Lucara Diamond Corp., a leading diamond producer known for its exceptional finds, unveiled its comprehensive Operating Outlook for 2017, outlining ambitious projections and strategic initiatives for its wholly-owned Karowe mine. The company anticipates robust revenues ranging between US$ 200 million and US$ 220 million for the year. This impressive forecast, notably, excludes the monumental sale price of the iconic Lesedi La Rona diamond, underscoring the consistent value generated by regular production from the Karowe operation. The Karowe mine, located in Botswana, has long been celebrated for its consistent recovery of large, high-quality diamonds, solidifying Lucara’s reputation as a premier supplier of exceptional stones to the global market.
The 2017 operational plan for the Karowe mine projects the processing of a substantial volume of ore, estimated to be between 2.2 million and 2.5 million tonnes. From this considerable throughput, Lucara expects to yield a significant quantity of rough diamonds, with production targets set between 290,000 and 310,000 carats. This production strategy is meticulously aligned with the geological characteristics of the mine, focusing predominantly on material extracted from the south lobe. While the overall grades of the south lobe are recognized as being comparatively lower than those found in the centre and north lobes, a strategic decision has been made to prioritize this section. This approach, though leading to a marginally reduced carat output, is fundamentally driven by the superior quality and inherent value of the diamonds historically recovered from the south lobe. This focus has consistently translated into substantially increased revenue and enhanced cash flow for the company, demonstrating a clear commitment to maximizing value over sheer volume.
Managing operational efficiency and cost control remains a cornerstone of Lucara’s strategy. For 2017, operating cash costs for the Karowe mine are projected to fall between US$ 36.0 and US$ 40.0 per tonne of ore processed. This figure reflects a planned and temporary increase in waste mining activities, a critical component of the company’s long-term development strategy. This intensified waste mining is designed to accelerate the completion of a major “push back” operation, a significant engineering undertaking aimed at expanding the pit walls to gain broader access to deeper ore bodies. The company is aggressively working towards an early completion of this crucial project by the end of 2018. Once this phase is completed, the operational profile is expected to shift, with operating cash costs, excluding waste mining, anticipated to be a more streamlined US$ 19 to US$ 20 per tonne processed for the 2017 period. This dual-cost perspective highlights the company’s transparency regarding the temporary impact of development work on its cost structure, while maintaining focus on underlying operational efficiency.
Lucara Diamond Corp. continues to demonstrate a strong commitment to delivering consistent returns to its shareholders. The company has announced its intention to declare an annual dividend in 2017 of Canadian $ 0.10 per share. This dividend will be distributed in four equal installments, paid out at the conclusion of each financial quarter, providing a predictable and steady income stream for investors. This declaration signifies not only the company’s robust financial health but also its confidence in its sustained profitability and future prospects. It serves as a tangible expression of Lucara’s dedication to shareholder value, building on its history of rewarding investors.
William Lamb, President and Chief Executive Officer of Lucara, provided insightful commentary on the company’s performance and strategic direction. He proudly reflected on 2016 as a highly successful year for Lucara, characterized by strong cash flows primarily driven by the high-value revenues generated from the south lobe. This success, he emphasized, was further bolstered by the company’s unwavering commitment to stringent cost control measures across all operations. Lamb highlighted that this exceptional performance culminated in a special dividend payment in 2016, a testament to the company’s strong financial position. Looking ahead, he expressed optimism, stating, “Our performance resulted in a special dividend payment in 2016 and we anticipate increasing our 2017 dividend from CAD $0.06 per share to CAD $0.10 per share.” This increase in the regular dividend underscores the board’s confidence in the company’s ongoing ability to generate significant free cash flow and deliver value back to its shareholders.
Elaborating on the strategic priorities for 2017, Mr. Lamb articulated the company’s primary focus on advancing the crucial “push back” project within the Karowe mine’s pit. This extensive undertaking is projected to reach completion by the close of 2018. The successful execution of this project is paramount, as it will grant Lucara “full access to the high value south lobe ore,” ensuring the continuous supply of the exceptional diamonds for which the mine is renowned. Furthermore, a significant long-term benefit of this project is the anticipated “significant reduction in waste mining going forward,” which will lead to greater operational efficiency and lower overall per-tonne costs in subsequent years. This strategic investment in infrastructure is designed to unlock greater value from the mine and secure its long-term viability and profitability.
Beyond current mining operations, Lucara is also keenly focused on future growth and resource delineation. The deep drilling program, a crucial initiative aimed at understanding and extending the mine’s geological profile, is on track for completion in early 2017. The findings from this program are expected to culminate in an updated resource statement, which will provide a more precise and comprehensive understanding of the Karowe mine’s diamond reserves and resources. This updated statement is vital for long-term mine planning, capital allocation, and demonstrating the mine’s extended life to investors and stakeholders. A clear and current understanding of the resource base is foundational to sustained production and strategic growth.
In a further demonstration of its commitment to future expansion and exploration, Lucara has allocated a substantial budget of up to $10.0 million. This capital is earmarked for advancing critical exploration work beyond the immediate confines of the current pit and for progressing the company’s extensive underground study. The exploration efforts aim to identify new diamondiferous kimberlites or extensions to existing ones, potentially leading to new sources of high-value diamonds. Concurrently, the underground study is a forward-looking initiative to evaluate the technical and economic feasibility of transitioning Karowe to an underground mining operation once the open-pit reaches its economic limits. This proactive approach ensures that Lucara is not only maximizing value from its existing operations but is also strategically positioning itself for sustained growth and extended mine life well into the future, maintaining its leading role in the premium diamond sector.