Lesedi La Rona Boosts Lucara Sales

Lucara Diamond Corp.’s revenue more than doubled in the third quarter as it sold the 1,109-carat Lesedi La Rona rough diamond, the miner reported Thursday.

Sales came to $77.9 million in the three months that ended September 30, up from $38.1 million a year earlier, while the average price jumped to $1,161 per carat compared with $332 per carat last year. During the quarter, Lucara sold the Lesedi La Rona to Graff Diamonds for $53 million, or $47,777 per carat. Profit stood at $32.9 million for the period, versus a loss of $3.8 million a year ago.

However, while sales increased for the quarter, they fell 20% in the first nine months to $183.6 million, partly due to the sale of the 813-carat Constellation rough diamond for a record $63.1 million in May 2016.

In addition, the company’s new mining contractor, Aveng Moolman, failed to increase its operating levels as quickly as expected, the company stated. As a result, less ore was mined from the Karowe deposit’s high-value south lobe than originally planned, so Lucara was forced to substitute it with lower-grade stockpiles.

Production consequently slid 23% to 62,425 carats in the third quarter, and Lucara reduced its sales forecast to between 260,000 and 270,000 carats for the year, compared with an earlier projection of 290,000 to 310,000 carats. The miner also slashed its full-year revenue forecast to between $165 million and $175 million — excluding the sale of the Lesedi La Rona — from an earlier guidance of $200 million to $220 million.

“We are addressing issues with our mining contractor,” said Lucara CEO William Lamb. “Improvements are being made, and we expect the shortfall in recovered carats from the south lobe this year to contribute to future cash flows.”

Lucara also released the results of a feasibility study for an underground mine at Karowe, saying it was potentially economically viable. The $195 million extension at the Botswana deposit would enable Lucara to continue production at Karowe even after it depletes the current open-pit operations in 2026, it said. The underground mine contains potential production of 2.72 million carats over its life span, Lucara said. The operations would focus on Karowe’s south lobe, where the company found the Lesedi La Rona in November 2015.

“We have seen ongoing improvement in the value of diamonds from the south lobe, and the development of an underground mine has the potential to add significantly to the life of mine at Karowe,” Lamb said.


BRONRapaport 5-11-2017