Lucara Diamond Corp, a prominent junior miner renowned for its exceptional diamond recoveries, announced outstanding operational and financial results for the quarter ending March 31, 2019. This period marked an unprecedented achievement for the company, particularly at its flagship Karowe mine. The report highlighted what management described as the best quarter in the Karowe mine’s illustrious history, showcasing remarkable efficiency across all mining and processing activities. These impressive results underscore Lucara’s commitment to operational excellence and its strategic focus on maximizing value from its world-class asset.
During this record-setting first quarter, the Karowe mine successfully recovered an impressive 132,336 carats. This substantial volume of diamonds was achieved with a recovered grade of 15.9 carats per hundred tons processed, an indicator of highly efficient ore processing and strong mineral liberation. Such a grade is highly commendable within the diamond mining industry, reflecting not only the richness of the Karowe ore body but also the effectiveness of Lucara’s advanced recovery techniques. These operational successes lay a solid foundation for sustained performance and future growth.
Among the significant finds of the quarter were several extraordinary diamonds that further solidified Karowe’s reputation as a producer of large, high-quality stones. These included a magnificent 240-carat top white gem and an equally impressive 223-carat high white gem, both highly sought after in the global diamond market due to their size and exceptional clarity. The recovery of such substantial and pristine diamonds is a rare occurrence and adds immense value to Lucara’s production profile, attracting premium prices and keen interest from buyers.
Beyond these headline-grabbing individual stones, the Karowe mine also produced a significant number of “specials” during the first quarter. A total of 170 specials were recovered, constituting 4.1 percent of the total carats produced. In the diamond industry, “specials” refer to diamonds weighing 10.8 carats or more, and their consistent recovery is a key indicator of a mine’s potential for generating high-value revenue. Notably, seven of these diamonds exceeded 100 carats in weight, further emphasizing the unique geological characteristics of the Karowe resource and its propensity for yielding exceptional gems.
The momentum from the first quarter continued into April 2019 with an astonishing discovery that captivated the entire diamond world. The largest diamond ever mined at Karowe, and one of the largest ever found globally, was recovered: an unbroken 1,758-carat near gem quality diamond. This monumental find, a true marvel of nature, further cemented Karowe’s status as a premier source of colossal diamonds. The integrity of the stone, remaining unbroken during the recovery process, speaks volumes about the meticulous and technologically advanced mining methods employed by Lucara Diamond Corp.
This 1,758-carat diamond, which generated considerable global excitement, is not just the largest from Karowe; it holds the distinction of being the largest diamond ever recovered in Botswana, a nation celebrated for its rich diamond heritage. Its “near gem quality” classification indicates significant potential for a high-value polished stone, or series of stones, making it a pivotal asset for Lucara. Such a discovery not only garners international attention but also significantly enhances the company’s valuation and market perception, highlighting the untapped potential still present within the Karowe kimberlite pipe.
Financially, Lucara Diamond Corp demonstrated a remarkable turnaround, transitioning from a period of loss to profitability. For the three months ended March 31, 2019, the company reported a net income of $7.4 million. This represents a substantial improvement compared to the net loss of $7 million recorded in the first quarter of 2018. This swing to profitability is a clear testament to improved operational efficiency, higher sales revenues, and effective cost management strategies implemented across the company’s operations, particularly at the high-performing Karowe mine.
Lucara also maintained a strong and healthy financial position as of March 31, 2019, holding cash and cash equivalents totaling $17.9 million. This robust cash balance provides the company with significant liquidity and operational flexibility. Furthermore, a key financial achievement during Q1 2019 was the full repayment of funds drawn on its credit facility. This action left the entire $50 million credit facility fully available, further strengthening Lucara’s financial standing and providing a comfortable buffer for future strategic initiatives or operational needs without incurring additional debt service costs.
In a move that signals confidence in its ongoing performance and commitment to shareholder returns, Lucara accrued a quarterly dividend of CA$0.025 per share. This dividend was based on a record date of March 22, 2019, and was subsequently paid out to shareholders on April 11, 2019. The consistent payment of dividends reinforces Lucara’s image as a stable and rewarding investment, reflecting a positive outlook on its cash flow generation and sustained profitability, driven largely by the exceptional output of the Karowe mine.
