Lucara Provides Operational Update and Announces COVID-19 Response Strategy
March 31, 2020
PRESS RELEASE
LUCARA PROVIDES OPERATIONAL UPDATE AND ANNOUNCES COVID-19 RESPONSE STRATEGY
VANCOUVER, March 31, 2020 /CNW/ - (LUC – TSX, LUC – BSE, LUC – Nasdaq Stockholm)
Lucara Diamond Corp. (“Lucara” or the “Company”) announced today that it has implemented a crisis management
strategy in relation to COVID -19, to protect the health and well -being of its employees in Botswana and Canada.
Lucara’s 100% owned Karowe Diamond Mine, situated in north central Botswana remains full y operational, under
new measures and guidelines implemented by the Government of Botswana (“GRB”) earlier this week. The se
measures include increased travel restrictions, reduced staffing and increase d social distancing pertaining to all
aspects of its business. Employees who are able to work remotely are doing so. As travel restrictions relating to
COVID-19 are expected to remain in place for an unknown period of time, the Company’s ability to complete tenders
in Botswana may be impacted. As a temporary measure, the Government of Botswana has granted Lucara
permission to hold diamond sales in Antwerp, Belgium if required.
Lucara completed its first of four planned diamond tenders for the year on March 5, and achieved sales prices within
1% of forecast, however, diamond prices have since deteriorated in response to weaker demand as COVID -19 has
continued to spread globally. Though Lu cara’s next quarterly tender is not scheduled to take place until mid May
2020, the full impact of COVID-19 on Lucara’s operations and production outlook for 2020 remains highly uncertain,
and as a result, the Company has taken the decision to suspend its 2020 guidance until further notice.
Key Operational Highlights to Date:
• Lucara began the year with a strong balance sheet - cash positive, no debt, and an undrawn US$50mln
working capital facility.
• Lucara is a low volume, high value diamond producer, with 70% of revenues generated from diamonds
in excess of 10.8 carats. Diamond tenders are held quarterly.
• Lucara’s first quarterly diamond tender was completed March 5 achieving sales results within 1% of
forecasted reserve prices; all proceeds from this tender have been received.
• Clara, Lucara’s web based digital sales platform for rough diamonds , which sells diamonds under 10.8
carats in size remains operational.
• Lucara has flexibility and optionality in its capital budget for 2020. Spending on the underground project
is scheduled to ramp up in Q3 but Lucara has the ability to adjust the timing of these expenditures as they
are not currently committed.
Eira Thomas, Lucara’s CEO stated: “Our main focus right now is on the safety and wellbeing of our workforce and
the local communities in which we operate. The global diamond industry is experiencing the widespread impacts of
COVID-19 throughout the value chain, manifested as fewer sales, weaker pricing and production curtailments at
several mines. Though the Karowe diamond mine continues to operate according to plan, and the first quarter 2020
sale achieved results within expectations, the full impact of COVID-19 on our business remains uncertain.
Lucara has worked swiftly to implement a crisis management plan to protect our people and assets, and continues
to monitor this dynamic situation closely, day by day. Lucara began the year with a strong balance sheet, cash on
hand, no long -term debt and flexibility in our 2020 capital spending program. Our longer -term outlook for the
diamond market remains positive, based on improving supply -demand fundamentals that were beginning to
manifest in late 2019, prior to the COVID-19 crisis taking hold. What’s more, diamond sales are continuing through
2
Clara, our secure web based digital sales platform , which has the unique advantage of providing customers with a
forum to buy rough diamonds without the requirement to travel.
In this challenging and volatile time, the quality of our assets combined with the strength of our balance sheet and
the fact that Lucara is not carrying any long -term debt, helps to position the Company to effectively manage the
business through this crisis. We would like to extend our sincere thanks to our employees, shareholders,
stakeholders and communities of interest for their continued support, and, extend our best wishes for good health”.
The Karowe Diamond Mine
During the first quarter of 2020, the Karowe diamond mine continued to operate safely and according to budget and
plan. As part of the Company’s ongoing COVID-19 response plan, management continues to analyze risks in relation
to all aspects of our mining and sales operations and, within our supply chains. At the present time, w e have not
identified any immediate obstacles to the continued, safe operations of our mine and the sales office but we also
acknowledge that the situation is extremely dynamic . Lucara will strictly adhere to the government guidelines and
exercise all precautionary measures it needs to take to keep its employees safe and healthy. These measures include,
but are not restricted to, working from home where possible , reduced overall staffing levels, increased and
appropriate social distancing, and, restrictions on travel. To this end, Lucara’s capital spending program for 2020 is
also being reviewed. The largest component of this year’ s capital spend relates to a US$53mln approved program
for the Karowe underground expansion project, the bulk of which is scheduled to be invested in the latter part of
the year. It is important to note that the underground program and schedule for 2020 retains both optionality and
flexibility as the expenditures scheduled to be incurred are not committed, and, can be adjusted as Lucara’s cashflow
projections and operational capacity become more certain. Further guidance will be provided in advance of the Q1
quarterly earnings call scheduled for Friday, May 8, 2020.
