Lucara Releases Q2 2019 Results

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Lucara Diamond Corp. has reported its results for the quarter ended June 30, 2019 that showed the company recognised revenue of $91.2 million or $463 per carat for its sales in the first half of the year, yielding an operating margin of $292 per carat (63%).

The company said the operating cash cost for the six months ended June 30, 2019 was $31.16per tonne processed (H1 2018: $36.64 per tonne processed) compared to the full year forecast cash cost of $32-$37 per tonne processed. 

It highlighted the continued excellent operational performance at Karowe mine has driven a strong 63% operating margin (H1 2018: 65%) and adjusted EBITDA year to date of $38.6 million (H1 2018: $37.5 million). Operating expenses per carat sold have decreased from $225 per carat in H1 2018 to $171 per carat in H1 2019.

Eira Thomas, president & CEO said the largest diamond to be unearthed in Botswana’s 50+ year history and the second +1,000 carat diamond to be recovered at Karowe in just four years, Sewelô, the 1,758 carat near gem that was recovered undamaged in April, is a testament to Karowe’s remarkable geological endowment and the strong operating environment that prevails at the mine.  

“During the second quarter, Lucara continued to deliver safe, reliable, record diamond production. Having focused on operational improvements to drive performance, carat recoveries have significantly increased and costs have gone down,” Thomas said.

“Overall average prices achieved for our diamonds during the first half of the year have settled at $463 per carat and reflect a higher contribution of fine (smaller) diamonds, with continued strong recoveries of single diamonds larger than 10.8 carats that contribute to more than 70% of our revenues.  Lucara continues to achieve high margins for its diamonds and is actively pursuing organic growth opportunities, including Clara, its proprietary, cloud based, digital, rough diamond marketplace that continues to ramp up and has now completed a total of 7 sales since December 2018.”

Lucara added that a strong operating environment prevailed at the Karowe Mine in Q2 2019, having met or exceeded guidance with respect to all mining and processing activities. These included 0.8 million tonnes of ore and waste mined and 1.8 million tonnes respectively; and 0.71 million tonnes of ore processed.

Karowe’s operating cash cost:  

Karowe’s year to date operating cash cost (see page 10 Non-IFRS measures) was $31.16 per tonne processed (2018: $36.64 per tonne processed) compared to the full year forecast of $32-$37 per tonne processed.  The decrease in cost per tonne processed compared to the three months ended June 30, 2018 reflects lower volumes of waste tonnes mined during the quarter as the significant stripping campaign undertaken between 2017 and 2018 was largely completed in 2018, as well as an increase in tonnes processed from ongoing plant improvements. 

Changes in guidance

As a result of record plant processing performance over consecutive quarters, annual carat recoveries are expected to increase to 375,000 – 420,000 carats (previously 300,000 – 330,000 carats) and carats sold to 375,000 – 420,000 carats (previously 300,000 – 320,000 carats) in 2019. Greater asset availability and utilization together with an improved mine call factor are driving the change with most of the increases attributable to enhanced recoveries of small diamonds. Ore tonnes mined is increased to between 3.0 to 3.4 million tonnes (previously 2.5 to 2.8 million tonnes) as a result of resource gains that offset planned waste mining in Q1 2019. Cost and revenue guidance are on track.

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