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Strong diamond market pushes Lucara's full-year revenue, Ebitda higher

The Karowe mine

The Karowe mine

25th February 2022

By: Chanel de Bruyn

Creamer Media Senior Deputy Editor Online

     

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Vancouver-headquartered Lucara Diamond Corporation achieved a more than five-fold year-on-year increase in adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) to $102.5-million for the financial year ended December 31.

That compares with the adjusted Ebitda of $18.4-million reported for the 2020 financial year. Lucara has attributed the increase primarily to higher revenues of $230.1-million for 2021 – an 84% increase on the revenue of $125.3-million in 2020.

Net income for the year increased to $23.8-million, or $0.06 a share, compared with a net loss of $26.3-million, or $0.07 a share, in 2020.

Lucara reports that 2.8-million tonnes of ore were processed during 2021 – a record since the start of production at its Karowe mine, in Botswana.

About 369 390 ct was recovered at a grade of 12.93 carats per hundred tonnes of direct milled ore. Among the diamonds recovered were 39 greater than 100 ct, including eight diamonds weighing more than 300 ct each, eight diamonds weighing between 200 ct and 300 ct each and 23 diamonds weighing between 100 ct and 200 ct each.

Notably, Lucara had recovered a 1 174 ct clivage diamond of variable quality with significant domains of high-quality white gem material – the third diamond weighing more than 1 000 ct to be recovered at Karowe since 2015. It has been named Sethunya.

As a result of strong forecast revenues for 2021 and amid strengthening prices for large, high-value diamonds, Lucara made a strategic decision late in 2021 to defer the sale of Sethunya.

Lucara sold 381 681 ct of diamonds in the year under review at an average price of $603/ct, compared with an average price of $335/ct the year before.

"Higher diamond prices combined with solid operational performance at the mine and Lucara’s novel, diversified approach to diamond sales through HB, Clara and traditional tenders has delivered strong revenues for the company in 2021, demonstrating a full recovery from the challenges of the pandemic, and reflecting a much better outlook for 2022 and beyond as we continue to benefit from one of the strongest diamond markets we have seen in the better part of a decade,” CEO Eira Thomas comments.

As a result of the stronger diamond market, Lucara has revised its revenue guidance for 2022 higher to between $195-million and $225-million, compared with the previously guided $185-million to $215-million.

Production and sales for this year are projected to be between 300 000 ct and 340 000 ct.

UNDERGROUND EXPANSION
Lucara's board late in 2021 approved the Karowe underground expansion project (UGP) at a projected capital cost of about $534-million. The UGP will extend Karowe's mine life to at least 2040, with mining predominately from the highest-value EM/PK(S) unit.

The project is forecast to contribute about $4-billion in additional revenues, using conservative diamond prices.

The UPG is expected to be in full production by the second half of 2026.

During 2021, Lucara invested $86.3-million in the UGP, with the funds spent on pre-sink activities for the production and ventilation shafts; clearing for and construction of 40 out of 88 tower foundations for the 29 km 132 kV transmission line bulk power upgrade; mobilisation of headframe materials and surface infrastructure, including a 200-person camp and a water treatment facility; and commissioning of a temporary generator farm, which will be used to power the shaft hoists during sinking until line power is commissioned.

Lucara expects capital costs for the UGP for this year to be about $110-million.

Work will focus on the start of main shaft sinking activities, the commissioning of the bulk power supply 132 kV line and substations and detailed engineering for the underground development.

Edited by Creamer Media Reporter

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