Lucara Announces Updated Feasibility Study FOR Karowe Underground Project
March 13, 2024
NEWS RELEASE
LUCARA ANNOUNCES UPDATED FEASIBILITY STUDY FOR KAROWE UNDERGROUND PROJECT
VANCOUVER, BC – March 13, 2024 /CNW/ (LUC – TSX, LUC – BSE, LUC – Nasdaq Stockholm)
Lucara Diamond Corp . (“Lucara” or the “Company”) is pleased to announce the filing of a technical report (the
“Report”) for the updated Feasibility Study (“FS” or “Study”), prepared in accordance with National Instrument 43 -
101 – Standards of Disclosure for Mineral Projects (“NI 43 -101”) on its Underground Expansion Project
(“UGP” or “Project”) at the Karowe Diamond Mine (“Karowe”) located in Botswana. The Report is tit led “Karowe
Mine – Botswana 2023 Feasibility Study Technical Report”, with an effective date of June 30, 2023, and was prepared
for Lucara by JDS Energy & Mining Inc. The Report is available under the Company’s profile on SEDAR+ at
www.sedarplus.ca or from the Company’s website at www.lucaradiamond.com.
Karowe is located in north-central Botswana, one of the world’s most prolific diamond producing areas , and is a
producer of large, high value type IIa diamonds and the only diamond mine to have produced four diamonds in
excess of 1,000 carats in size . The underground expansion at Karowe is expected to double the mine life, and to
generate significant revenue and cashflow out to 2040, extending benefits to the Company, its employees,
shareholders, communities surrounding the mine, and Botswana. The Report provides an update to the 2019
underground feasibility study (“2019 FS”) and 2021 financed base case to reflect changes to project duration, capital
expenditure, and technical updates to the Project. All amounts are in U.S. dollars unless otherwise noted.
COMBINED OPEN PIT/ UNDERGROUND HIGHLIGHTS
• Extending mine life by 15 years;
• Total life of mine (“LOM”) diamond recoveries of 6.8 million carats;
• Operational highlights include ~42.4 million tonnes of ore mined and ~52.2 million tonnes of ore processed;
• Highest value EM/PK(S) unit of the South Lobe is the dominant rock type mined over the LOM of the
underground; a significant source of many large high value diamonds, including the 1,109 carat Lesedi La Rona,
the 549 carat Sethunya, and more recently the 1,080 carat Type IIa white stone recovered in August 2023;
• Pre-production capital costs for the UGP totalling $683 million, to be expended over an eight -year pre -
production construction and commissioning period until H2/2027, of which three and a half years have already
been successfully completed;
• The UGP is projected to generate $1.1 billion in cash flow;
• Fully financed project as announced on January 9, 2024 (link to Press Release ), when the Company amended
its debt package that was originally entered into in 2021; and
• The amended facilities consist of a project finance facility (“Project Loan”) of $190.0 million (previously $170.0
million) to fund underground development, and a $30.0 million (previously $50.0 million) senior secured
working capital facility (the "WCF") which is used to support ongoing operations along with operating cash flow
from the Karowe open pit.
William Lamb, President and CEO of Lucara Diamond Corp., commented: "Lucara is excited to share the updated
Feasibility Study for the Karowe Underground Expansion Project, which reinforces our strategic decision to extend
mine life and continue to generate benefits for our stakeholders. Karowe is a world-class mine, and we look forward
to continuing to recover large, exceptional diamonds from the South Lobe at Karowe.”
2
This report is updated from the original 2019 UGP FS (link to Press Release) and 2021 f inanced base case (link to
Press Release) and encompasses the following significant modifications:
• Project construction progress (surface infrastructure and underground development) to June 30, 2023;
• Revised economic modelling with updated diamond prices and exchange rates, exclusion of sunk costs and
inclusion of financing costs;
• Re-baselining the UGP schedule and as a result, the open pit mine and processing facility production plans;
• Re-estimation of the current operations budgets and project capital and operating cost projections;
• Modifications to the mine design;
• Fine tailings storage and management;
• Advancement of detailed engineering designs;
• Re-modeling of the hydrogeological conditions;
• Underground dewatering and grouting methodology; and
• Groundwater management on surface.
