First production anticipated in 2022
The Botswana Stock Exchange (BSE) listed Lucara Diamond Corp is developing underground mining operations at its Karowe mine in Letlhakane following projections that production at the open pit mine could end in 2026.
The company told its shareholders last week that since declaring commercial production in July 2012, the Karowe mine has produced an average of 320,000 carats of diamonds per annum from open pit operations and added that these open pit operations are scheduled to continue until 2026 followed by underground operations which are expected to end production in 2036.
“Capital expenditures for development of the planned underground operations are estimated to a total of $195 million (over 1.9 billion), including the costs associated with the pre-feasibility and feasibility studies, the required hydro and geotechnical testing and modelling work and a 25% contingency. The development period is approximately 5 years to first production. Ongoing development capital requirements are estimated at $178M (over 1.7 billion),” states the company. According to the entity diamond processing plant, other site facilities and equipment required to support an underground mining operation have recently been upgraded to accommodate the treatment of diamonds at depth.
Preliminary economic assessment for the development of an underground mine to commence production, after the completion of the current open pit mine, is expected to be completed in the first half of 2018 (H1 2018). “The Karowe Underground PEA evaluates the development of underground operations to extract the AK06 kimberlite resource, following the depletion of the current open pit operations, which is expected to occur in 2026,” said the Canadian mining firm.
Lucara CEO William Lamb stated that management is pleased with the results of the preliminary economic assessment which demonstrates the high quality of diamonds at Karowe and the potential for long term operations at Karowe with the development of an underground mine. “The results of the PEA so far demonstrate the potential economic viability for the development of an underground mine at Karowe. Underground operations are focused on the high value south lobe, which remains open at depth below the current design, and is a further indication of the potential longevity of the resource and cashflow generation at Karowe. We have seen on-going 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,” said Lamb. He stated that based on the positive PEA results, the company has continued with the development of a pre-feasibility study for the development of the mine and added that release of the study results is anticipated in the second quarter of 2018 (Q2, 2018).
KAROWE SEES STRONG SALES IN Q3 2017
Giving an update on the financial performance of the company, CEO William Lamb indicated that latest financials show that during the third quarter of 2017 (Q3 2017) Lucara generated revenue amounting to $77.9 million (around P779) compared to $38.1 million (around P381 million) achieved in the third quarter of 2016. Lamb stated that Karowe diamond prices during Q3 2017 was $389 per carat compared to Q3 2016 average sales price of $332 per carat, an increase of 17%.
According to Lamb since January 2017, prices achieved an increase of 11%. He stated that the continued recovery of special stones and increase in prices compared to the prior year and in difficult market conditions emphasizes the quality of the Karowe stones. “Karowe sales remain strong compared to the diamond sector which is experiencing an influx of new production, weakness in the smaller and poorer quality stones, as well as low colour brown diamonds. Average diamond prices, as reported by other diamond producers, are estimated to have decreased by up to 8% compared to the prior year in certain size and quality fractions. This price decrease has been compounded by the increase diamond production from new producers. The high quality south lobe and rarity of some of the Karowe diamonds has created strong demand for its diamonds leading to price increases,” said the CEO.