Lucara Announces Results FOR the First Quarter of 2021 with Strong Financial and Operational Performance
May 6, 2021
NEWS RELEASE
LUCARA ANNOUNCES RESULTS FOR THE FIRST QUARTER OF 2021 WITH STRONG FINANCIAL
AND OPERATIONAL PERFORMANCE
VANCOUVER, May 6, 2021 /CNW/ (LUC – TSX, LUC – BSE, LUC – Nasdaq Stockholm)
Lucara Diamond Corp. (“Lucara” or the “Company”) today reports its results for the first quarter of 2021 end ing
March 31, 2021, with strong financial and operational performance.
HIGHLIGHTS:
• Revenue of $ 53.1 million or $579 per carat sold in Q1 2021, 56% higher than Q1 2020. This includes
diamonds sold through a combination of regular tenders, Clara, and through HB Antwerp (“HB”) under the
supply agreement announced in July 2020.
• Q1 2021 total operating cash costs of $29.24 per tonne processed(1), 7% lower than Q1 2020.
• Adjusted EBITDA(1) in Q1 2021 of $22.2 million, marking a return to higher levels of operating margin.
• Extension of the Karowe mining license for a period of 25 years to 2046, marking a critical step in the
advancement of the Karowe underground expansion project.
• Specials recovered (+10.8 carats) equated to 6.8% weight percentage of total recovered carats.
• In January 2021, the Company announced the recoveries of two, top white gem quality diamonds (341
carats and 378 carats) from ore sourced from the M/PK(s) unit within the South Lobe. Both stones were
recovered unbroken.
• In April 2021, Lucara announced the 24-month extension of its novel supply agreement with HB, in respect
of all diamonds produced in excess of 10.8 carats in size, from the Karowe mine, to be sold as polished.
• In May 2021, Lucara received credit approved commitments from a syndicate of five i nternational lenders
for a senior secured project financing debt package of up to $220 million to fund an underground expansion
at the Karowe Mine in Botswana.
(1) See Non-IFRS measures
Eira Thomas, President & CEO commented: “Lucara has bounced back in the first quarter of the year, demonstrating
its resiliency at a time of continued uncertainty in respect of the ongoing COVID-19 pandemic. Our solid performance
in the first quarter reflects a stronger business environment, Lucara’s conti nued focus on operational discipline and
our innovative approach to sales. We also made significant progress towards the completion of a supplemental debt
financing package with credit ap proved commitments received from fi ve international lenders , in support of our
plans for underground expansion. Our outlook for the diamond market remains strong, and with close to 20 years
of future mining now ahead of us at Karowe, Lucara is highly leve red to an improving diamond price environment ,
particularly in respect of large, high value gem diamonds, the hallmark of Karowe’s production profile. ”
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REVIEW FOR THE THREE MONTHS ENDED MARCH 31, 2021
• Operational highlights from the Karowe Mine included:
o Ore and waste mined of 1.1 million tonnes and 0.8 million tonnes, respectively .
o 0.67 million tonnes of ore processed resulting in 80,014 carats recovered, achieving a recovered
grade of 11.9 carats per hundred tonnes.
o 188 Specials (+10.8 carats) were recover ed from direct milling during the first quarter,
representing 6.8% weight percentage of total direct milling recovered carats, in line with resource
expectations.
o 2 diamonds were recovered greater than 300 carats in weight and 2 diamonds were recovered
greater than 200 carats in weight.
• Financial highlights for the three months ended March 31, 2021 included:
o The Company recorded net income of $3.4 million during Q1 2021 (earnings per share of $0.01),
as compared to a net loss of $3.2 million for Q1 2020 (loss per share of $0.01).
o Adjusted EBITDA(1) was $22.2 million as compared to adjusted EBITDA of $8.1 million for the same
period in 2020.
o The value of the rough diamonds transacted through the Clara platform in Q1 2021 was $6.0
million over six sales, double the $3.0 million transacted on the platform in Q1 2020. Strong price
increases have been observed in each of the sales conducted since the beginning of the year.
o As at March 31, 2021, the Company had cash and cash equivalents of $27.9 million, an increase of
$23.0 million from December 31, 2020 and net debt of $22.2 million. Following the quarter -end,
on May 5, 2021 the Company’s $50 million working capital facility was extended with Rand
Merchant Bank, a division of FirstRand Bank Limited, London Branch.