PROJECT DESCRIPTION
• The UGP is focused on the South Lobe of the AK06 kimberlite;
• The UGP is designed to support operation of a 2.7 million tonnes per annum underground mine and
processing plant;
• 8.5 metre finished internal diameter Production Shaft approximately 767 metres deep equipped to hoist a
nominal 7,400 tonnes per day of ore and additional development waste;
• 6 metre finished internal diameter unequipped Ventilation Shaft with a planned final depth of 729 metres;
• Extraction of approximately 400 vertical metres of the South Lobe of the AK06 kimberlite from 310 metres
above sea level (“masl”) (700 metres below surface) to the bottom of the depleted open pit (approximately
710 masl or 300 metres below surface).
KEY OPERATIONAL PARAMETERS
Table 1: Key Operational Parameters
Tonnage and Grade Karowe Base Case
Waste Tonnes mined (millions) 3.5
Ore Tonnes mined (millions) 42.4
Processed Tonnes (millions) 52.2
Diamond grade (carats per hundred tonne or “cpht”)
based on a 1.25mm bottom cut-off size
and inclusive of estimated mining dilution
13.10
Recovered carats (millions) 6.8
Diamond revenue ($ millions) 5,073
Mine Life (years) ~15 years
Source: 2023 FS
FEASIBILITY STUDY APPROACH
The FS has been prepared following Canadian Institute of Mining Guidelines for the development of an underground
mine. Production from the underground is planned after open pit operations have been completed and the Company
3
will rely on the processing of stockpiled material during the latter part of the underground development and ramp-
up to full production in Q1, 2028.
The results of the FS represent forward-looking information that are subject to a number of risks, uncertainties and
other factors that may cause results to differ materially from those presented here. (See "Cautionary Note Regarding
Forward Looking Statements" below.)
OPERATING AND CAPITAL COST ESTIMATES
The mine operating cost estimate for the Karowe Project is based on a combination of experience, reference
projects, first principle calculations, budgetary quotes, and factors as appropriate for a FS.
Table 2: Summary of Operating Cost Estimate
Operating Costs
Average
Annual(1) Life of Mine Tonnes
Processed(2)
Unit Cost per tonne
Processed Weighting
M$ M$ Mt $/t %
Open Pit Mining Costs 24.2 72.6 5.5 13.2 4
Underground Mining Costs 29.5 413.2 37.0 11.2 24
Rehandle Costs 3.4 23.6 9.7 2.4 1
Process Costs 24.7 493.7 52.2 9.5 29
Other Power Costs 5.3 105.2 52.2 2.0 6
G&A 18.3 365.8 52.2 7.0 21
Cost of Sales 4.4 87.9 52.2 1.7 5
Corporate Charges (Botswana) 8.0 159.2 52.2 3.1 9
Total 86.1 1,721.1 52.2 33.0 100
Notes:
(1) Average cost per year in which costs occur.
(2) Tonnes processed in relation to operating cost.
Source: 2023 FS
The capital cost estimate was prepared using a combination of first principles, applying project experience and using
vendor/ contractor provided budgetary quotes while avoiding the use of general industry factors. The estimate is
derived from engineers, c ontractors, and suppliers who have provided similar services to existing operations and
have demonstrated success in executing the plans set forth in the study.
Table 3: Capital Cost Summary
Capital Costs
Pre-Production
Sustaining
(M$)
LOM Total
(M$)
Weight
(%) Sunk
(M$)
Estimated
(M$)
Subtotal
(M$)
Mining 140.4 253.1 393.5 124.8 518.2 63%
Site Development 12.7 13.4 26.1 6.6 32.7 4%
Process Plant - 0.1 0.1 - 0.1 0%
Tailings and Mine Waste - - - 42.8 42.8 5%
On-site Infrastructure 13.0 5.1 18.1 - 18.1 2%
4
Buildings and Facilities 2.1 3.1 5.2 - 5.2 1%
Off-site Infrastructure 23.3 0.4 23.7 - 23.7 3%
Project Indirects 9.4 21.7 31.1 1.4 32.5 4%
Owner Costs 63.6 89.9 153.5 - 153.5 19%
Subtotal 264.5 386.8 651.3 175.6 826.9 100%
Contingency - 31.9 31.9 13.3 45.2
Closure - - - 34.0 34.0
Total Capital Costs 264.5 418.7 683.3 222.9 906.1
Source: 2023 FS
ECONOMICS
The main assumptions with respect to the economic model are listed in Table 4. Table 5 shows the baseline diamond
prices by zone.
