Q1 2024 HIGHLIGHTS:
The recovery of a 320-carat top light brown gem quality diamond, a 166-carat Type IIa diamond, followed by the recovery of a 111-carat Type IIa diamond in Q1 2024.
In
On
Total revenue of
During Q1 2024, a total of 93,560 carats of rough diamonds (Q1 2023: 83,374) from Karowe were sold through the Company's three sales channels, generating revenue of
Operating cost per tonne processed(1) was
Work on the underground expansion project at Karowe also progressed well during the quarter. This key growth initiative remains on track with the rebase schedule and budget, positioning us to access the higher-value ore from the underground portion of the ore body, early in 2028.
While the diamond market remained relatively stable in Q1, we observed some cautious sentiment due to the broader macroeconomic climate of high inflation and interest rates impacting consumer demand in certain regions. However, the fundamental supply and demand dynamics continue to favour natural diamonds over the long-term as new mine supply remains constrained.
Lucara is well-positioned with our exceptional diamond production profile and our innovative process facilities and sales mechanisms to navigate this environment. We will continue executing our growth strategy while maintaining financial discipline to create sustained value for all our stakeholders.'
REVIEW FOR THE QUARTER ENDED
Operational highlights from the
A total of 89,145 carats recovered, including 7,534 carats from the processing of historic recovery tailings, (Q1 2023: 89,640 carats) at a recovered grade of 11.7 carats per hundred tonnes ('cpht') of direct milled ore (Q1 2023: 12.8 cpht).
A total of 160 Specials (defined as stones larger than 10.8 carats) were recovered, with three diamonds greater than 100 carats including one diamond greater than 300 carats.
Recovered Specials equated to 5.1% of the total recovered carats from direct milling ore processed during Q1 2024 (Q1 2023: 4%).
The twelve-month Total Recordable Injury Frequency Rate of 0.30 (Q1 2023: 0.36) at the end of Q1 2024 reflects a continued focus on leading indicators and safe performance.
Financial highlights for the three months ended
Operating margins of 51% were achieved (Q1 2023: 57%). A strong operating margin continues to be achieved through cost reduction initiatives assisted by a strong
Adjusted EBITDA(1) was
Net loss was
Cash outflows from operating activities was
Cash position and liquidity at
Working capital deficit (current assets less current liabilities) of
Cost overrun account balance ('CORA') of
The total debt drawn at the end of Q1 2024 was
The long-term outlook for natural diamond prices remains positive, anchored on improving fundamentals around supply and demand as many of the world's largest mines reach their end of life. In the short-term, De Beers, the largest diamond producer by value reduced their production guidance by up to 3.0 million carats, for 2024, to assist with stabilizing the diamond market. During the quarter, the G7 sanctions on the importation of Russian diamonds greater than one carat went into effect at the beginning of March and some trade delays were noted in the industry. The new procedures require all rough diamonds larger than 1.0 carat to be processed through the
Sales of lab-grown diamonds increased steadily through 2023 and into Q1 2024 with many smaller retail outlets increasingly adopting these diamonds as a product. In Q1 2024, this market underwent further change with a number of major brands confirming that they would not market lab-grown stones. The overall long-term impact will support the natural diamond market as the Company expects a division between the natural and lab-grown diamond market. The longer-term market fundamentals for natural diamonds remain positive, pointing to continued price growth as demand is expected to outstrip future supply, which is now declining globally.
2024 OUTLOOK
This section of the press release provides management's production and cost estimates for 2024. These are 'forward-looking statements' and subject to the cautionary note regarding the risks associated with forward-looking statements. Diamond revenue guidance does not include revenue related to the sale of exceptional stones (an individual rough diamond which sells for more than
HB SALES AGREEMENT FOR +10.8 CARAT DIAMOND PRODUCTION FROM KAROWE
For the three months ended
Recovered Specials for the quarter equated to 5.1% by weight of total recovered carats from ore processed during Q1 2024, with 89% of carats recovered coming from the South Lobe, 7% recovered from the Centre Lobe, and 4% recovered from mixed ore (Q1 2023: 4.0%; 64% Centre and North, 36% South Lobe ore). Natural variability in the quality profile of the +10.8ct stones in any production period or fiscal quarter results in fluctuations in recorded revenue and associated top-ups.