(1) See Non-IFRS measures
DIAMOND SALES
Diamond sales in Q1 2021 were held through a combination of regular tenders, and the Clara platform, for diamonds
less than 10.8 carats, and through HB under the supply agreement for those diamonds greater than 10.8 carats. The
Company recognized revenue of $53.1 million or $579 per carat from the sale of 91,760 carats. Price recovery was
observed in most size and quality classes . Included in this amount is variable consideration of $9.1 million which
relates to “top-up” payments which arise from polished diamond sales in excess of the initial planned value paid to
Lucara. Beginning in Q2 2020, all +10.8 carat diamonds mined from Karowe were sold to HB pursuant to the terms
of the diamond supply agreement described below.
HB SUPPLY AGREEMENT FOR +10.8 CARAT DIAMOND PRODUCTION FROM KAROWE
Karowe’s large, high value diamonds have historically accounted for approximately 60% to 70% of Lucara’s annual
revenues. Though the mine remained fully operational following the declaration of COVID-19 as a global pandemic,
Lucara made a decision not to tender any of its +10.8 carat production after early March 2020 amidst the uncertainty
caused by the global crisis and the significant weakness observed in the rough dia mond market. The polished
diamond market performed better through this period and subse quently, in July 2020, Lucara announced a
groundbreaking partnership agreement with HB , entering into a definitive supply agreement for the remainder of
2020, for all diamonds produced in excess of +10.8 carats from our 100% owned Karowe Diamond mine in Botswana.
This agreement was subsequently extended for a 24 month period, from January 1, 2021 to December 31, 2022.
Under the supply agreement with HB, Lucara’s +10.8 carat production is being sold at prices based on the estimated
polished outcome of each diamond, determined through state of the art scanning and planning technology, with a
true up amount payable to Lucara on actual achieved polished sales in excess of the initial estimated polished price,
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less a fee and the cost of manufacturing. This unique pricing mechanism delivers regular cash flow for this important
segment of our production profile.
Revenue from stones delivered to HB in 2020 will continue to be r ecognised in 2021 as polished diamonds are sold,
and “top-up” payments are realised.
CLARA SALES PLATFORM
With global restrictions impeding travel for many diamond manufacturers , interest in Clara, Lucara’s prop rietary,
secure, web-based digital sales platform, grew significantly in 2020 and that positive momentum continued through
Q1 2021. Six sales were held in the first quarter with total sales volume transacted of $6.0 million, more than double
the volume from the comparable period in 2020. Encour agingly, Clara also observed consistent price increases at
each s ubsequent sale throughout the period. The number of buyers on the platform increased to 80 and the
Company is maintaining a waiting list to manage supply and demand. Discussions continue wi th third party sellers
to build supply.
KAROWE UNDERGROUND EXPANSION UPDATE
During Q1 2021, the Company spent $9.9 million on project execution activities for the Karowe underground
expansion, including shaft and geotechnical engineering, surface infra structure, dewatering and power line
engineering and procurement. Site construction work commenced early in the quarter and in March the production
and ventilation shaft box cuts were drilled and blasted to bulk excavation elevations. A significant amount of time
and effort was also spent on due diligence related to technical, environment and social matters as part of ongoing
project financing efforts.
This follows the $18.7 million spent on project execution activities in 2020 including: site earthworks , geotechnical
test pitting and drilling, power line engineering, and works on the shaft design and engineering. In Q4 2020, the
Government of Botswana (“GRB”) approved the proposed powerline route and granted a 25 -year extension to the
Karowe Mine License to 2046, sufficient to cover the remaining open -pit life (to 2026) and the expected life of the
proposed underground expansion, currently planned to 2040.
In March 2021, a mandate for a senior secured project financing package of up to $220 million (th e “Mandate”) to
fund the underground expansion at Karowe was executed with a syndicate of five international financial institutions,
including ING Bank N .V., Natixis, Soci ete Generale, London Branch, Africa Finance Corporation and Afreximbank
(collectively, the “MLAs”). The formal Mandate included a non-binding indicative term sheet for debt facilities of up
to $220 million (the “Facilities"). In May 2021, Lucara received credit approv ed commitments for a senior secured
project financing debt package of up to $2 20 million from the MLAs. Closing of the Facilities is targeted to be mid -
2021, with financing in place for the second half of 2021. The re ceipt of credit approved commitments is a key
milestone in the project financing process for the Karowe undergr ound expansion, whic h has an estimated capital
cost of $514 million and a five -year development period. The balance of development capital is expected to come
from operating cash flow generated by open pit operations at Karowe during the development period. Detailed due
diligence is expected to be concluded in the near term. Financial closing of the Facilities is subject to satisfactory
completion of definitive documentation, and satisfaction of certain terms and conditions, including appropriate KYC
checks.