Table 4: Economic Assumptions
Item Unit Value
BWP:US$ FX BWP:US$ 12.5
ZAR:US$ FX ZAR:US$ 17
Source: 2023 FS
Table 5: Baseline Diamond Prices
Unit Unit 2023 FS
North $/ct 273
Centre $/ct 392
EM/PK(S) $/ct 828
M/PK(S) $/ct 707
Stockpiles $/ct 574
Source: 2023 FS
SENSITIVITIES
A univariate sensitivity analysis was performed to examine which factors most affect the Project economics when
acting independently of all other cost and revenue factors. Each variable evaluated was tested using the same
percentage range of variation, fro m -20% to +20%, although some variables may actually experience significantly
larger or smaller percentage fluctuations over the LOM. The Project is most sensitive to diamond prices and grade
and the least sensitive to capital costs.
5
Table 6: Sensitivity Results (Post-Tax NPV @ 8%)
Variable
Post-tax NPV8% (M$)
-20% Variance -10% Variance Base +10% Variance +20% Variance
Diamond Price 252.3 400.1
531.8
672.0 811.3
Mining Cost 556.8 544.3 519.2 506.7
Processing Cost 561.6 546.4 517.1 502.4
All Operating Costs 607.1 568.1 495.6 459.6
Upfront CAPEX 584.6 556.6 509.3 487.0
Sustaining CAPEX 548.1 539.9 523.6 515.5
All capital costs 602.3 565.4 501.2 473.1
Source: 2023 FS
MINERAL RESOURCES
The 2023 mineral resource estimate for Karowe incorporates drilling and sampling data obtained prior to 2018, and
additional drilling and sampling information obtained in 2018/ 2019 which targeted delineation of the deep
extension of South Lobe (deeper than approximately 600m from surface). In 2019, the geological data were used to
develop an updated internal geology model for the South Lobe and to update the external contacts for the South,
Centre and North Lobes. The 2023 update also includes geological i nformation and production data derived from
open pit mining to the end of June 30, 2023.
The 2023 mineral resources for Karowe, as summarized in Table 7, have been classified as either Indicated or Inferred
Mineral Resources, according to CIM Definition Standards for Mineral Resources and Mineral Reserves (CIM, 2014).
Mineral Resources reported are inclusive of those portions of the Mineral Resource that have been converted to
Mineral Reserves and have an effective date of June 30, 2023.
Table 7: Karowe 2023 Mineral Resource Statement (effective date of June 30, 2023)
Classification Domain Volume
(Mm3)
Tonnes
(Mt)
Density
(t/m3)
Carats
(Mcts)
Grade
(cpht)
Average
($/ct)
Indicated
South_M/PK(S) 7.02 20.92 2.96 2.27 10.8 707
South_EM/PK(S) 6.77 19.77 2.90 4.16 21.0 828
Centre 0.30 0.81 2.57 0.12 15.5 392
North 0.18 0.42 2.45 0.05 11.6 273
Total Indicated 14.27 41.92 2.90 6.60 15.8 793
Inferred
South_M/PK(S) 0.10 0.31 3.05 0.03 10.5 707
South_EM/PK(S) 1.40 4.18 2.97 0.87 20.9 828
South_KIMB3 0.32 0.94 2.94 0.10 10.9 707
Total Inferred 1.82 5.42 2.97 1.01 18.6 804
Notes:
1. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. All numbers have been rounded to reflect
accuracy of the estimate;
2. Mineral Resources are in-situ Mineral Resources and are inclusive of in-situ Mineral Reserves;
3. The base of the South Lobe Indicated Mineral Resource is 250masl and 60masl for the inferred resource;
6
4. Mineral Resources are exclusive of all mine stockpile material;
5. Mineral Resources are quoted above a +1.25 mm bottom cut -off and have been factored to account for diamond losses within the smaller
sieve classes expected within the current configuration of the Karowe process plant;
6. Inferred Mineral Resources are estimated on the basis of limited geological evidence and sampling, sufficient to imply but not verify geological
grade and continuity. They have a lower level of confidence than that applied to an Indicated Mineral Resource and cannot be directly
converted into a Mineral Reserve;
