LUCARA ANNOUNCES Q2 2024 RESULTS
07.08.2025 - 18:07:32 | prnewswire.co.uk2024
2023
2024
2023
Revenues
$
41.3
38.6
$
80.8
79.9
Operating expenses
(13.7)
(13.9)
(32.0)
(30.8)
Net income from continuing operations for the period
11.9
6.1
5.0
7.9
Net loss from discontinued operations for the period
(0.6)
(1.1)
(1.5)
(2.0)
Earnings per share from continuing operations (basic and diluted)
0.03
0.01
0.01
0.02
Cash on hand
21.9
26.7
21.9
26.7
Cost overrun facility (restricted cash)
37.5
18.0
37.5
18.0
Amounts drawn on WCF(1)
25.0
35.0
25.0
35.0
Amounts drawn on Project Facility
165.0
86.2
165.0
86.2
Carats sold
76,387
72,717
169,948
156,091
(1) Excludes amounts drawn from the Clara Facility.
QUARTERLY RESULTS FROM OPERATIONS – KAROWE MINE
UNIT
Q2-24
Q1-24
Q4-23
Q3-23
Q2-23
Sales
Revenues from the sale of Karowe diamonds
US$M
41.3
39.5
36.3
56.2
38.6
Karowe carats sold
Carats
76,387
93,560
111,523
111,673
72,717
Production
Tonnes mined (ore)
Tonnes
699,846
809,999
607,101
869,188
682,636
Tonnes mined (waste)
Tonnes
245,006
386,849
456,880
954,226
907,051
Tonnes processed
Tonnes
714,301
698,870
703,472
724,640
720,345
Average grade processed(1)
cpht (*)
12.9
11.7
14.0
13.6
12.6
Carats recovered(1)
Carats
92,419
81,611
98,177
98,311
90,497
Costs
Operating cost per tonne of ore processed(2)
US$
26.32
26.00
31.96
28.62
27.90
Capital Expenditures
Sustaining capital expenditures
US$M
3.5
1.8
8.0
3.2
2.4
Underground expansion project(3)
US$M
11.2
17.9
28.0
20.3
22.5
(*) Carats per hundred tonnes
(1) Average grade processed is from direct milling carats and excludes carats recovered from re-processing historic recovery tailings
(2) Operating cost per tonne of ore processed is a non-IFRS measure. See Table 6.
(3) Excludes qualifying borrowing cost capitalized
DIAMOND SALES
Karowe diamonds are sold through three sales channels: through a diamond sales agreement concluded with HB Antwerp ("HB"), on the Clara digital sales platform and through quarterly tenders.
HB Sales
Karowe's large, high value diamonds have historically accounted for approximately 60% to 70% of Lucara's annual revenues. In February 2024, Lucara entered into a ten-year New Diamond Sales Agreement ("NDSA") with HB. Under the sales arrangements with HB, +10.8 carat gem and near gem diamonds from the Karowe Mine of qualities that could directly enter the manufacturing stream are sold to HB at prices based on the estimated polished outcome of each diamond. The estimated polished value is determined using advanced scanning and planning technology, with an adjusted amount payable on actual achieved polished sales, less a fee. The timing of payments varies based on the category of stones being delivered, as determined by the estimated diamond's polished value.
Additional consideration, in the form of a "top-up" payment, is payable to the Company if the final sales price of the polished diamond sold is higher than the initial estimated polished price. Any polished diamonds sold to an end buyer for less than the initial estimated polished price (after deductions for HB's fee) will result in the difference being refunded to HB.
Top-up payments, net of HB's fees, are payable when polished diamonds are sold to an end buyer and the sales prices achieved exceeds the initial purchase price paid to Lucara. Top-up payments primarily relate to carats delivered in previous quarters. The amount and timing of top-up payments received is impacted by the complexity of certain rough diamonds and the qualitative assumptions that are part of the initial planning process. At various points during the manufacturing process, the stones are re-assessed, and adjustments may be made to the manufacturing plan, with the objective of maximizing the final sales price, also taking into account the marketability of the polished outcome.
Payments owing for the final polished sales price and top-up payments received are estimated, after deductions for HB's fee and the cost of manufacturing, when determining the transaction price recognized for accounting purposes. This estimate is updated at each period end until the transaction price is confirmed.
Sethunya Diamond
Sethunya, a 549ct stone recovered in 2020, distinguished by its considerable size and quality is subject to a separate agreement with HB, in which HB acts as an agent to the sale of the stone to the end customer. Lucara received an advance of future proceeds of $20.0 million from HB that has been classified as deferred revenue, as this advance relates to the future sale of the stone, it will decrease the remaining consideration to be received from the sale. As of June 30, 2024, the Sethunya had not yet been sold and the $20.0 million advance remains recorded as deferred revenue on the Statement of Financial Position.
