LIEUTENANT General Seretse Khama Ian Khama, President of Botswana, arrives for the opening of Lucara’s Karowe mine on the prolific Orapa field. Credit: Lucara

LIEUTENANT General Seretse Khama Ian Khama, President of Botswana, arrives for the opening of Lucara’s Karowe mine on the prolific Orapa field. Credit: Lucara

Lucara Looks to Cream Sales Forecast

Issue 35, March 2013

Lucara Diamond will this evening publish revenue from its first two sales of the year, against a backdrop of forecast annual revenue of $90m. “We're starting to see traction in the market,” president William Lamb told Global Mining Observer. “People have seen that our goods polish up to be very, very good diamonds.”

The results follow the recovery last week of a 239-carat diamond from its Karowe mine, Botswana, the largest recorded recovery from the country's Orapa district. The stone, which will arrive in Antwerp next week, was too large for the company's testing equipment and is estimated by analysts to be worth up to $15m.

Lucara was fortunate that such an exceptionally large diamond passed through its mill without being crushed. “The screen that we have on the plant has a 30mm aperture, which means the diamond had to stand up vertically to go through the screen. Technically, we are very lucky that it went though.” The company is now shipping Russian X-ray equipment to Botswana to treat up to 45mm material.

The recovery was accompanied by a 124 carat diamond also “way in excess of anything we would expect,” along with a “slew” of stones above 20 carats, due for Lucara's May tender. It also follows the discovery of blue diamonds at Karowe in November, in its first year of production.

Lucara's luck is firmly built on a record of operational excellence, focused on late stage exploration and mine construction. Built on time and within budget of $120m, Karowe's 2.5m tonne per annum plant was commissioned in less than 5 months, versus 9 as the industry standard. “Whereas the design capacity is 7,000 tonnes per day, we've had periods where it's processed more than 12,000.”

Diamond sales, due for release after Canada’s market close today, compare to recovery costs below $95 per carat, annual guidance of 400,000 carats and a market capitalization of C$238m ($232m). Lucara's cash flow may make easy knitting of debt repayments this year of $32m, owed to trusts linked to Lukas Lundin, also Lucara's chairman.

Lamb describes sales from tenders this year as being based on Karowe’s “bread-and-butter good. The 239 carat stone, it's just cream on the top.” Shares last traded at C$0.62.

“Our goods polish up to be very, very good diamonds.”

Lucara's 239-carat stone

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