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Lucara Diamond Corp
Symbol LUC
Shares Issued 396,858,168
Close 2019-11-28 C$ 0.81
Recent Sedar Documents

Lucara estimates recoveries of 370,000 carats in 2020

2019-11-28 17:10 ET - News Release

Ms. Eira Thomas reports

LUCARA PROVIDES OPERATING OUTLOOK FOR 2020

Lucara Diamond Corp. has provided operating guidance for 2020 (all amounts are in U.S. dollars unless otherwise stated).

2020 highlights:

  • Revenue is forecast to be between $180-million and $210-million.
  • A capital expenditure of up to $53-million has been approved for early works related to a proposed underground mine at the Karowe diamond mine. An investment decision, subject to receipt of all required authorizations and the arrangement of financing, is expected in second half 2020.
  • Karowe 2020 operating cash costs are forecast to be between $32 and $36 per tonne processed.
  • Ore mined is expected to be between 3.5 million and 3.9 million tonnes.
  • Waste mining is expected to be between 3.6 million and 4.2 million tonnes.
  • Tonnes processed are expected to be between 2.5 million and 2.8 million tonnes, consistent with the strong operating performance achieved in 2018 and 2019.
  • Diamond recoveries are expected to be between 370,000 carats and 410,000 carats. Diamonds sold are expected to be between 350,000 carats and 390,000 carats.

Eira Thomas, president and chief executive officer, commented: "Building upon the strong operating performance achieved in 2019, Lucara will continue to focus in 2020 on optimizing the base business, growing Clara by adding third party production to the platform and preparing for an underground expansion at Karowe following the announcement of a positive feasibility study earlier this month. Anticipated cash flow from operations in 2020 should allow us to pursue early works, which are critical to the underground development schedule, while at the same time allowing us to leverage our balance sheet to finance the project in a cost-effective manner."

Karowe mine -- diamond sales, production and cost outlook for full-year 2020 (all amounts in U.S. dollars)

Diamond revenue:  $180-million to $210-million

Diamond sales:  350,000 carats to 390,000 carats

Diamonds recovered:  370,000 carats to 410,000 carats

Tonnes mined -- ore:  3.5 million to 3.9 million

Tonnes mined -- waste:  3.6 million to 4.2 million

Tonnes processed -- ore:  2.5 million to 2.8 million

Total operating cash costs per tonne processed (including (a) to (b)):  $32 to $36

(a) Cash cost per tonne mined (ore and waste):  $4.40 to $4.90

(b) Cash cost per tonne processed:  $11.50 to $12.50

Botswanan general and administrative expenses, including sales and marketing expenses, per tonne processed:  $3 to $4

Tax rate:  22 per cent

Average exchange rate -- U.S. dollar to pula:  $10.50

Diamond revenue

In 2020, the company forecasts revenues between $180-million and $210-million, as the proportion of carats recovered from the higher-grade MP/KS and EM/PK(S) units increases. These projections include specials, which are diamonds that are 10.8 carats and larger, but exclude the sale of any truly unique diamonds, such as the 1,109-carat Lesedi la Rona and the 813-carat Constellation. Specials are consistently recovered from the Karowe diamond mine and contribute a significant percentage of the company's annual revenue. Diamonds recovered are expected to be between 370,000 carats and 410,000 carats, and diamonds sold are expected to be between 350,000 carats and 390,000 carats.

Production estimates and costs

The company expects to mine between 3.5 million and 3.9 million tonnes of ore and between 3.6 million and 4.2 million tonnes of waste. The 2020 estimated cash cost per tonne of ore processed is expected to be between $32 and $36. The cost per tonne mined is expected to be between $4.40 and $4.90, and the estimated processing cost per tonne processed is expected to be between $11.50 and $12.50, a reflection of optimization work and strong operation performance in the plant.

Tax rates

Lucara Botswana's progressive tax rate computation allows for the immediate deduction of operating costs, including capital expenditures, in the year in which they are incurred. Based on 2019 revenue guidance of $180-million to $210-million, the expected tax rate is 22 per cent for 2020 but could decrease depending on the amount and timing of capital expenditures during the year.

Underground development project

A budget of up to $53-million has been approved for early works related to a proposed underground mine at the Karowe diamond mine. An investment decision, subject to receipt of all required authorizations and the arrangement of financing, is expected in second half 2020. Following the positive results of a feasibility study announced on Nov. 5, 2019, and based on the company's ability to finance these initial capital expenditures from operating cash flow, a program of early works, including detailed engineering and design work, has been approved to mitigate key risks related to the schedule.

Sustaining capital, maintenance projects and community investment

Sustaining capital and project expenditures are expected to be up to $25.0-million in 2020, including expenditures associated with the construction of an additional slimes dam (this is a multiyear project), upgrades to the XRT recovery circuit and a provision for the implementation of body scanning technology to enhance security, which had originally been planned for 2019, subject to receipt of the regulatory approval. In addition, Lucara has committed to several community investments and optimization initiatives in 2020.

Clara digital sales platform

Following an inaugural diamond sale in December, 2018, through Clara Diamond Solutions, its 100-per-cent-owned digital sales platform, diamond sales through Clara were held with increasing frequency during 2019, and the customer base increased to 27 participants. Further growth is expected through 2020 as more supply is made available through the platform, balanced with demand from the customers using the platform. Third party production should complement the diamonds from Karowe, which are sold through the platform and should support increased transaction volumes through 2020.

Qualified person (QP)

Dr. John P. Armstrong, PhD, PGeol, the company's vice-president, technical services, a QP as that term is defined in National Instrument 43-101, has reviewed and approved the contents of this news release.

The results of the Karowe underground feasibility study announced on Nov. 5, 2019, will be summarized in a technical report prepared pursuant to the guidelines of NI 43-101. This technical report will be filed on or before Dec. 19, 2019, on SEDAR, 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 mine in Botswana. The company has an experienced board and management team with extensive diamond development and operations expertise. The company operates transparently and in accordance with international best practices in the areas of sustainability, health and safety, environment, and community relations.

We seek Safe Harbor.

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