Over P300 Million Already Spent On Karowe Mine Expansion


During the three months that ended on March 31, 2022 (2022 first quarter), Canadian mining company Lucara Diamond Corporation spent a total of $31.1 million (P378 million) on the underground expansion (UGP) development from its 100 percent owned Karowe Diamond Mine in Botswana, this publication can reveal.

According to the company in its 2022 first quarter (2022 Q1) results released recently, the money was primarily used in relation to engineering, procurement of long lead items and ongoing construction activities at the mine. The Karowe UGP is expected to extend the mine’s life to at least 2040, with underground carat production predominantly from the highest value EM/PK(S) unit and is forecast to contribute approximately $4 billion in additional revenues, using conservative diamond prices.

The Karowe UGP has an estimated $534 million capital cost and a five-year construction period. Mine ramp up is expected in Q1 2026 with full production from the UGP expected in the second half of 2026. Lucara is financing the Karowe UGP through a combination of cash flow from operations and project debt.

In 2022, the Canadian precious stone miner expects capital costs for the Karowe underground expansion to be up to $110 million and will focus on the commencement of main shaft sinking activities, the commissioning of the bulk power supply 132 kV line and substations 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.

This is the company that saw its revenue for the period under review increasing by 28 percent to $68.2 million from $53.1 million in Q1 2021 an instance that Lucara says reflects strong rough and polished diamond market fundamentals into the first quarter. “The combination of a strong diamond market, combined with the sale of several higher value rough diamonds in Q1 2022 generated an average price per carat (excluding top-up payments) of $690 for Karowe diamonds sold during the quarter (Q1 2021: $480 per carat),” the company said. “A total of 186 Specials (single diamonds in excess of 10.8 carats) were recovered, representing 6.9 percent weight percent Specials (Q1 2021: 6.8 percent).”
Lucara CEO Eira Thomas commented: “Lucara begins the year on a positive trajectory, having fully financed and significantly de-risked our growth plans for the underground expansion in 2021 and delivered another strong quarter of operating and financial results in Q1, reflecting solid performance at the mine combined with continued buoyancy in diamond prices. Preparation for main shaft sinking is well underway and anticipated to begin in Q2. Our multi-channel approach to sales through tenders, Clara and HB continues to mature, creating alignment along the value chain, delivering efficiencies and higher margins. Despite current geo-political challenges, Lucara remains optimistic about diamond prices as natural rough diamond supply constraints continue to manifest globally.”