NOVEMBER 29, 2017 (LUC - TSX, LUC - BSE, LUC - Nasdaq Stockholm) Lucara Diamond
Corp. ("Lucara" or the "Company") is pleased to provide operating guidance for
2018 (all dollar amounts are in US dollars unless otherwise stated).
2018 HIGHLIGHTS
-- Revenue is forecast at $170 million to $200 million.
-- Karowe operating cash costs are expected to be between $38.0 - $42.0 per
tonne processed as the Company continues to advance the major push back to
fully access south lobe ore. Operating cash costs, excluding waste mining
is expected to be $21 - $24 per tonne processed.
-- The performance of the Company's mining contractor has improved, and ore
mined is forecast to increase to between 2.5 - 2.8 million tonnes in 2018
from 2017 forecast of between 1.4 - 1.6 million tonnes ore mined.
-- Based on the positive results from the Preliminary Economic Analysis
("PEA") for a potential underground mine at Karowe, the Company is
continuing with a Pre-Feasibility Study ("PFS") which we expect to release
in Q2, 2018.
-- The Company anticipates it will declare an annual dividend in 2018 of
Canadian $0.10 per share to be paid in four equal payments in the last
month of each financial quarter.
William Lamb, President and Chief Executive Officer 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. 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. Following the successful completion of
the MDR and sub-middles projects as well as the expected completion of the cut
2 waste push back in early 2019, operating and capital costs are forecast to be
significantly reduced going forward contributing to free cash flow in future
periods".
Karowe Mine - Diamond Sales, Production, and Cost Outlook:
Karowe Mine (all dollar amounts are in US dollars unless otherwise Full Year
stated) 2018
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Diamond revenue (million) 170 - 200
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Diamond sales (thousands of carats) 270 - 290
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Diamonds recovered (thousands of carats) 270 - 290
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Ore tonnes mined (million) 2.5 - 2.8
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Waste tonnes mined (million) 13.0 -
16.0
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Ore tonnes processed (million) 2.4 - 2.7
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Total operating cash costs including waste mined (per tonne $38.00 -
processed). This includes costs (a) to (c) below: $42.00
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(a) Ore and waste mined cash costs (per tonne mined) $2.90 -
$3.20
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(b) Processing cash costs (per tonne processed) $13.75 -
$15.0
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(c) Mine on-site departmental costs (security, technical services, $4.50 -
mine planning, safety and health, geology) - per tonne processed $5.50
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Operating cash costs excluding waste mined (per tonne processed) $21.00 -
$24.00
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Botswana general and administration costs including marketing costs $2.00 -
(per tonne processed) $3.00
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Tax rate 22%
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Average exchange rate - USD/Pula 9.8
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Diamond Revenue
The Company forecasts revenue of between $170 million to $200 million,
excluding the sale of significant high quality exceptional stones. Diamonds
recovered and sold are forecast between 270,000 to 290,000 carats. The
recovery of these high value diamonds can positively impact the Company's
revenue. To date the Karowe mine has produced and sold the world's two highest
value rough diamonds, the Lesedi La Rona and the Constellation for a combined
value of $116.1 million dollars as well as selling 7 rough diamonds in excess
of $10 million each.
Production
We remain on track to achieve the Company's 2017 production guidance. For
2018, the Company is forecasting ore mined guidance at to 2.5 - 2.8 million
tonnes compared to 2017 forecast of 1.4 - 1.6 million tonnes.
The Karowe mine is forecast to process between 2.4 - 2.7 million tonnes of ore,
producing between 270,000 and 290,000 carats. It is expected that the mill
feed will comprise up to 85% south lobe ore during 2018. The South lobe grades
are lower than the Centre and North lobes resulting in lower diamond recoveries
however the overall higher diamond quality and value from the south lobe as
compared to the Centre and North lobes results in higher average sales prices
and resulting revenues and cash flows.
Cash Costs - Operating cost per tonne processed
Cash costs per tonne of ore processed is forecast to be between $38.0 - $42.0
per tonne. To fully access cut 2 south lobe ore requires at large volume of
waste to be mined which significantly impacts operating cash costs in 2018 as
it did in 2017. Operating cash costs, excluding waste mining is expected to be
between $21 - $24 per tonne processed. The strip ratio is forecast at
approximately 5.0 - 6.0 in 2018 before decreasing significantly in 2019 and
then forecast at under 2.0 going forward from 2020. The decrease in waste
mining is expected to add to free cash flow once the cut 2 push back is
complete in 2019.
Tax rates
Boteti's progressive tax rate computation allows for the immediate deduction of
operating costs, including the mining of waste as well as capital expenditures
in the year they are incurred. Based on 2018 revenue guidance of $170 - $200
million and the additional waste mining next year along with the completion of
the Company's capital program, the Company forecasts a tax rate of 22%.
Sustaining Capital Expenditures
Sustaining capital expenditures of up to $11 million, includes final
expenditure for the sub-middles XRT project which are part of the total project
cost at $45 million compared to guidance of $45-$48 million.
