Lucara Diamond, the operators of Karowe mine in Botswana, has adjusted operating cash costs at its key asset to factor in a number of challenges including shortage of electricity.
The Botswana Stock Exchange (BSE) listed mining outfit said on its 2016 guidance that the mine’s operating cash costs (including waste mining) are expected to be between US $33.5-$36.5 per tonne treated.
“The forecast increase in operating cash costs from 2015 is due to investment in changes to the process plant facilities to improve large diamond recovery and to process harder material from deeper in the south lobe, current forecast power costs in Botswana and a CPI increase in Botswana of approximately 4%,” said the company that recently recovered the world second largest diamond in history.
The costing include costs of ore and waste mined cash costs (per tonne mined) at $2.50 – $2.75; processing cash costs (per tonne milled) at $11.0 – $12.5 and mine on-site departmental costs (security, technical services, mine planning, safety and health, geology) – per tonne milled budgeted for $3.50 – $4.50.
However, Lucara said operating cash costs excluding waste mined (per tonne milled) are forecast at $20.0 – $22.0 while Botswana general and administration costs including marketing costs (per tonne milled) at $2.50 – $3.00.
The company added that Karowe mine is forecast to treat between 2.2 to 2.4 million tonnes of ore, producing over 350,000 carats of diamond. The mine is expected to process up to 60% of material from the south lobe during 2016 and arowe is forecast to mine between 13.0 and 14.0 tonnes of waste during 2016. Waste mining continues to open up the full extent of the south lobe.
“Lucara had a successful operating year in 2015 which culminated in the historic recovery of the world’s second and sixth largest gem quality diamonds,” Chief Executive Officer William Lamb said.
“Our 2015 performance has positioned us well for 2016 as we focus on mining in the high value south lobe and advancing our organic growth projects at Karowe. We continue to deliver strong cash flows and returns for our shareholders and as a result we are introducing a progressive dividend policy”.
Lucara forecasts that annual revenue of between US $200 million to US $220 million excluding the sale of exceptionally high value diamonds such as the recently recovered 1,111 and 813 carat diamonds.
This baseline revenue is supported by Karowe’s consistent recovery and yearly sales of its current diamond profile, including specials (+10.8 carats) and its exceptional diamonds. Although the Company has recovered exceptionally high value stones from the mine and is now focused on the high value south lobe, it is unable to predict when these diamonds will be recovered and sold.
“The company therefore considers sales from these diamonds as additional revenue to the baseline US $200 million to US $220 million revenue forecast, which has the potential to significantly increase annual cash flows”
