Lucara Diamond Projects $170-200M Revenue, 280K Carats Mined in 2018

Mining and Exploration
30/11/2017 09:55

Lucara Diamond has published its Operating Outlook for 2018, forecasting revenue at $170 million to $200 million, excluding the sale of high-quality exceptional stones, from 270,000 - 290,000 carats mined, bringing them back up to projected 2017 levels. Production levels in 2017 had to be scaled back as a result of extracting less ore than planned from its Karowe deposit, forcing the company to focus on mining waste material to ensure future access to larger volumes of ore from the lower-grade but higher-value south lobe. The overall drop in the amount of mined ore prompted Lucara to lower its full-year production outlook during the year to between 265,000 and 285,000 carats, compared with a previous forecast of 290,000 to 310,000 carats, representing a decline of up to 25% from their 2016 output of 353,974 carats.

The miner states that the performance of their mining contractor - Aveng Moolman, which had equipment availability issues last quarter - has improved, and ore mined is forecast to increase to between 2.5 - 2.8 million tons in 2018. Previously, the miner said it expected performance to improve during the December quarter, and the south lobe ore not mined this year is expected to be extracted and carats recovered in 2018. The lower volume of carats being processed has led to the miner also reducing its full-year revenue guidance to US$165-175 million, without taking into account the sale of the 1,111ct Lesedi La Rona diamond, which sold for $53 million in September. The sale of large, high-quality stones positively impacts the company's revenue. To date, the Karowe mine has produced and sold the world's two highest value rough diamonds, the Lesedi La Rona and the Constellation, for a combined value of $116.1 million dollars as well as selling 7 rough diamonds in excess of $10 million each.

Lucara forecasts that processed ore will comprise up to 85% ore from the South lobe during 2018. South lobe grades are lower than the Centre and North lobes resulting in lower diamond recoveries, however, the overall higher diamond quality and value from the south lobe as compared to the Centre and North lobes results in higher average sales prices and resulting revenues and cash flows. Based on the positive results from the Preliminary Economic Analysis ("PEA") for a potential underground mine at Karowe, the Company is continuing with a Pre-Feasibility Study ("PFS") which they expect to release in Q2, 2018. They expect to declare an annual dividend in 2018 of Canadian $0.10 per share to be paid in four equal payments in the last month of each financial quarter. William Lamb, President and CEO commented, "The Company is forecasting to mine robust volumes from the high-value south lobe and continuing waste mining to complete the push back at the Karowe mine to fully access south lobe ore. In 2018, we continue to advance our internal growth projects including the pre-feasibility study for an underground mine at Karowe as well as our exploration portfolio."