An investment decision, subject to receipt of all required authorizations and the arrangement of financing, is
expected in H2 2021. Total expenditures on the underground project in 2021 are expected to be $105 million. Until
financial close of the Facilities is complete and an investment decision is made, a limited amount of funding has been
approved for H1 2021, based on the Company’s ability to fund the initial capital expenditures from operating cash
flow. Similar to the 2020 program, the 2021 program will focus on early works, including detailed engineering and
design work, with the objective of mitigating key risks related to the development schedule.
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DIAMOND MARKET
The diamond market began 2021 in a healthier position than it has at any stage over the past five years, resulting in
increasing price performance in virtually all sizes and quality of diamonds in Q1 2021. This follows a challenging year
in 2020 as a result of the global COVID -19 pandemic, characterized by global travel restrictio ns, low sales volumes,
pricing pressure and overall, difficult economic conditions for miners, manufacturers, retailers and consumers.
During Q1 2021, the diamond market remained buoyant following a strong holiday sales period, particularly in China
and the United States. Careful rough diamond supply management by the producers has also helped to re-balance
polished diamond inventories and stabilize the market overall. COVID -19 remains a key concern, however , even as
vaccination programs are being rolled out in many countries around the world. India, a major manufacturing centre
for diamonds, is of particular concern heading into the second quarter as infection rates have increased dramatically,
resulting in new lock-down measures.
UPDATE ON COVID-19 RESPONSE
Measures and guidelines implemented by the GRB in late March 2020, and the current state of emergency in
Botswana, has still allowed for the Karowe Mine to remain fully operational throughout the pandemic as mining has
been designated an essential service in Botswana. The current state of emergency has been extended and currently
the published end date is September 30, 2021.
The Company continues to operate under its approved crisis management plan, designed to protect the health and
well-being of our e mployees in Botswana and Canada as well as the financial well -being of the business. The
Company has permission to conduct COVID -19 testing at our operations in Botswana and active testing of the
workforce began in January 2021. Regular health screening, temperature checks and the use of infrared
measurements are also a routine part of the operations.
QUARTERLY FINANCIAL HIGHLIGHTS
Three months ended March 31,
In millions of U.S. dollars except carats or otherwise noted 2021 2020
Revenues $ 53.1 $ 34.1
Net income (loss) for the period 3.4 (3.2)
Earnings (loss) per share (basic and diluted) 0.01 (0.01)
Operating cash flow per share* 0.06 0.02
Cash on hand 27.9 27.4
Amounts drawn on working capital facility 50.0 19.0
Average price per carat sold ($/carat)* 579 396
Operating expenses per carat sold ($/carat)* 215 201
Operating margin per carat sold ($/carat)* 364 195
Carats sold 91,760 86,178
(*) Operating cash flow per share before working cap ital adjustments, average price per carat sold, operating expenses per carat sold and
operating margin per carat sold are Non-IFRS measures.
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QUARTERLY RESULTS OF OPERATIONS – KAROWE MINE, BOTSWANA
2021 OUTLOOK
This section provides management's production and cost estimates for 2021. No changes have been made to the
Guidance previously announced. These are “forward -looking statements” and subject to the cautionary note
regarding the risks associated with forward-looking statements.