Diamond Tender Completed March 5, 2020
Lucara completed its first diamond tender of the year on March 5 , selling all diamonds recovered and prepared for
sale during the period, and achieved an overall result within 1% of expected reserve prices. Achieved prices were in
line with the pricing environment that prevailed in early-mid 2019 and are consistent with our previously reported
2020 Outlook. These pricing assumptions be adjusted in the coming weeks and months as the full impact of COVID-
19 becomes better understood. We experienced a solid turnout for the sale, with a total of 104 companies attending
in Gaborone and a participation rate of 80%. Our smallest planned sale for the year, t he Q1/20 tender sold 83,610
carats, including 37 single stones greater than 10.8 carats in size. A total of 4 stones were sold for in excess of
US$1mln including 2 that sold for more than US $2mln. All goods prepared for sale were sold. M anagement is
monitoring the travel restrictions related to COVID-19 which may impact Lucara’s ability to complete tenders within
Botswana for a period of time . As a temporary measure, in response to the COVID -19 crisis, the Government of
Botswana has granted Lucara permission to hold diamond sales in Antwerp, Belgium if required.
Clara Sales Continue
CLARA uses technology to create a more efficient, transparent, global marketplace and provides greater connectivity
between the rough and polished diamond marketplaces remotely, from any jurisdiction around the world. Never,
we feel, has this innovation been more relevant or more important. In this current, unprecedented global lockdown,
where personal travel is restricted and diamond tenders and sights are being canceled or postponed, CLARA remains
operational, allowing purchase s of individual diamonds to continu e, providing flexibility and optionality to help
businesses throughout the supply chain be more effective at managing their purchases in response to the current,
dynamic business environment. A total of 6 sales have been transacted on Clara in 2020, with 25 out of 32 total on-
boarded manufacturers participating, the highest participation rate to date. A total of just over 1,800 carats and
3
821 diamonds have been transacted. Though volumes are slightly lower than in previous sales and may continue to
fluctuate, reflective of the more challenging business environment that has emerged, Clara continues to attract
strong interest and participation. We expect this interest t o continue and potentially grow as travel restrictions
persist, respective of the possibility that the transportation of our diamonds may be subjected to delays or other
constraints in relation to the COVID-19 crisis.
On behalf of the Board,
Eira Thomas
President and Chief Executive Officer
Follow Lucara Diamond on: Facebook, Twitter, Instagram and LinkedIn
For further information, please contact:
North America Christine Warner, Investor Relations & Communications
+1 604 689-7842 | [email protected]
Sweden Robert Eriksson, Investor Relations & Public Relations
+46 701 112615 | [email protected]
UK Public Relations Emily Moss / Jos Simson, Tavistock
+447788554035 | [email protected]
ABOUT LUCARA
Lucara is a leading independent producer of large exceptional quality Type IIa diamonds from 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 Co mpany has an experienced board and management team with extensive diamond development and
operations expertise. The Company operates transparently and in accordance with international best practices in
the areas of sustainability, health and safety, environment and community relations.
ABOUT CLARA
Clara Diamond Solutions Limited Partnership (Clara), wholly owned by Lucara Diamond Corp, is a secure, digital sales
platform that uses proprietary analytics together with cloud and blockchain technologies to modernize the existing
diamond supply chain, driving efficiencies, unlocking value and ensuring diamond provenance from mine to finger.
The information in this release is accurate at the time of distribution but may be superseded or qualified by
subsequent news releases.
This information is information that Lucara is obliged to make public pursuant to the EU Market Abuse Regulation.
This information was submitted for publication, through the agency of the contact person set out above, on March
31, 2020 at 1:45pm Pacific Time.
4
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, performance 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 information 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.
In particular, this release may contain forward looking information pertaining to the following: the impact of the
COVID-19 pandemic on the Company’s operations, the Company’s ability to operate according to plan and budget,
the Company’s ability to continue to operate Clara and participant’s continued use of Clara, statements relating to
diamond prices, the Company’s plans with respect to the underground expansion and the timing and flexibility
thereon.
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
the rapidly evolving regulatory landscape and market conditions related to the COVID- 19 p andemic, and the
operational and travel bans that have been imposed or may be expanded into regions impacting Lucara’s operations,
those factors discussed in or referred to under the heading "Risks and Uncertainties"' in the Company's most recent
Annual Information Form available at http://www.sedar.com, as well as changes in general business and economic
conditions, 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 operate 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.