Lucara Diamond Corp Unveils Robust 2018 Outlook for Karowe Mine: High-Value Production and Strategic Growth on the Horizon

Lucara Diamond Corp, a prominent name in the global diamond industry, has presented an optimistic and strategically focused outlook for its world-renowned Karowe Mine in Botswana for the year 2018. This pivotal period is set to witness a significant surge in production volumes, robust revenue generation, and critical advancements in the mine’s long-term development trajectory. The company’s unwavering focus on extracting high-value ore from the South Lobe underscores its commitment to maximizing shareholder value and reinforcing Karowe’s esteemed reputation as a consistent source of extraordinary diamonds.

Ambitious Production Targets and Revenue Projections for 2018

The company forecasts a substantial output from the Karowe Mine, projecting diamond production to range between 270,000 and 290,000 carats. This ambitious target is expected to translate into impressive financial returns, with anticipated revenues reaching between US$170 million and US$200 million. A key driver behind this buoyant forecast is the intensified mining efforts within the high-value South Lobe of the Karowe deposit.

Lucara is set to increase its ore mining volume significantly in 2018, with forecasts indicating between 2.5 million and 2.8 million tonnes to be processed. This represents a substantial increase compared to the 2017 forecast of 1.4 million to 1.6 million tonnes, highlighting a deliberate acceleration in operational activity. This strategic intensification is directly linked to accessing larger volumes of the South Lobe’s unique ore body.

While the South Lobe grades are acknowledged to be lower than those found in the Centre and North lobes—comprising approximately 85% of the total output in 2018—Lucara emphasizes that the overall higher diamond quality and intrinsic value from the South Lobe fundamentally contribute to elevated average sales prices. This results in superior revenues and enhanced cash flows for the company. This strategic focus demonstrates a sophisticated understanding of the ore body’s geological characteristics and market dynamics, prioritizing value over sheer volume where appropriate.

Crucially, the provided revenue forecast for 2018 deliberately excludes the potential sale of any significant, high-quality exceptional stones. This prudent approach means that any discoveries of large, high-value diamonds recovered during the year could provide a substantial positive impact, potentially boosting the company’s revenue beyond current projections and offering considerable upside to its financial performance.

Karowe Mine: A Proven Source of World-Class and Exceptional Diamonds

The Karowe Mine holds a distinguished place in the annals of diamond mining history, renowned for its consistent production of large, high-value, and often record-breaking diamonds. This track record is a testament to the unique geological endowment of the Karowe kimberlite pipe in Botswana.

To date, the Karowe Mine has produced and successfully sold two of the world’s most historically significant and highest-value rough diamonds: the Lesedi La Rona and The Constellation. These monumental discoveries commanded a combined value of US$116.1 million, captivating the attention of the global diamond market and reinforcing Karowe’s reputation as a premier source for extraordinary gems. The Lesedi La Rona, a magnificent 1,109-carat diamond, was the second-largest gem-quality rough diamond ever recovered, while The Constellation, at 813 carats, also broke records upon its sale.

Beyond these two iconic stones, Karowe has also yielded and sold seven other rough diamonds, each fetching in excess of US$10 million. This unparalleled consistency in producing exceptional stones differentiates Lucara from many other diamond producers, solidifying its niche in the high-value segment of the market. This remarkable history not only elevates Lucara’s brand recognition but also instills significant confidence among investors and industry stakeholders regarding the mine’s ongoing potential for future discoveries of similar magnitude.

Strategic Vision: Advancing Towards an Underground Future for Karowe

Recognizing the finite nature of open-pit operations and the vast untapped potential beneath the current mining limits, Lucara Diamond Corp is proactively planning for the future of the Karowe Mine. The company has already completed a Preliminary Economic Analysis (PEA) for a potential underground mine, which indicated positive results and affirmed the viability of transitioning to a sub-surface operation.

Building on these encouraging findings, Lucara is currently engaged in a comprehensive Pre-Feasibility Study (PFS). This critical phase involves more detailed engineering, geological modeling, cost estimation, and risk assessment to define the optimal design and economic parameters for an underground mine. The completion and finalization of this crucial PFS report are anticipated in the second quarter of 2018.

The development of an underground mine is a strategic imperative that would commence production shortly before the exhaustion of the current open-pit operations at Karowe. This transition is designed to significantly extend the mine life, unlock deeper diamond resources, and ensure the long-term sustainability and profitability of the Karowe asset for decades to come. This forward-thinking approach demonstrates Lucara’s commitment to maximizing the value of its world-class resource and securing its position as a leading diamond producer well into the future.