Karowe Mine (all amounts in US Dollars) Full Year 2021
Diamond revenue $180 million to $210 million
Diamond sales 350,000 carats to 390,000 carats
Diamonds recovered 340,000 carats to 370,000 carats
Tonnes mined – Ore 2.8 million to 3.2 million
Tonnes mined – Waste 2.8 million to 3.4 million
Tonnes processed – Ore 2.6 million to 2.9 million
Total operating cash costs per tonne processed (includ ing (a) to (b)
below):
$28.00 to $32.00
(a) Cash cost per tonne mined (ore and waste) $5.00 to $5.50
(b) Cash cost per tonne processed $11.15 to $12.15
Botswana G&A expenses, including sales and marketing, per tonne
processed
$3.00 to $4.00
Tax rate 0% to 25%
Average exchange rate – USD/Pula 11.0
UNIT Q1-21 Q4-20 Q3-20 Q2-20(1) Q1-20
Sales
Revenues generated from the sale of
Karowe diamonds in the quarter
US$M 53.1 42.3 41.2 7.3(1) 33.8
Carats recovered from Karowe sold for
revenues recognized during the period
Carats 91,734 105,329 112,741 68,861 86,010
Average price per carat for proceeds
received during the period
US$ 579 401 366 107(1) 393
Production
Tonnes mined (ore) Tonnes 1,100,622 748,296 678,110 683,282 878,087
Tonnes mined (waste) Tonnes 756,494 434,082 436,781 591,804 1,199,660
Tonnes processed Tonnes 673,646 684,768 646,447 705,421 639,430
Average grade processed cpht (*) 11.9 14.6 13.8 14.3 14.3
Carats recovered Carats 80,014 100,059 88,909 101,203 91,536
Costs
Operating costs per carats sold (see Non-IFRS
measures)
US$ 215 205 192 174 201
Sustaining capital expenditures US$M 0.4 4.4 4.7 3.7 2.4
Underground expansion project US$M 10.0 8.3 4.8 3.9 1.7
(*) carats per hundred tonnes
(1) During the three months ended June 30, 2020 the Company made a deliberate decision to withhold from sale all +10.8 carat stones
due to market uncertainty arising from the global pandemic. As a result, the quarterly revenue recognized during Q2 2020 and the
average price per carat sold are not directly comparable to the other quarterly results presented in the table above.
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Sustaining capital and project expenditures are expected to be up to $21.0 million in 2021, including expenditures
associated with further upgrades to the XRT recovery circuit to create redundancy in the L arge Diamond Recovery
circuit and implementation of body scanning technology (to enhance security) which had originally been planned for
2020 but was delayed whilst regulatory approval was pending (required approvals were received in Q4 2020).
Proceeds from two unique collabo ration agreements with Louis Vuitton and HB, both entered int o in 2020, are
expected to be realized in 2021. The objective of the collaboration agreements is to create a high jewellery collection
from the historic 1,758 carat “Sewelô”, the largest diamond ever mined in Botswana, and the 549 carat “Sethunya”.
CONFERENCE CALL
The Company will host a conference call and webcast to discuss the results on Friday, May 7, 2021 at 7:00 a.m.
Pacific, 10:00 a.m. Eastern, 3:00 p.m. UK, 4:00 p.m. CET.
CONFERENCE CALL:
Please call in 10 minutes before the conference call starts and stay on the line (an operator will be available to assist
you).
Conference ID:
76196170 / Lucara Diamond
Dial-In Numbers:
Toll-Free Participant Dial-In North America (+1) 888 390 0546
UK Toll free 0 800 652 2435
All Other International Participant Dial-In (+1) 778 383 7413
Webcast:
To view the live webcast presentation, please log on using this direct link:
https://produceredition.webcasts.com/starthere.jsp?ei=1456126&tp_key=287c91a276
The presentation slideshow will also be available in PDF format for download from the Lucara website
(www.lucaradiamond.com).
Conference Replay:
A replay of the telephone conference will be available two hours after the completion of the call until May 14, 2021.
Replay number (Toll Free North America) (+1) 888 390 0541
Replay number (International) (+1) 416 764 8677
The pass code for the replay is: 196170 #.
On behalf of the Board,
Eira Thomas
President and Chief Executive Officer
Follow Lucara Diamond on Facebook, Twitter, Instagram, and LinkedIn
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For further information, please contact:
Investor Relations & Communications
+1 604 674 0272| [email protected]
Sweden Robert Eriksson, Investor Relations & Public Relations
+46 701 112615 | [email protected]
UK Public Relations Charles Vivian / Jos Simson, Tavistock
+44 778 855 4035 | [email protected]
ABOUT LUCARA
Lucara is a leading independent producer of large exceptional quality Type IIa diamonds fro m its 100% owned
Karowe Mine in Botswana and owns a 100% interest in Clara Diamond Solutions, a secure, digital sales platform
positioned to modernize the existing diamond supply chain and ensure diamond provenance from mine to finger.
The Company has an experienced board and management team with extensive diamond development an d
operations expertise. The Company operates transparently and in accordance with international best practices in
the areas of sustainability, health and safety, environment, and c ommunity relations.