Quarterly Tenders
All +10.8 carat non-gem quality diamonds and all diamonds less than 10.8 carats which are not sold on the Clara platform are sold as rough diamonds through quarterly tenders. Viewings take place in both Gaborone, Botswana and Antwerp, Belgium.
Clara
Clara Diamond Solutions Limited Partnership, a wholly owned subsidiary of Lucara, has developed a secure web-based digital marketplace which is designed to transact diamonds between 1 and 10 carats, in higher colours and quality.
During the six months ended June 30, 2024, Lucara received an indicative non-binding offer for the purchase of the Company's interest of Clara Diamond Solutions Limited Partnership, Clara Diamond Solutions B.V., and Clara Diamond Solutions GP (together referred to as "Clara"). The Company has concluded that, despite the uncertainty regarding completion of a potential definitive agreement, there is a high probability that its interest in Clara is likely to be sold within the next 12 months. Therefore, under IFRS 5, Clara is classified as held for sale on statement of financial position ended June 30, 2024. Based on the expected sales proceeds on June 30, 2024, the Company has determined that the net book value of Clara is recoverable, and no impairment has been recorded in connection with the reclassification. Further, Clara remained operational during the period ended June 30, 2024, and its activities from operations has been reported as discontinued operations on the Company's statements of operations and cash flows.
QUARTERLY SALES RESULTS
Three months ended
June 30,
Six months ended
June 30,
Revenue is in millions of U.S. dollars
2024
2023
2024
2023
Sales Channel
HB Arrangements
29.5
25.8
52.8
50.4
Tender(1)
9.2
9.8
22.2
22.7
Clara
2.6
3.0
5.8
6.8
Total Revenue
41.3
38.6
80.8
79.9
(1) Non-gem +10.8 carat diamonds and diamonds less than 10.8 carats that did not meet characteristics for sale on Clara were sold through tender.
HB Arrangements
For the three months ended June 30, 2024, the Company recorded revenue of $29.5 million from the HB arrangements as compared to revenue of $25.8 million on the period ending June 30, 2023. Revenue generated from HB was 71% of total revenue recognized in the second quarter of 2024 (Q2 2023: 67%). The revenue includes "top-up" payment which is payable to the Company for final sales price of the polished diamond sold when it is higher than the initial estimated polished price.
Quarterly Tender & Clara
During Q2 2024, the sales volume transacted by Tender was $9.2 million (Q2 2023: $9.8 million) and by Clara was $2.6 million (Q2 2023: $3.0 million). Both sales channels experienced lower prices compared to Q2 2023 reflecting the weakening of prices in the smaller sized diamond market.
2024 OUTLOOK
This section of the news release provides management's production and cost estimates for 2024. These are "forward-looking statements" and subject to the cautionary note regarding the risks associated with forward-looking statements. Diamond revenue guidance does not include revenue related to the sale of exceptional stones (an individual rough diamond which sells for more than $10.0 million), or the Sethunya. No changes have been made to the guidance released in November 2023.
Karowe Diamond Mine
2024
In millions of U.S. dollars unless otherwise noted
Full Year
Diamond revenue (millions)
$220 to $250
Diamond sales (thousands of carats)
345 to 375
Diamonds recovered (thousands of carats)
345 to 375
Ore tonnes mined (millions)
2.8 to 3.2
Waste tonnes mined (millions)
0.8 to 1.4
Ore tonnes processed (millions)
2.6 to 2.9
Total operating cash costs(1) including waste mined (per tonne processed)
$28.50 to $33.50
Underground Project
Up to $100 million
Sustaining capital
Up to $10 million
Average exchange rate – Botswana Pula per United States Dollar
12.5
(1) Operating cash costs are a non-IFRS measure. See "Use of Non-IFRS Performance Measures".
The Company had expected higher diamond recoveries and diamond quality during Q4 2023 and Q1 2024 and has seen diamond recoveries and quality improve in the second quarter of 2024.
In 2024, the Company expects to mine between 3.6 and 4.6 million tonnes, of which ore tonnes mined represent approximately three quarters of total tonnes mined. The assumptions for carats recovered and sold as well as the number of ore tonnes processed are consistent with achieved plant performance in recent years. A portion of the tonnes mined in 2024 will be stockpiled, prior to the end of open pit mining in mid-2025. Stockpiled material is planned to be processed between 2025 to 2027 before the mine transitions to the underground operations. Ore from the underground development is expected to supplement lower grade stockpile material, primarily from the upper benches of the South lobe, during the transition period to the underground mining operations, beginning in 2027.