Operational Efficiency and Strategic Cost Management Initiatives

Lucara Diamond Corp is meticulously managing its operational expenditures at the Karowe Mine. For 2018, operating cash costs are projected to be between US$38.0 and US$42.0 per tonne processed. This cost range reflects the ongoing significant capital investment and operational effort involved in the “major push back” activities. This crucial mining operation entails the systematic removal of substantial volumes of waste rock to ensure full access to the high-value South Lobe ore, which is essential for achieving the company’s production targets.

To provide a clearer picture of direct processing costs, Lucara also projects operating cash costs, excluding waste mining, to be in the range of US$21 to US$24 per tonne processed. This distinction highlights the temporary nature of elevated costs associated with developing future access to the ore body, rather than routine processing expenses.

William Lamb, President and Chief Executive Officer of Lucara Diamond Corp, provided further insight into the company’s operational strategy. He 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.” This statement underscores the strategic importance of the current operational phase.

Mr. Lamb also highlighted that following the successful completion of the Material Damage Reduction (MDR) and sub-middles projects, alongside the expected completion of the cut 2 waste push back in early 2019, operating and capital costs are forecast to be significantly reduced. This anticipated reduction in costs going forward is poised to contribute substantially to improved free cash flow in future periods, indicating a clear trajectory towards enhanced profitability and financial flexibility once these major development initiatives are concluded.

Leadership’s Vision and Forward-Looking Growth Initiatives

Under the leadership of William Lamb, Lucara Diamond Corp is not only focused on immediate production targets but also on comprehensive internal growth projects and broader exploration efforts. “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,” Mr. Lamb stated, emphasizing the multi-faceted approach to sustaining and expanding the company’s value proposition.

This commitment to advancing the PFS for the underground mine is a testament to Lucara’s long-term strategic planning, aiming to unlock the full economic potential of the Karowe resource beyond its current open-pit lifespan. Furthermore, the dedication to an active exploration portfolio suggests that Lucara is continually seeking new opportunities to discover and develop additional diamond assets, thereby securing future revenue streams and mitigating resource depletion risks.

The successful completion of prior operational enhancements, such as the MDR and sub-middles projects, demonstrates Lucara’s capability to execute complex engineering and operational initiatives effectively. These achievements, coupled with the projected cost reductions post-2019, paint a picture of a company diligently working to optimize its operations, enhance efficiency, and ultimately deliver greater value to its shareholders and stakeholders.

Lucara’s strategic investments in both current operational efficiency and future growth initiatives also have a significant impact on the local economy of Botswana, providing employment, infrastructure development, and revenue contributions that support the nation’s economic progress and sustainable development goals within the diamond sector.

Positioning Lucara in the Global Diamond Market

These strategic announcements for 2018 firmly reinforce Lucara Diamond Corp’s unique position within the global diamond mining landscape. By consistently producing a high proportion of large, high-value diamonds, the Karowe Mine distinguishes Lucara from its peers who often focus on a higher volume of smaller, lower-value goods. This specialization allows Lucara to command premium prices and maintain strong margins, even in fluctuating market conditions.

The combination of robust production forecasts, promising revenue projections, a proven track record of exceptional diamond recoveries, and a clear, forward-looking strategy for long-term mine development (through the underground project) serves to bolster investor confidence. Lucara is perceived not merely as a diamond miner, but as a strategic asset developer with a clear vision for sustainable profitability and continued discovery in a niche, high-value segment of the industry.

The market for large, exceptional diamonds often behaves differently from the general diamond market, showing greater resilience and demand. Lucara’s ability to consistently supply this segment provides it with a distinct competitive advantage and a predictable source of high-impact revenue, making it a compelling entity for investors interested in the luxury goods and high-end mining sectors.

Conclusion: A Bright Future for Lucara and Karowe

In summary, Lucara Diamond Corp’s 2018 outlook for its Karowe Mine in Botswana is characterized by ambition, strategic foresight, and a commitment to operational excellence. With increased high-value production anticipated from the South Lobe, strong revenue projections, and a dedicated focus on advancing the underground mine project, Lucara is strategically positioning itself for sustained growth and profitability.

The company’s ability to consistently unearth world-class diamonds, coupled with its prudent cost management and long-term development plans, underscores its robust operational and financial health. Lucara Diamond Corp is not merely extracting diamonds; it is strategically investing in its future, ensuring continued discovery of some of the world’s most spectacular gems and solidifying Karowe’s legacy as a truly exceptional diamond mine for years to come.