Exploration
A budget of up to $6 million has been allocated to advance exploration work on
the companies prospecting licenses. The Company is focused on drill programs at
AK13, AK24, LDD programs based on results of core drilling and geophysical
surveys in the vicinity of AK11 and AK24. Completion of processing of AK11 LDD
samples and additional drilling will be conducted if warranted. The Company
continues to set staged hurdle targets throughout its exploration program,
where results will be evaluated to determine whether funding will be advanced
for further work.
Underground Development
During 2017 the Company completed a preliminary economic assessment in
accordance with the National Instrument 43-101 for the development of an
underground mine to commence production shortly before the completion of the
current open pit at the Karowe mine. Based on the positive PEA results the
Company has continued with the development of a PFS which is anticipated to be
complete in Q2, 2018. (See press release November 2, 2017).
The costs of a PFS in 2018 are forecast at up to $3 million. Costs associated
with geotechnical and hydrogeology drilling and additional studies in support
of a Feasibility Study are forecast at up to $26 million in 2018.
Dividend Policy
The Company anticipates it will declare an annual dividend in 2018 of Canadian
$0.10 per share to be paid in four equal payments in the last month of each
financial quarter. 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, the Board of Directors will consider
current operating results and outlook, the need to invest to maintain
profitable long term growth, the external environment and any other factors
deemed relevant.
On behalf of the Board,
William Lamb
President and CEO
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For further information, please contact:
Lucara: Michelle Fyfe, Investor Relations +1 (604) 689-7842,
michelle.fyfe@lucaradiamond.com
Sweden: Robert Eriksson, Investor Relations +46 701-112615, reriksson@rive6.ch
UK: Louise Mason, Citigate Dewe Rogerson +44 (0) 20 7282 2932,
louise.mason@citigatedewerogerson.com
About Lucara
Lucara is a leading independent producer of large exceptional quality Type IIa
diamonds from its 100% owned Karowe Mine in Botswana. The Company has an
experienced board and management team with extensive diamond development and
operations expertise. The Company operates transparently and in accordance
with international best practices in the areas of sustainability, health and
safety, environment and community relations.
The information in this release is accurate at the time of distribution but may
be superseded or qualified by subsequent news releases.
The information in this release is subject to the disclosure requirements of
the Company under the EU Market Abuse Regulation and the Swedish Securities
Market Act. This information was publicly communicated on Wednesday, November
29, 2017 at 2:30p.m. Pacific Time.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain of the statements made and contained herein and elsewhere constitute
forward-looking statements as defined in applicable securities laws. Generally,
these forward-looking statements can be identified by the use of
forward-looking terminology such as "expects", "anticipates", "believes",
"intends", "estimates", "potential", "possible" and similar expressions, or
statements that events, conditions or results "will", "may", "could" or
"should" occur or be achieved.
Forward-looking statements are based on the opinions and estimates of
management as of the date such statements are made, and they are subject to a
number of known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievement
expressed or implied by such forward-looking statements. The Company believes
that expectations reflected in this forward-looking information are reasonable
but no assurance can be given that these expectations will prove to be accurate
and such forward-looking information included herein should not be unduly
relied upon. In particular, this release may contain forward looking
information pertaining to the following: the estimates of the Company's mineral
reserve and resources; estimates of the Company's production and sales volumes
for the Karowe Mine; processing capabilities, recovery rates, cash flows and
sales volumes for the Karowe Mine, including the potential effect of the
development and integration of the proposed underground mine at Karowe on
production, sales volumes and the expected LOM; estimated costs to construct
the proposed Karowe underground development and the timelines associated
therewith; expected exploration and development expenditures and expected
reclamation costs at the Karowe Mine including associated plans, objectives and
economic estimates; expectation of diamond prices and changes to foreign
currency exchange rate; expectations regarding the need to raise capital;
possible impacts of disputes or litigation and other forward looking
information.
There can be no assurance that such forward looking statements will prove to be
accurate, as the Company's results and future events could differ materially
from those anticipated in this forward-looking information as a result of those
factors discussed in or referred to under the heading "Risks and
Uncertainties"' in the Company's most recent Annual Information Form available
at http://www.sedar.com, as well as changes in general business and economic
conditions, changes in interest and foreign currency rates, the supply and
demand for, deliveries of and the level and volatility of prices of rough
diamonds, costs of power and diesel, acts of foreign governments and the
outcome of legal proceedings, inaccurate geological and recoverability
assumptions (including with respect to the size, grade and recoverability of
mineral reserves and resources), and unanticipated operational difficulties
(including failure of plant, equipment or processes to operate in accordance
with specifications or expectations, cost escalations, unavailability of
materials and equipment, government action or delays in the receipt of
government approvals, industrial disturbances or other job actions, adverse
weather conditions, and unanticipated events relating to health safety and
environmental matters).
Accordingly, readers are cautioned not to place undue reliance on these
forward-looking statements which speak only as of the date the statements were
made, and the Company does not assume any obligations to update or revise them
to reflect new events or circumstances, except as required by law.
Attachment:
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