The average price of goods delivered in the first quarter of 2024 remained strong and is directly comparable to the value delivered in the first quarter of 2023. Top-ups in the first quarter continue to be received from goods delivered in prior periods under the
The Company had expected higher diamond recoveries and diamond quality during Q4 2023 and Q1 2024. This decrease in both recovery and diamond quality contributed to the Company's additional working capital facility draw during the quarter. Under the HB agreement payment for diamonds delivered under a value of
The large stone diamond market fundamentals continued to support healthy prices from the multi-year highs observed at the peak in Q1 2022, despite an overall softening of demand in the market.
CLARA SALES PLATFORM
Total volume transacted on the platform was
QUARTERLY TENDER
A total of 88,275 carats were sold in the Q1 2024 tender, generating revenues of
KAROWE UNDERGROUND EXPANSION UPDATE
The Karowe UGP is designed to access the highest value portion of the Karowe orebody, with initial underground carat production predominantly from the highest value eastern magmatic/pyroclastic kimberlite (south) ('EM/PK(S)') unit. The Karowe UGP is expected to extend mine life to at least 2040.
On
With the update, the
During the three months ended
Main sinking in the production and ventilation shafts:
The ventilation shaft reached 426 metres below collar, with a planned final depth of 731 metres. The shaft is approximately 19 days ahead of the
The production shaft reached 449 metres below collar, with a planned final depth of 765 metres. The production shaft is approximately 15 days behind the
During Q1 2024, the first shaft stations at the 670-level were engaged in lateral development at 348 metres below collar (666 masl). The first lateral connection between the two shafts (670 level) was completed. Electrical and dewatering sump excavation was completed, and construction of equipment was carried out as a concurrent activity during shaft sinking.
During Q1 2024, the ventilation shaft sank 78 metres, completed three probe hole covers, continued the 670-level station development and replaced the initial winder kibble ropes. Total lateral development in Q1 2024 was 141 metres.
Production shaft activities included sinking a total of 101 metres, completion of four probe hole covers, lateral development on the 670-level station and replacement of the initial winder kibble ropes. A total of 26 metres of lateral development was completed.
Sinking and lateral development during the first quarter took place in the Thalbala mudstone and the Tlapana carbonaceous material. Water encountered in the core holes was derived from Granites. A mini grout cover was completed in the production shaft and sinking continued.
Construction of the permanent bulk air coolers at the production shaft continued with completion expected in Q2 2024. Planning for a surface dam for the water during production commenced.
Detailed engineering and fabrication of the permanent men and materials winder continued during the quarter, representing the last major component for the permanent winders.
Preparation of tender documents for the underground lateral development work.
Mining engineering advanced with a focus on supporting shaft sinking, underground infrastructure engineering and finalizing level plans.
During Q1 2024, the UGP achieved a twelve-month rolling Total Recordable Injury Frequency Rate of 0.65. Project to date Total Recordable Injury Frequency Rate at
The capital cost expenditure for the underground expansion in 2024 is up to
Activities planned for the Karowe UGP in Q2 2024 include the following: Sinking within the ventilation and production shafts to the 470-level.
Sink through the Mea formation into Granites and commence 470-level station development and lateral development.
Planned cover drill campaigns in the ventilation and production shafts. Sinking planned for the second quarter will move through the Mea formation into the Granite lithologies. Probe hole grouting campaigns are planned in each shaft in the period.
Procurement of underground equipment, including an additional Load, Haul, Dump Aardvark for the production shaft station development. Major components of the Crusher and sinking pumps will be delivered to site.
Commissioning of the permanent bulk air cooler system.
Launch of the tender process for the underground lateral development work.
Continuation of detailed design and engineering of the underground mine infrastructure and layout.
Finalise engineering of the permanent men and materials winder. Commence earthworks for winder.
ANNUAL MEETING INFORMATION
The Company's annual general and special meeting of shareholders will be held at the office of
CONFERENCE CALL
The Company will host a conference call and webcast to discuss the results on
The presentation slideshow will also be available in PDF format for download from the Lucara website (Link to presentation).
Conference Replay: A replay will be available until
Replay number (
ABOUT LUCARA
Lucara is a leading independent producer of large exceptional quality Type IIa diamonds from its 100% owned
The information is information that Lucara is obliged to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Markets Act. This information was submitted for publication, through the agency of the contact person set out above, on
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