7. Average diamond value estimates are based on 2023 diamond sales data provided by Lucara Diamond Corp.; and
8. Mineral Resources have been estimated with no allowance for mining dilution and mining recovery.
Source: 2023 FS
MINERAL RESERVES
The effective date for the Mineral Reserve Estimate contained in the updated FS report is June 30, 2023 and was
prepared by Qualified Person (QP) Brandon Chambers, P.Eng. All Mineral Reserves in Table 8 are classified as
Probable Mineral Reserves. The Mineral Reserves, except stockpiles, are not in addition to the Mineral Resources,
but are a subset thereof.
The QP has not identified any legal, political, or environmental risks that would materially affect potential Mineral
Reserves development.
Table 8: Karowe Mineral Reserve Estimate (effective date of June 30, 2023)
Lobe Reserve Category
Ore Tonnage Carats Grade LOM Diamond
Price
(Mt) ('000s ct) (cpht) ($/ct)
Open Pit
Centre Probable 0.6 96 16.3 392
South - EM/PK(s) Probable 1.3 323 25.4 828
South - M/PK(s) Probable 3.6 384 10.7 707
Open Pit Total 5.5 803 14.7 718
Underground
South - EM/PK(s) Probable 18.6 3,361 18.1 828
South - M/PK(s) Probable 18.4 1,871 10.2 707
Underground Total 37.0 5,232 14.2 785
Stockpile
Mixed Stockpile Probable 4.0 502 12.7 433
Life of Mine Probable 5.8 296 5.1 574
Stockpile Total 9.7 798 8.2 485
Combined
All Total 52.2 6,834 13.1 742
Notes:
1. Prepared by Brandon Chambers, P.Eng. JDS Energy & Mining Inc.;
2. CIM definitions were followed for Mineral Reserves;
3. Process recovery of the diamonds was assumed to be 100% as the recoveries were included in the mineral resource block model assumptions
and therefore have taken recoveries into account;
4. The bottom elevation of the Probable Reserve is 310 masl;
5. Mineral Reserves are quoted above a +1.25 mm bottom cut-off and have been factored to account for diamond loses within the smaller sieve
classes expected within the current configuration of the Karowe Process Plant;
6. Diamond price estimates are provided by Lucara; prices are derived from historical sales and adjusted for current market conditions;
7
7. Tonnages are rounded to the nearest 100,000 t, diamond grades are rounded to one decimal place to properly reflect the Reserve estimate
accuracy;
8. Tonnage and grade measurements are in metric units; contained diamonds are reported as thousands of carats;
9. Open pit Mineral Reserves are estimated at a cut-off value of $37/t based on an open pit mining cost of $13/t, a processing cost of $12/t and
a G&A cost of $12/t;
10. Underground Mineral Reserves are estimated at a cut-off value of $35/t based on an underground mining cost of $11/t, a processing cost of
$12/t and a G&A cost of $12/t;
11. Mine Call Factor is a modifying factor used by Lucara which tracks the reconciliation between the block model and actual recovered carats.
Mine Call Factor is assumed to be 100%, historically this factor has reconciled either near or above 100%, however in the 12-month period
prior to the Reserve Statement the Mine Call Factor has deviated away from historical average performance and is currently at 95%;
12. Underground dilution assumptions in the 2019 FS were revised in 2023. U nderground dilution included in the Reserve was estimated from
the following three sources:
• 1.0 m of zero-grade overbreak from stoping adjacent to the granite host rock;
• 2.7 Mt of zero-grade overbreak from stoping adjacent to sedimentary rocks (based on geomechanical modelling); and
• Inclusion of inferred KIMB3 kimberlite within the overall pipe shape as zero-grade waste.
13. Stockpile Mineral Reserves are estimated at a cut-off value of $19/t based on a rehandle cost of $2/t, a processing cost of $12/t and a G&A
cost of $5/t, when processed at the end of mine life;
14. Stockpile Reserves are not included in the Karowe Mineral Resource Estimate, which covered only in-situ mineralized material;
15. Stockpile Reserves are based on surveyed volumes and block model grades; and
16. Stockpile LOM diamond price is determined from the weighted average of the North, Centre, South - M/PK(s), and South - EM/PK(s) lobe
ratios.
