Lucara Diamond Corp. has released an updated mineral resource estimate for the Karowe Mine in Botswana. The company said a significant population of large and exceptional diamonds has been recovered during mining operations over the past year at Karowe and these larger diamonds have now been factored into the mineral resource estimate resulting in a greater than $1 billion increase in the estimated in-situ value of the Indicated mineral resource.

The updated mineral resource estimate was completed by Mineral Services Canada Inc. taking into account mining activities at Karowe since the start of production in April 2012 and includes changes to the geological model, re-interpretation of diamond size distributions, and the results of all diamond sales.

The highlights of the mineral resource update, valid at the cut-off date of 21 October 2013, are a recoverable Indicated mineral resource estimate at a 1.25mm bottom cut-off size of 46.2 million tonnes at an average grade of 16 carats per hundred tonne (cpht) with an average modeled diamond value of US$394 per carat, and a recoverable Inferred mineral resource of approximately 21 million tonnes at an average grade of 14 cpht with an average modeled diamond value of US$412 per carat.

The recovery of significant numbers of large and high value diamonds from the centre and south lobes of the mineral resource being mined at Karowe has resulted in a positive change to the modeled and recovered size frequency distribution significantly increasing the overall modeled average price per carat for the Karowe Mine compared to the previous mineral resource estimate.

William Lamb, Lucara’s President and Chief Operating Officer, noted that the updated mineral resource for the Karowe mine reflects important changes based on the large amount of new information generated since the start of production at Karowe.

“The presence of exceptional stones within the centre and south lobes is now appropriately reflected in the size frequency distributions and the modeled average price. In 2013, Lucara sold more than 438,000 carats of diamonds for gross proceeds in excess of $180 million. Included in these were 23 diamonds which sold for over US $1 million, including 9 diamonds which sold for more than US $3 million each,” Lamb said.

According to Lamb, the updated resource estimate is further supported with the ongoing recovery of special diamonds, with more than 70 stones larger than 10.8 carats being recovered to date in December. “Since the start of mining in the centre and south lobes in March, more that 600 diamonds larger than 10.8 carats have been recovered.”

The updated mineral resource was completed to the standards of the Canadian Institute of Mining (CIM) Definition Standards for Mineral Resources and Reserves as incorporated by National Instrument 43-101 Standards of Disclosure for Mineral Projects. The update incorporates a comprehensive review of the historic exploration data and resource modeling information (News Release dated 29/03/2010), complemented with data generated since the start of production in April 2012. The full details of the mineral resource update will form a portion of a NI 43-101 Technical report to be filed on SEDAR within 45 days.

The reader is cautioned that mineral resources that are not mineral reserves do not have demonstrated economic viability. Estimates of recoverable carats are based on the current Karowe plant configuration and physical ore characteristics (in particular ore hardness), and may be influenced by any changes to these factors.

Diamond Value

Updated diamond value estimates are based on size distribution models for each lobe (North, Centre, South) and the pricebook value of specific production batches attributable to individual lobes, referenced to a common November 2013 diamond price book. Pricing information was provided by GTD Diamonds, diamond valuation experts managing the sales of all Karowe diamonds. The price model for the +10.8 carat diamonds (‘specials’) is based on actual sales data.

Mothae Diamond Project

Lucara has also announced the sale of its Mothae bulk sample plant to a subsidiary of Paragon Diamonds Ltd., Meso Diamonds.

Under the terms of the agreement, Meso Diamonds will pay to the company a consideration of US$1.15 million, comprised of US$50,000 cash and US$400,000 in new Paragon Diamonds shares at a price of 5.5 pence per share upon signing the asset purchase agreement, followed by US$200,000 cash and US$500,000 in new Paragon Diamonds shares at a price of 5.5 pence per share on completion of the plant’s relocation.

“The sale of the Mothae bulk sample plant and its removal from site allows for expansion of the pit as well as additional space for larger processing equipment which would be required for any future development of the Mothae asset,” Lamb said.