In 2024, capital costs for the Karowe UGP are expected to be up to $100 million and will focus predominantly on shaft sinking activities and station development. Surface works will focus on completing the construction of the bulk air cooler and installation of the people and materials winder building. Tendering the underground lateral development contract along with underground equipment purchases are also included in the 2024 project plan.
Sustaining capital and project expenditures are expected to be up to $10 million with a focus on replacement and refurbishment of key asset components in addition to dewatering activities, and an expansion of the tailings storage facility in accordance with Global Industry Standard on Tailings Management ("GISTM").
On behalf of the Board,
William Lamb
President and Chief Executive Officer
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ABOUT LUCARA
Lucara is a leading independent producer of large exceptional quality Type IIa diamonds from its 100% 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 Limited Partnership ("Clara"), 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 is certified by the Responsible Jewellery Council, complies with the Kimberley Process, and 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 expansion project ("UGP") 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.
The information is information that Lucara is obliged to make public pursuant to the EU Market Abuse Regulation. This information was submitted for publication, through the agency of the contact person set out above, on August 9, 2024, at 4:00 p.m. Pacific Time.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain of the statements made in this news release contain certain "forward-looking information" and "forward-looking statements" as defined in applicable securities laws. Generally, any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance and often (but not always) using forward-looking terminology such as "expects", "is expected", "anticipates", "believes", "plans", "projects", "estimates", "budgets", "scheduled", "forecasts", "assumes", "intends", "goals", "objectives", "potential", "possible" or variations thereof or stating that certain actions, events, conditions or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved, (or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.
By their nature, forward-looking statements and information involve assumptions, inherent risks and uncertainties, many of which are difficult to predict and are usually beyond the control of management, that could cause actual results to be materially different from those expressed by these forward-looking statements and information. Forward-looking information and statements are based on the opinions and estimates of management as of the date such statements are made, and they are subject to several known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievement expressed or implied by such forward-looking statements. The Company believes that the expectations reflected in this forward-looking information are reasonable, but no assurance can be given that these expectations will prove to be correct. Readers and investors should not place undue reliance on such statements.
This press release contains forward-looking information in several places, such as in statements relating to the Company's ability to continue as a going concern, the project schedule and capital costs for the Karowe UGP, the diamond sales, production and cost estimates under "2024 Outlook", the Company's ability to meet its obligations under the Rebase Amendments with its Lenders, the Company's ability to fill the CORA, the impact of supply and demand of rough or polished diamonds, expectations regarding top-up values, estimated capital costs, the timing, scope and cost of grouting events at the Karowe UGP, that expected cash flow from operations, combined with external financing will be sufficient to complete construction of the Karowe UGP, that the estimated timelines to achieve mine ramp up and full production from the Karowe UGP can be achieved, the economic potential of a mineralized area, expectations that the Karowe UGP will extend mine life, forecasts of additional revenues, future production activity, that depletion and amortization expense on assets will be affected by both the volume of carats recovered in any given period and the reserves that are expected to be recovered, the future price and demand for, and supply of, diamonds, expectations regarding the scheduling of activities for the Karowe UGP in 2024, future forecasts of revenue and variable consideration in determining revenue, the impact of the renewed HB sales arrangements on the Company's projected revenue and sales channels, the outcome of tax assessments and the likelihood of recoverability of tax payments made, estimation of mineral resources, cost and timing of the development of deposits and estimated future production, interest rates, including expectations regarding the impact of market interest rates on future cash flows and the fair value of derivative financial instructions, the profitability of Clara, and the potential impacts of economic and geopolitical risks.
Certain risks which could impact the Company are discussed under the heading "Risks and Uncertainties" in the Company's most recent MD&A and Annual Information Form available at SEDAR+ at www.sedarplus.ca. Forward-looking information and statements contained in this news release are made as of the date of this news release and accordingly are subject to change after such date. Except as required by law, the Company disclaims any obligation to revise any forward-looking information and statements to reflect events or circumstances after the date of such information and statements. All forward-looking information and statements contained or incorporated by reference in this news release are qualified by the foregoing cautionary statements.
For further information, please contact: Vancouver: Hannah Reynish, Investor Relations & Communications, +1 604 674 0272, info@lucaradiamond.com; Sweden: Robert Eriksson, Investor Relations & Public Relations, +46 701 112615, reriksson@rive6.ch; UK Public Relations: Charles Vivian / Jos Simson, Tavistock, +44 79 772 97903, lucara@tavistock.co.uk
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