Eira Thomas, President and CEO of Lucara Diamond Corp, provided insightful commentary on these impressive results, highlighting the strategic pillars of the company’s success. She stated, “Lucara’s focus on operational excellence has delivered another strong quarter, having met or exceeded guidance with respect to ore mined and processed as well as carats produced.” This statement underscores the rigorous planning and execution that characterize Lucara’s mining operations, ensuring consistent delivery against ambitious targets and setting new benchmarks for efficiency and output in the diamond industry.
Ms. Thomas further elaborated on the financial discipline that contributed to the quarter’s success, noting, “Costs were significantly down quarter over quarter and the first sale of the year delivered revenues in excess of US$47 million, in line with expectations.” The reduction in operational costs, coupled with robust sales performance, directly contributed to the positive financial turnaround experienced by the company. Achieving over $47 million in revenue from the first sale of the year demonstrates strong market demand for Karowe diamonds and effective sales strategies employed by Lucara’s marketing teams.
Highlighting the technological innovation at the heart of Lucara’s operations, Ms. Thomas specifically referenced the monumental 1,758-carat discovery. She proudly stated, “In April, Lucara’s technologically advanced, XRT diamond recovery circuit delivered one of the largest diamonds in recorded history, the largest diamond recovered in Botswana, and the largest diamond to be mined at Karowe to date.” This emphasis on the XRT (X-ray Transmission) recovery circuit is crucial, as this advanced technology is designed to detect and recover large diamonds more efficiently and with minimal damage, thereby preserving their natural integrity and maximizing their potential value. The successful recovery of such a massive, unbroken stone is a powerful endorsement of this cutting-edge technology.
Concluding her remarks, Ms. Thomas passionately affirmed the intrinsic value of the Karowe asset, stating, “The unbroken 1,758-carat diamond is a testament to the remarkable nature of the Karowe resource and the strong operating environment prevailing at the mine.” This statement encapsulates the synergy between the rich geology of the Karowe kimberlite and the highly skilled and efficient operational teams. The consistent ability of Karowe to yield not only a high volume of diamonds but also extraordinary, historically significant gems positions Lucara as a leader in the discovery and ethical production of high-value diamonds.
The Karowe mine, located in Botswana, is internationally recognized for its consistent production of large, exceptional quality Type IIa diamonds, including numerous stones over 100 carats. This reputation is built upon decades of geological study and successful extraction, making it a cornerstone of Botswana’s thriving diamond industry. Lucara’s ownership and operation of Karowe contribute significantly to the local economy through employment, infrastructure development, and various community upliftment initiatives, showcasing a commitment to responsible mining practices that benefit all stakeholders.
The geological makeup of the Karowe kimberlite is unique, characterized by features that promote the growth and preservation of unusually large diamond crystals. This geological advantage, combined with Lucara’s investment in state-of-the-art recovery technology like XRT, creates an optimal environment for detecting and safely extracting these valuable giants. The XRT technology, in particular, reduces breakage of large stones during the sorting process, a critical factor in preserving the value of finds like the 1,758-carat diamond, which might otherwise be damaged by traditional crushing methods.
Looking ahead, Lucara Diamond Corp’s strong Q1 2019 performance and the landmark 1,758-carat discovery set a positive trajectory for the company’s future. These achievements bolster confidence in the potential for further significant discoveries at Karowe, including prospects from its ongoing underground expansion project. The ability to generate substantial revenue from sales, coupled with a healthy balance sheet and a commitment to shareholder returns, positions Lucara for continued growth and strategic investment in its operations. The market for high-value, large diamonds remains robust, further benefiting Lucara’s specialized production profile.
Lucara’s unwavering focus on operational excellence, technological innovation, and financial prudence has clearly paid dividends. The record-breaking performance at the Karowe mine in early 2019, capped by the discovery of an enormous, historically significant diamond, underscores the unparalleled potential of its primary asset. As Lucara continues to unlock the geological secrets of Karowe, its future appears bright, promising further valuable discoveries and sustained returns for its investors and stakeholders, solidifying its position as a leading producer of exceptional diamonds globally.