Lucara Diamond’s Revenues, Profitability Lower in Q3 2016

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Lucara Diamond Corp said its revenues were lower in the third quarter of the year as only one tender was reported in the period under review compared to the prior year. The BSE and TSX listed mining company noted on its financial performance for Q3 2016 that revenue for the period was $38.1 million or $332 per carat, which was worse than $90.9 million recorded in Q3 2015.

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It added that its year to date revenue was $229.4 million or $850 per carat (year to date 2015: $158.6 million; $560 per carat). The company, which owns Karowe mine in Botswana, reported a net loss of $3.8 million during Q3 (Q3 2015: net income of $44.2 million).

According to Lucara, this revenue includes $8.3 million of proceeds received in the third quarter from its June tender.  “Revenue in Q3 is lower than the prior year as revenue reported in Q3 2015 included two sales including an exceptional stone tender compared to a single regular tender during the current quarter,” the company said.

“For the nine months ended September 30, 2016 (‘year to date’) revenue is $229 million (2015: $159 million) with operating margins of 83% (2015: 77%).”

The company reported a net loss of $3.8 million in Q3 compared to net income of $44.2 million in the prior year. This was attributable to the company having two sales in the prior year including an exceptional stone tender compared to a single sale in the current year.

“The Company also reported a foreign exchange loss in Q3 compared to a foreign exchange gain on translation of its US dollar cash in the prior year as the pula has appreciated in the current year.”

During the quarter, Lucara paid $137 million in dividends comprising a special dividend of CA$0.45 per share and its regular quarterly dividend of CA$0.015 cents per share on September 15, 2016.

Following the payment of this special dividend the Company has paid $185 million in dividends back to its shareholders, equivalent to approximately 20% of total revenues generated, since the commencement of its dividend policy in 2014.

“Lucara is committed to rewarding our shareholders with our dividend policy, having paid a total of $185 million since we started to pay dividends in 2014. These payments now exceed the total amount of shareholder equity ever raised by the Company,” company CEO, William Lamb said.

“We are pleased with our Q3 and year to date revenue and now look forward to the fourth quarter with high quality production for our second exceptional tender of the year and a further regular tender in December,” he added.

Lamb said cost discipline during Q3 remained strong and “we continued to advance our capital projects for large diamond recovery as well as our exploration and drilling programs to expand our resource base.”

Karowe’s operating, year to date, cash cost is $25.0 per tonne processed (2015: $29.0 per tonne processed). Costs remain well controlled. Karowe’s operating cash costs guidance was been decreased for the year from between $29.0 to $31.0 per tonne of ore processed to $25.0 to $28.0 per tonne ore processed.

The reduction in cost guidance is due to power and general cost savings and an increase in tonnes processed. The Company’s processed tonnes continue to exceed forecast and this level of productivity has resulted in more ore processed across the Company’s operating cost base.

Effective today’s date, November 8, 2016, the Company is declaring its fourth quarter 3 dividend of CA$0.015 per share. The dividend is expected to be paid on December 15, 2016 to holders of securities on the record of the Company’s common shares at the close of business on December 2, 2016.

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