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Lucara provides operating outlook for 2019

Published by
Global Mining Review,


Lucara Diamond Corp. (Lucara) has shared the following operating guidance for 2019.

Eira Thomas, President & CEO commented: “Having stabilised and significantly improved our mining operations at Karowe in 2018, Lucara is now focused on optimising the base business and pursuing a suite of high potential, organic growth opportunities. The completion of a feasibility study examining the potential for underground production and life of mine expansion at Karowe from 2026 until at least 2036, remains a top priority for 2019. In addition, we will continue to systematically ramp up diamond sales through Clara, our transformational, proprietary digital sales platform that successfully completed its first trial sale in December 2018.”

She added: “Our focus at Karowe in 2019 will be on driving operational efficiencies, increased productivity and cost control, and maximising cash flow. The waste stripping bottleneck is now behind us and we expect stripping ratios to steadily improve towards the end of the calendar year, enabling improved access to high value, south lobe ore.”

Dividend policy

Lucara anticipates that an annual dividend of CAN$0.10 per share will be paid in four equal installments in 2019; in April, June, September and December. The amount of any dividend declared will remain at the discretion of the Board of Directors. In determining the rate of the total dividend in Canadian dollars per share and consistent with Lucara’s Dividend Policy, the Board of Directors will consider current operating results and outlook, the need to reinvest to maintain profitable long-term growth, the external environment and any other factors deemed relevant.

Diamond revenue

In 2019, the company forecasts revenues between CAN$170 million and CAN$200 million, consistent with the forecast for 2018. These projections include ‘Specials’ which are diamonds that are 10.8 carats and larger but exclude the sale of any truly unique diamonds such as the 1109 carat Lesedi la Rona and the 813 carat Constellation. Specials are consistently recovered from the Karowe diamond mine and contribute a significant percentage of the company’s annual revenue. Diamonds recovered are expected to be between 300 000 - 330 000 carats and diamonds sold are expected to be between 300 000 - 320 000 carats.

Production estimates and costs

Following the substantial completion of a significant waste stripping campaign in 2017 and 2018, total tonnes mined in 2019 are expected to be between 8.5 million - 11.8 million t, of which the company expects to mine between 2.5 million - 2.8 million t of ore and between 6.0 - 9.0 million t of waste. The average strip ratio is expected to be 2.84 in 2019. The 2019 estimated cash cost per tonne of ore processed is expected to be between CAN$32.00 and CAN$37.00 (2018: CAN$38.00 - CAN$42.00) while estimated operating cash costs, excluding waste mining, are expected to be between CAN$21.00 - CAN$24.00/t processed. The cost per tonne mined is expected to be between CAN$4.00 - CAN$4.50 and the estimated processing cost per tonne processed is expected to be between CAN$12.00 - CAN$13.00, mostly offsetting the increase in cost per tonne mined which results from higher rates from the mining contractor appointed in mid-2018.

Tax rates

Lucara Botswana’s progressive tax rate computation allows for the immediate deduction of operating costs, including waste mining and capital expenditures, in the year in which they are incurred. Based on 2019 revenue guidance of CAN$170 million - CAN$200 million and a budget of CAN$14.8 million for the feasibility study as well as operating costs, the expected tax rate is between 22% - 29% for 2019.

Sustaining capital and maintenance projects

Sustaining capital and project expenditures are expected to be up to CAN$14.0 million in 2019, including expenditures associated with the construction of an additional slimes dam, maintenance related to the XRT recovery circuit, and a provision for the implementation of body scanning technology to enhance security. This does not include investments being made on the underground development study noted below.

Exploration

Exploration expenditures are estimated to be up to CAN$3.0 million for use of the Sunbird remote mapping technology and drilling of prospective targets identified by the technology.

Feasibility Study: underground development

A budget of CAN$14.8 million has been approved to complete a feasibility study that was initiated in 2018, evaluating the potential for an underground mining operation at Karowe. Work undertaken in 2018 under a budget of approximately CAN$29 million has significantly de-risked the project and in 2019, efforts will focus on follow up geotechnical and hydrogeological drilling and related studies. A comprehensive update on the underground project will be provided in early 1Q19.

Clara digital sales platform

Lucara successfully completed its inaugural diamond sale through Clara Diamond Solutions, its 100%-owned digital sales platform in December 2018 and anticipates a systematic ramp up in diamond sales through Clara in 2019. Analysis of results is ongoing and further details about this initial sale, as well as next steps for the Clara platform will be reported in January 2019.

Read the article online at: https://www.globalminingreview.com/finance-business/09012019/lucara-provides-operating-outlook-for-2019/

 

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