Lucara projects P2, 6 billion earnings in 2016

SHARE   |   Monday, 18 April 2016   |   By Kabelo Adamson
Karowe Mine [Insert CEO, William Lamb Karowe Mine [Insert CEO, William Lamb

Lucara Diamond Corp, owners of Karowe Mine, projects to generate between $200m and $220 million of revenue in 2016. Figures exclude anticipated sale of two high value diamonds such as Lesedi La Rona – a 1,111 carat stone recovered last November and the 813 carat stone held in the inventory by end of December last year. The company said in statement on financial results for the year 2015 released on Thursday that it forecasts to process between 2.2m to 2.4 million of tonnes of ore and producing over 350,000 carats during the year. In 2015, Lucara made $223.8 million as proceeds from the sales of 377,136 carats at an average price of $593 per carat. The reduction in carats sold in 2015 has led to a decrease in operating margins and with the company’s Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for the year being $133.9 million from $173.4 million registered in 2014.

Lucara, which has two prospecting licenses in Botswana, has further announced that it intends to make substantial investments in its operations with capital expenditure in 2016 expected to include modifications of the existing Large Diamond Recovery (LDR) circuit and the installation a Mega Diamond Recovery (MDR) circuit for a total investment of between $15 million and $18 million. The two prospecting licenses are located within a distance of 15km and 30km from the Karowe Diamond Mine. The two precious stones prospecting licenses are to be known to host kimberlites, BK02, AK11 and AK12, AK13 and AK14. It is noted that the bulk sampling plant was commissioned in the fourth quarter of 2015 and processing of kimberlite from BK02 was commenced. During the same quarter, Lucara says it received environmental approvals for bulk sampling activities at AK11 and AK12.

Sustaining capital is forecast to be approximately $11 million which includes a mill re-liner at a cost of $1.5 million and an investment of $1.5 million for a combined sales and administrative office in Gaborone. With regard to Mothae Diamond Project in Lesotho, which was supposed to be sold Paragon Diamonds following a signing of the Memorandum of Understanding, Lucara says it has relinquished its 75 percent ownership to the government of Lesotho after Paragon was unable to complete the share purchase agreement. As a result, Lucara says it has no remaining ownership in the project. The Botswana Stock Exchange (BSE) listed company’s earnings per share was $0.21 per share for the year under review and the total dividend paid by the company was $11.8 million.