Source: 2023 FS
GEOTECHNICAL
A geotechnical investigation program was carried out to support underground mine design, building on the open pit
and underground preliminary economic assessment (“ PEA”) geotechnical modelling carried out in 2017. The
geotechnical drilling, sampling and testing program was designed to comply with the data confidence requirements
of a FS, in support of a feasibility-level mine design, and leading into optimization of the design implementation. The
investigation focused on defining the geotechnical characteristics of the surrounding country rock as well as the
South Lobe kimberlite and involved the drilling, geotechnical logging and sampling of 37 diamond drillholes, totaling
more than 23,500m, with field and laboratory testing of the core samples . Almost 11,000 tests were conducted on
samples across the various lithologies.
HYDROGEOLOGY
Water control and hydrogeological context of the deposit and host rocks are key elements in the mine plan. The AK6
deposit sits within layered, sedimentary, regional aquifers that have been documented since the 1980's.
Since the release of the 2019 feasibility study report, five key updates were made:
• The groundwater flow model was updated;
• A planned drainage gallery at the 680 Level (680 L) was not implemented;
• The groundwater flow model in the 2019 FS assumed that grouting in the granites will take place in all
underground development and will be 75% successful. The predicted inflow rate in the updated model
(2023) only assumed 66% successful grouting during shaft sinking and station development up to January
1, 2026; the model also assumes that no grouting activities are un dertaken once underground pumping
capacity is available unless particularly high inflows are encountered that hinder development;
• The underground drainage systems were updated; and
• The depressurization target for the open pit slope was updated.
8
MINERAL PROCESSING
The Karowe processing plant has been treating unweathered South Lobe ore since 2015 and mineral processing
characteristics are very well understood.
A comminution test program was conducted to test the milling characteristics of the South Lobe material below the
open pit to determine if the mill is suitable for deeper EM/PK(S) ore.
The second test involved testing of Tomra’s X -ray Transmission (XRT) machines and associated software to
determine their ability to differentiate between diamonds, coal, carbonaceous shale and other waste rock. Due to
the high carbon content of coal and ca rbonaceous shales, they were of greatest concern. The dilution of ore with
carbonaceous shales (and the small, sporadic, coal seams contained therein) is anticipated to occur during the later
stages of mine life. Testing was conducted by Tomra at their tes ting facilities in Germany.
MINING
The currently operating open pit at Karowe is a conventional load and haul operation. Open pit mine operations are
expected to terminate mid -2025 at an elevation of 713 masl. The mine currently has over three years of surface
stockpiled reserves, which will be consumed as required while the Underground mine operations ramp up to
commercial production.
The 2019 FS investigated several u nderground mining methods based on data and information from an exhaustive
field program conducted in 2018 and 2019 to define mineral resource, geotechnical, and hydrogeological
characteristics necessary for making informed decisions at a FS-level study.
The inability for natural or preconditioned caving to occur has resulted in the development of the Long Hol e
Shrinkage (“LHS”) mine method, which is essentially a fully assisted cave. The method involves a combination of
longhole drilling and blasting to create a large muck pile within the South Lobe, followed by the managed drawdown
of the blast material through a panel cave extraction level.
The benefits of the LHS mining method include:
• Highest value ore to be extracted first due to the bottom-up mining approach;
• Minimal development in weak, water-bearing lithologies near surface;
• Dilution will be delayed (occurring after the payback period) as the weaker host rock is not exposed until
later in the mine life;
• Development of the underground mine can occur simultaneously with the open pit operations;
• Low operating costs;
• Ease of operation after the drilling and blasting phase is complete and small underground work force
requirements;
• Early exclusion of precipitation into the underground workings until the crown pillar is blasted;
• Significant ability to increase production after the drill and blast phase is complete; and
• Designed to manage natural caving should it occur.
INFRASTRUCTURE
The UGP at Karowe will include the use of existing and new infrastructure at the Karowe Mine. Current and planned
infrastructure is designed to support the operation of the mine and processing plant. Project construction over the
past two years has led to the completion of most of the surface infrastructure components of the Project .