The information is information that Lucara is obliged to make public pursuant to the EU Market Abuse Regulation
and the Swedish Securities Markets Act. This information was submitted for publication, through the agency of the
contact person set out above, on May 6, 2021 at 2:15pm Pacific Time.
NON-IFRS MEASURES
This news release refers to certain financial measures, such as operating cash flow per share, adjusted EBITDA,
average price per carat sold, operating cost per carat sold, operating margin per carat sold and operating cost per
tonne of ore processed which are not measures recognized under IFRS and do not have a standardized meaning
prescribed by IFRS. These measures may differ from those made by other corporations and accordingly may not be
comparable to such measures as reported by other corporation s. T hese measures have been derived from the
Company’s financial statements, and applied on a consistent basis, because the Company believes they are of
assistance in the understanding of the results of operations and financial position. Please refer to the C ompany’s
MD&A for the first quarter, 2021 for an explanation of non-IFRS measures used.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain of the statements made and contained herein and elsewhere constitute forward -looking statements as
defined in applicable securities laws. Generally, these forward -looking statements can be identified by the use of
forward-looking terminology such as "expects", "anticipates", "believes", "intends", "estimates", "potential",
"possible" and similar expressions, or statements that events, conditions or results "will", "may", "could" or "should"
occur or be achieved.
Forward-looking statements are based on the opinions and estimates of management as of the date such statements
are made, and they are subject to a number of known and unknown risks, uncertainties and other factors which may
cause the actual results, perfo rmance or achievements of the Company to be materially different from any future
results, performance or achievement expressed or implied by such forward -looking statements. The Company
believes that expectations reflected in this forward -looking informati on are reasonable, but no assurance can be
given that these expectations will prove to be accurate and such forward-looking information included herein should
not be unduly relied upon.
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In particular, this release may contain forward looking information pertaining to the following: the impact of COVID-
19 pandemic on the Company’s operations and cash flows and its plans with respect to the Karowe underground
expansion project; the estimates of the Company’s mineral reserves and resources; estimates of the C ompany’s
production and sales volumes for the Karowe Diamond Mine; estimated costs for capital expenditures related to the
Karowe Diamond Mine; production costs; exploration and development expenditures and reclamation costs;
expectation of diamond prices and the potential for the supply agreement with HB Antwerp to achieve both higher
prices from the sale of polished diamonds and to provide more regular cash flow than in previous periods; estimates
of variable consideration receivable pursuant to the HB su pply agreement; changes to foreign currency exchange
rates; assumptions and expectations related to the possible development of an underground mini ng operation at
Karowe including associated capital costs, financing strategies and timing; expectations in r espect of the
development and functionality of the technology related to the Clara platform, the intended benefits and
performance of the Clara platform, including ability to complete sales without viewing diamonds, the growth of the
Clara platform, the timing and frequency of sales on the Clara Platform, and the quantum and timing of participation
of third parties on the Clara platform; expectation s regarding the need to raise capital and its availability; possible
impacts of disputes or litigation; and o ther risks and uncertainties described under the heading “Risks and
Uncertainties” in the Company’s most recent Annual Information Form available a t http://www.sedar.com (the
“AIF”).
There can be no assurance that such forward looking statements will prove to be accurate, as the Company's results
and future events could differ materially from those anticipated in this forward -looking information as a result of
those factors discussed in or referred to under the heading “COVID -19 Global Pandemic” in the Comp any’s most
recent MD&A and under the heading "Risks and Uncertainties" in the Company's most recent Annual Information
Form, both available at http://www.sedar.com, as well as changes in general business and economic conditions, the
ability to continue as a going concern, changes in interest and foreign currency rates, the supply and demand for,
deliveries of and the level and volatility of prices of rough diamonds, costs of power and diesel, acts of foreign
governments and the outcome of legal proceedings, inaccurate geological and recoverability assumptions (including
with respect to the size, grade and recoverability of mineral reserves and resources), and unanticipated operational
difficulties (including failure of plant, equipment or processes to operat e in accordance with specifications or
expectations, cost escalations, unavailability of materials and equipment, government action or delays in the receipt
of government approvals, industrial disturbances or other job actions, adverse weather conditions, and
unanticipated events relating to health safety and environmental matters).
Accordingly, readers are cautioned not to place undue reliance on these forward -looking statements which speak
only as of the date the statements were made, and the Company does not assume any obligations to update or
revise them to reflect new events or circumstances, except as required by law.