Lucara Diamond Corp. says quarterly proceeds of $50.9 million at an average sales price of $625 per carat and operating expenses of $110 per carat. The company added that its strong cash flow generation has resulted in the company fully repaying its $50 million debenture during the fourth quarter.
Third quarter 2013 highlights
Safety: There were no Lost Time Injury (LTI’s) and no reportable environmental incidents at Karowe during the quarter. Karowe’s year to date Lost Time Injuries Frequency Rate (“LTIFR”) is 0.25. LTIFR is defined as the total number of work hours lost per 200,000 work hours.
Cash flows and cash operating margins: The company achieved proceeds of $50.9 million ($625 per carat) during the quarter, of which $10.9 million was received in October for its late September tender. At average operating expenses of $110 per carat, the cash operating margin achieved for the quarter was $515 per carat. Sales during the quarter included one tender of over 80,000 carats and the Company’s second exceptional stone tender during the quarter.
Full year to date sales of 328,000 carats have achieved proceeds of $132.7 million, or $404 per carat, which exceeds previous full year 2013 revenue guidance. The Company has achieved a year to date cash operating margin of $308 per carat based on operating expenses of $96 per carat.
Exceptional stone tenders: The company continued to recover exceptional diamonds, resulting in a second large stone tender during the quarter achieving revenues of $24.7 million ($24,025 per carat). The company’s two exceptional tenders have contributed $49.3 million ($26,745 per carat) of revenue. Based on the continued recovery of exceptional stones the Company is planning a third exceptional stone sale in late November. The sale is planned to include 14 stones with 4 stones in excess of 100 carats.
Net cash position: Third quarter cash flows have significantly strengthened the Company’s balance sheet with quarter end cash of $33.6 million and a net cash position (total cash and cash equivalents less short and long term debt) of $17.5m. In early October, this cash position was further strengthened following the receipt of $10.9 million of gross proceeds from its late September tender. The outstanding debenture balance at September 30 of $16.6 million was subsequently repaid after the quarter end, fully repaying the $50 million debenture.
Karowe operating performance: Karowe’s mined tonnes and tonnes milled were in line with budget during the quarter. The Company advanced access to deeper sections of the south lobe and currently has three months of exposed ore providing flexibility in terms of process plant feed.
William Lamb, President and Chief Executive Officer said proceeds in excess of $132 million highlight an exceptional nine month performance for Lucara. “We have sold over 328,000 carats at an average price exceeding $400 per carat compared to an average operating cost of $96 per carat”.
“ A differentiator for Lucara has been the occurrence of large and exceptional stones, with two sales this year generating proceeds of $49.3 million. We are pleased to announce the continuation of our exceptional diamond recoveries with a third sale of these stones expected to be held in the fourth quarter. “
He said the company’s significant revenues and strong cash operating margins have resulted in Lucara making a double payment on its debenture during the period and we have subsequently fully repaid the debenture by making the final two debenture payments during the fourth quarter.
“The resource continues to outperform management expectations with the continued recovery of significant stones including 243 special stones (greater than 10.8 carats) during the reporting period. These stones include two diamonds larger than 200 carats and a further 3 diamonds larger than 100 carats. Based on information and recoveries to date, Lucara has commissioned an update to the Karowe resource. We expect to release a revised NI 43-101 Technical Report during the first quarter of 2014.”