Lucara lowers FY production, sales guidance

JOHANNESBURG (miningweekly.com) – Vancouver-based diamond producer Lucara Diamonds, which operates the Karowe mine, in Botswana, has lowered its full-year production guidance to between 265 000 ct and 285 000 ct, compared with the previously targeted 290 000 ct to 310 000 ct, as a result of lower mined ore volumes in the second quarter.

The diamond miner pointed out that mining contractor Aveng Moolman had experienced equipment availability issues at the start of the quarter, ended June 30, resulting in lower-than-planned mined ore volumes.

Processed volumes were, however, largely on forecast as ex-pit ore feed was replaced with south lobe stockpile material.

In line with the lower production guidance, Lucara has also lowered its full-year sales guidance to 260 000 ct to 275 000 ct, compared with the previously targeted 290 000 ct to 310 000 ct.

Meanwhile, two capital projects to enhance diamond recovery and maintain design throughput continued on schedule and within budget.

The Mega Diamond Recovery project is expected to be completed in the third quarter. Construction is essentially complete and first stage commissioning has started.

Secondly, construction on its -8+4 mm sub-middles XRT project is on schedule for completion in the third quarter. This project is aimed at enabling the processing facilities to treat the high-yielding, high-value south lobe ore at depth and is expected to result in an efficient and cost effective methodology for processing this ore.

“We have worked with our new mine contractor to improve performance during the second and third quarters, and our mining department is now achieving our productivity targets.

“Our focus on the process plant is to complete the capital projects, further enhancing diamond recovery by the end of the third quarter. This will place the Karowe mine in an even stronger position to maximise value from the recovery and sale of diamonds from the high-value south lobe,” commented Lucara president and CEO William Lamb.

Lucara has, meanwhile, also appointed Royal Haskoning to lead a study into the potential of developing an underground mine at Karowe. A preliminary economic assessment is expected to be completed in the fourth quarter and will be followed by a prefeasibility study in the first half of 2018.

FINANCIAL PERFORMANCE
Lucara’s earnings a share decreased to $0.08 in the first half of this year, from $0.17 in the first half of 2016; however, excluding the sale of the 812.77 ct Constellation diamond, for $63.11-million, in May last year, earnings a share for the first half of 2016 would have also been $0.08.

Revenue for the first half of this year also decreased to $105.7-million, compared with the $191.4-million recorded in the first half of 2016.

The diamond miner’s forecast revenue for the full-year remains at $200-million to $220-million, excluding any revenue that may be generated from the sale of the 1 109 ct Lesedi La Rona that is currently held in inventory.

Lucara ended the second quarter with a cash balance of $62.7-million, compared with $53.3-million as at December 2016.

The increase in cash was attributed to an exceptional stone tender and regular tender during the quarter and was partially offset by operating costs, royalty payments and capital expenditures of $17-million.