Lucara Diamond said production at its flagship Botswana project was in line with forecast as the company revealed it exited Lesotho operations as it did not believe sufficient shareholder value could be gained by investing cash reserves on the Mothae project.
The company reported revenues of $266 million for 2014 full year in the period where it had sales totaling 412,136 carats for gross proceeds of $265.5 million at an average price of $644 per carat.
The increase in revenues of 47% or $85.0 million compared to the prior year was due to higher prices received for the Karowe diamonds and a larger number of carats being sold in the large exceptional stones tenders, which contributed $135.6 million to revenues.
The Botswana based Karowe mine was the star performer as it was in line with forecast for the year in terms of ore and waste mined and carats recovered. The mine recovered 815 special stones (+10.8 carats; 2013 recovery of 732 specials) during the year.
This included 27 stones greater than 100 carats (2013: 17 stones) and 4 stones over 200 carats (2013: 4 stones). The company said the plant optimisation programme is advancing according to plan and the plant is expected be commissioned during Q2 2015 within the $55 million forecast cost.
President and Chief Executive Officer of the company, William Lamb said the completion of plant optimisation will improve recovery of the stones from the mine located near Debswana’ Orapa, Letlhakane and Damtshaa operations.
“We remain disciplined with our deployment of capital focusing on completing our plant optimisation program to enhance our recovery of diamonds from Karowe, advancing our exploration program in Botswana and making the decision to dispose of Mothae based on our strict investment criteria,” Lamb said.
“Our focus on return on capital is driving the right behaviors and at an average return on capital of 50% over the past two years we have built a strong balance sheet while rewarding shareholders with the payment of our first dividend during 2014. We are pleased that the continued recovery of exceptional diamonds at Karowe during the year allowed us to increase our return to shareholders with our special dividend,” he added.
Lamb revealed that following a period of weakening diamond prices during the end of 2014, we saw improved market conditions and firmer prices at our first sale of 2015. The long term fundamentals for the rough diamond market continue to be strong.
“As a company, we remain focused on our delivery of optimal results at the Karowe mine and anticipate an exciting 2015, which will see us complete our plant optimisation program during the second quarter. We will also be advancing into the higher value south lobe on a sustainable basis during the second half of the year.”