Lucara Posts Impressive Performances In Q3 2021

The company is bullish as the holiday season begins


Multi-listed mining company, Lucara Diamond Corporation, which is known for producing top gems from its Botswana operation, Karowe Diamond Mine, has recorded strong financial and production performances in the three months ended 30 September (Q3) 2021.
This is the mining company that recognised revenue of $72.7 million in Q3 2021 compared to $41.3 million in Q3 2020. A total of 117 459 carats were sold for the three months ended on 30 September 2021, which is a slight increase compared to 112 943 carats sold in the same period last year.
“Stronger performance was driven by a high proportion of Specials (+10.8 carats) recovered and sold over the quarter, higher diamond prices and a contribution from top-up payments for polished diamonds sold under the HB supply agreement,” it said in a statement released recently.
Lucara recorded net income of $12.8 million during Q3 2021 (earnings per share of $0.03), compared to a net loss of $5.4 million for Q3 2020 (loss per share of $0.01). As at 30 September 2021, Lucara had cash and cash equivalents of $26.6 million, an increase of $21.7 million from 31 December 2020.
Known for recovering “Specials,” as diamonds in excess of 10.8 carats in size are usually referred to,
The Canadian precious stone miner did what it is best known for when it recovered 212 Specials (+10.8 carats) from direct milling during the third quarter, representing 7.9 percent weight percentage of total direct milling recovered carats, a strong production quarter in terms of Specials recovered (Q3 2020: 6.5 percent).
In industry terminology “Specials” are diamonds in excess of 10.8 carats in size. Lucara has come to be known for recovering such massive stones from Karowe Mine.
Still in the period under review, Lucara recovered four pink diamonds from direct milling from the EM/PK(S) unit of the South Lobe, including a 62.7 carat high quality, fancy pink Type IIa gem diamond and a 22.21 carat pink gem of similar quality along with two additional pink gems of similar colour and purity weighing 11.17, and 5.05 carats.
Meanwhile, Lucara has announced in a statement that the Karowe Underground Project (UGP) will extend the mine life to at least 2040, with mining predominantly from the highest value EM/PK(S) unit and is forecast to contribute approximately $4 billion in additional revenues, using conservative diamond prices.
“Following financial close of the facilities on September 2, 2021, the company’s Board of Directors formally approved the UGP, which has a $534 million capital cost and a five-year construction period,” the statement said. “Mine ramp up is expected in Q1 2026 with full production from the UGP expected in Q4 2026.
According to Lucara, $64.6 million has been spent to September 30, 2021, at the Karowe UGP primarily in relation to engineering and procurement of long lead items and commencement of construction activities. The total planned spend for 2021 is up to $120.0 million.
“During Q3 2021, the company spent $32.0 million on project execution activities, including full mobilisation of the pre-sink shaft sinking contractor, commencing pre-sinking of the ventilation and production shafts, ventilation shaft scotch derrick erection and installation, continued surface infrastructure construction for shaft development and the second phase of a 200-person camp, and the commencement of bush clearing on the route for the 29 km 132kV transmission line bulk power upgrade,” the company said.
Lucara stated that following a challenging 2020, the diamond market in 2021 continues to be in a healthy balance due to robust demand and lower rough supply. “The market remained stable in Q3 despite concerns there may be a softening in the Chinese market.” Lucara noted. “Midstream demand remains strong with capacity, in particular India, remaining high leading up to an expected strong holiday season over the coming months.”