requirements for the potential underground mining operations. A total of four deep boreholes were drilled to assess the deep hydrogeological conditions at Karowe, three of which were specifically designed to target and test the potential existence of a deep basal aquifer. Drilling encountered limited water strikes, provided no evidence for such an aquifer and has positively addressed one of the key risks identified during the PEA study.

Mining method selection/permitting

Mining method selection is being considered in accordance with the geotechnical and hydrogeological interpretations and technical data already collected and in progress. At present, four possible alternatives are being studied. These include variants on block cave with shaft access, sublevel retreat/sublevel cave with access through a decline and conventional vertical crater retreat stoping followed by block cave through shaft access. As greater clarity on the rock mass and geotechnical characteristics of the host rocks and units internal to the south lobe becomes available, a final decision will be made for the most appropriate mining method.

Lucara continues to engage in discussions with the government of Botswana to extend the mining lease to include underground mining operations. In support of these discussions, Lucara is updating the mine closure plan, closure cost estimates, the environmental management plan as well as the social economic impact assessment.

Next steps

Lucara's board of directors has approved a budget of $14.8-million (U.S.) to complete the technical program and the feasibility study in 2019. Drilling is expected to be completed toward the end of Q1 2019, with logging, data collection and the receipt of laboratory results expected toward mid-Q2 2019. Completion of the feasibility study and final reporting are expected late in the second half of 2019.

This press release has been reviewed and approved by Dr. John Armstrong, PhD, PGeol, vice-president, technical services, of the company, and Gord Doerksen, PEng, of JDS, both of whom are considered qualified persons for the purposes of National Instrument 43-101.

About Lucara Diamond Corp.

Lucara is a leading independent producer of large, exceptional-quality Type IIa diamonds from its 100-per-cent-owned Karowe mine in Botswana. The company has an experienced board and management team with extensive diamond development and operations expertise.

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