Lucara outperforms forecast

SHARE   |   Monday, 20 February 2017   |   By Kabelo Adamson
Lucara CEO, William Lamb Lucara CEO, William Lamb

Lucara Diamond Corp, owners of Karowe Mine in Boteti, is yet to find a buyer for Lesedi La Rona – a diamond nearly a size of a tennis ball. The Vancouver-based junior miner released its financial statement on Friday morning, showing that the stone which made news headlines in 2015 was still in the company’s inventory as at 31st December 2016. The diamond, which is the second largest stone to be unearthed in history, was scheduled to be sold through auction in London last winter but bids failed to reach even the minimum  reserve as they stalled at $60 million. The failed bid came following a series of road shows, which saw the 1,109 carat diamond taken to the streets in the Far East and USA. In an interview with this publication last year, Lucara President and CEO, William Lamb indicated that the company is in no rush to let go of the precious stone. He said the company believes Lesedi La Rona, which was named after Lucara ran a competition among the locals, holds such a significant value that they are willing to hold it in their inventory until a suitable buyer is found. Following a failed bid to sell it through an auction, Lamb did not commit himself on which method will be used but suggested that it may include selling it privately. Karowe mine, which was previously owned by De Beers, is expected to process between 2.2 million and 2.5 million tonnes of ore, producing between 290,000 and 310,000 carats of diamonds in 2017. From that production Lucara, which has of late has been breaking records in unearthing extremely large diamonds, anticipates to rake in revenue of $220-$220 million, excluding the sale of Lesedi La Rona which is expected to finally happen this year.

During 2016, the mine reportedly outperformed its forecast in terms of ore processed and carats recovered. Lucara recently announced the appointment of Moolman Mining Botswana, a subsidiary of Aveng Moolman as contractors to carry out open cast mining activities at Karowe on its behalf on a six-year contract. Currently Moolman is mobilising equipment and actual mining activities are expected to expect next month. On Friday the company announced that it had cash balance of $53.3 million by the end of 2016 calendar year, a huge decrease from $134.8 million it had the year before. The massive decrease is blamed on the company’s special and regular dividend payments of $149.7 million to its shareholders. Lucara says its $50 million credit facility remains undrawn. The company expects to spend $33-$35 million to complete Mega Diamond Recovery and sub-needle XRT projects which commenced last year and are to be completed this year. Furthermore Lucara has set aside about $10 million to push exploration work and the completion of a pre-feasibility level underground study.