Lucara Diamond: Guidance for 2022

25th November 2021

Lucara Diamond Corp. (“Lucara” or the “Company”) is pleased to provide operating guidance for 2022 (all amounts in USD unless otherwise stated).

2022 OUTLOOK

This section provides management’s production and cost estimates for 2022. These are “forward-looking statements” and subject to the cautionary note regarding the risks associated with forward-looking statements.

Karowe Mine (all amounts in US Dollars) Full Year 2022

Diamond revenue – $185 million to $215 million

Diamond sales – 300,000 carats to 340,000 carats

Diamonds recovered – 300,000 carats to 340,000 carats

Tonnes mined (Ore) – 3.1 million to 3.5 million

Tonnes mined (Waste) – 1.5 million to 2.1 million

Tonnes processed (Ore) – 2.6 million to 2.8 million

Total operating cash costs per tonne processed (including (a) to (b) below): $29.50 to $33.50

  • (a) Cash cost per tonne mined (ore and waste) – $5.75 to $6.25
  • (b) Cash cost per tonne processed – $12.00 to $13.00

Botswana G&A expenses, including sales and marketing, per tonne processed – $3.50 to $4.00

Tax rate – 0%

Average exchange rate – USD/Pula – 11.0

Eira Thomas, President and CEO commented: “The business environment for diamonds and diamond jewellery is the healthiest we’ve seen in several years, spurred on by an improvement in global supply and demand fundamentals, a trend which is expected to continue. In 2022, our tenth year of operations at Karowe, Lucara anticipates producing up to 340,000 carats which will be sold through its innovative, multi-sales channel approach generating revenues between $185 and $215 Million. This does not include any estimated contributions of revenue from large, exceptional diamonds that have historically formed a regular part of Karowe’s production profile. The completion of a supplemental debt financing package in 2021 to support our underground expansion project was a significant de-risking milestone for the company and the project, which was $64 Million spent by Q3 2021 and 20% complete. The underground expansion at Karowe provides access to the richest portion of the orebody and will extend minelife to at least 2040. The project remains on schedule and budget, with a forecasted spend of up to $110 Million in 2022.”

REVENUE AND SALES CHANNELS

In 2022, the Company’s revenue forecast assumes that 100% of the carats recovered will come from the higher value M/PK(S) and EM/PK(S) units within the South Lobe in accordance with the mine plan, generating revenue between $185 and $215 million in 2022. The Company will continue to use three different sales channels to maximize revenue and generate consistent cash flow to support the Company’s operations and its investment in the underground expansion project. Higher value stones greater than +10.8 carats in size will continue to enter the manufacturing pipeline at HB, giving the Company exposure to polished prices and regular cash flow from the highest value portion of the Karowe production.

Quarterly tenders and regular sales through Clara, primarily for stones less than 10.8 carats in size will continue, consistent with the practise from previous years.

MINING AND PROCESSING ASSUMPTIONS

Following the successful project financing for the Karowe underground expansion project in mid-2021, the open pit mine plan was revised to extend the life of the open pit into 2026. Centre lobe material, combined with ore from the underground development will replace lower grade stockpiles towards the end of the open pit mine life. In 2022, the Company expects to mine between 4.6 and 5.6 million tonnes, of which ore tonnes mined represent approximately two-thirds of total tonnes mined. The assumptions for carats recovered and sold as well as the number of tonnes processed are consistent with achieved performance in recent years.

UNDERGROUND AND SUSTAINING CAPITAL EXPENDITURES

In 2022, capital costs for the underground expansion are expected to be up to $110 million and will focus on the commencement of shaft sinking activities, the commissioning of power and detailed engineering for the underground development. Sustaining capital and project expenditures are expected to be up to $17 million with a focus on completion of a community sports facility, dewatering activities and an expansion of the tailings storage facility.

BOTSWANA TAX RATE

Lucara Botswana’s progressive tax rate computation allows for the immediate deduction of operating costs, including capital expenditures, in the year in which they are incurred. Based on 2022 revenue guidance of $185 million to $215 million and assuming the underground development expenditures of $110 million, the tax rate is expected to be 0% for 2022.

CLARA SALES PLATFORM

Clara, Lucara’s 100% owned proprietary, secure, web-based digital sales platform, continues to grow in terms of volume transacted and customer participation. The number of buyers on the platform as of Q3 2021 was 87 and the Company continues to maintain an active waiting list to manage supply and demand. Platform trials and discussions with third party suppliers of rough diamonds are ongoing to build supply, which remains a key objective for 2022 and beyond. The rationale for a web based digital sales platform for the transaction of rough diamonds has never been stronger, sparked by industry’s need for increased transparency, global restrictions on travel, and a new openness to the use of innovation and technology to create a more efficient supply chain.

On behalf of the Board,

Eira Thomas

President and Chief Executive Officer

News in full

In the TV clip below, Lucara’s CEO Eira Thomas explains the business, including the deal with Louis Vuitton and tells us more about Clara, Lucara’s wholly owned digital sales platform