Lucara’S 2021 Annual Revenue of $230.1 Million Increases 84% from Previous Year Exceeding Guidance Amidst Strong and Balanced Diamond Market Fundamentals
February 24, 2022
NEWS RELEASE
LUCARA’S 2021 ANNUAL REVENUE OF $230.1 MILLION INCREASES 84% FROM PREVIOUS
YEAR EXCEEDING GUIDANCE AMIDST STRONG AND BALANCED DIAMOND MARKET
FUNDAMENTALS
VANCOUVER, February 24, 2022 /CNW/ (LUC – TSX, LUC – BSE, LUC – Nasdaq Stockholm)
Lucara Diamond Corp. (“Lucara” or the “Company”) today reports its results for the year and quarter ended
December 31, 2021.
YEAR END 2021 HIGHLIGHTS:
• Revenue of $230.1 million increased 84% over the previous year.
• Average price per carat sold increased to $603/carat, an 80% increase over the previous year.
• Adjusted EBITDA(1) of $102.5 million increased more than five -fold over the adjusted EBITDA (1) of $18.4
million for the same period in 2020, attributed primarily to higher revenues.
• Net income for the year increased to $23.8 million, or $0.06 earnings per share .
• A total of 841 Specials (single diamonds in excess of 10.8 carats) recovered, representin g 7.8% weight
percent Specials, the highest annual volume of Specials recovered since Karowe commenced production
in 2012.
• The third +1,000 carat diamond recovered since 2015.
• A record 2.8 million tonnes of ore processed , representing a new annual record since the start of
production at the Karowe Mine.
• Equity and debt financings totalling $250 million concluded mid -2021 will support a $534 million
underground expansion project at the Karowe Mine in Botswana .
• The Karowe underground expansion project was formally approved by the Board of Directors and a total
project investment of $86.3 million during 2021 focused on detailed design and engineering, establishing
surface infrastructure and shaft pre-sinking.
• Total sales volume of $28.7 million transacted on the Clara platform , a 168% increase from the $10.7
million transacted in 2020.
(1) Adjusted EBITDA is a non-IFRS measures (See “Non-IFRS Financial Performance Measures”).
Eira Thomas, President & CEO commented: “2021 was a pivotal year for Lucara, having de -risked our future
growth strategy with the sanction of the fully financed, Karowe underground expansion project, conservatively
estimated to add $4 billion to future revenues and extend mine life to at least 2040. As important, the diamond
market continued to gain momentum throughout the year, supported by improving fundamentals that reflect
declining global rough diamond supply combined with rising demand and record diamond jewelry sales. Higher
diamond prices combined with solid operational performance at the mine and Lucara’s novel, diversified
approach to diamond sales through HB, Clara and traditional tenders has delivered strong revenues for the
Company in 2021, demonstrating a full reco very from the challenges of the pandemic , and reflecting a much
better outlook for 2022 and beyond as we continue to benefit from one of the strongest diamond markets we
have seen in the better part of a decade.”
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REVIEW FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2021
• Operational highlights for 2021 from the Karowe Mine included:
o Ore and waste mined of 3.7 million tonnes (2020: 3.0) and 2.6 million (2020: 2.7), respectively.
o 2.8 million tonnes (2020: 2.7) of ore processed representing a new annual record since the start of
production at the Karowe Mine.
o A total of 369,390 carats recovered at a recovered grade of 12.93 carats per hundred tonnes of direct
milled ore.
o A total of 39 diamonds greater than 100 carats were recover ed during the year, including eight
diamonds greater than 300 carats, eight diamonds between 200 and 300 carats, along with a further
23 stones between 100 and 200 carats in weight.
o Highlights of Specials recoveries during the year included:
▪ five top white Type IIa gem quality diamonds in excess of 200 carats, including three in excess
of 300 carats.
▪ a 1,174 carat clivage gem of variable quality with significant domains of high-quality white gem
material, the third +1,000 carat diamond recovered from the Karowe Mine since 2015.
▪ a 470 carat top light brown clivage diamond.
▪ a 62.7 carat high quality, fancy pink Type IIa gem diamond.
o Total Recordable Injury Frequency Rate ("TRIFR") in 2021 declined to 0.1 from 0.3 in 2020, with zero
recordable injuries in three of four quarters of 2021.
• Financial highlights for the year ended December 31, 2021 included:
o Total revenues of $230.1 million (2020: $125.3 million) or $603 per carat (2 020: $335 per carat). The
amended and extended sales agreement with HB Trading BV (“HB”) accounted for 65% (44%) of total
revenues recognized in 2021.
o Operating cash costs of $30.02 per tonne processed (1) (2020: $27.80 per tonne processed) are 8%
higher than the prior year because of a combination of increased mining and processing activity and
higher power, labour and insurance costs.
o Net income for the year increased to $23.8 million ($0.06 earnings per share) as compared to net loss
of $26.3 million ($0.07 loss per share) in 2020.
o As at December 31, 2021, the Company had cash and cash equivalents of $27.0 million and $23.0
million drawn ($27.0 million available) from a $50 million working capital facility.
(1) Operating cash cost per tonne processed is a non-IFRS measures (See “Non-IFRS Financial Performance Measures”).
• First drawdown under the $220 million senior secured project financing debt package for an underground
expansion at the Karowe Mine occurred in September 2021. As at December 31, 2021, the Company had
drawn $25.0 million from the project loan facility and had reduced the outstanding balance on the working
capital facility from $50.0 to $23.0 million. After year -end the Company completed a second draw of $20.0
million from the project finance facility.
• Two equity financings were closed that generated net proceeds of $31.3 million from the sale of 55,157,733
common shares at a price of C$0.75 per share, including the acquisition of 16.4 million comm on shares by
the Company’s largest shareholder, Nemesia S.a.r.l. (“Nemesia”).
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RECENT DEVELOPMENTS
• As a result of strong forecast revenues for 2021 and amidst strengthening prices for large, high value
diamonds, a strategic decision was taken late in 2021 to defer the sale of the Sethunya, one of the finest,
gem quality, exceptional diamonds produced from the Karowe Mine.
• In February 2022, the Company’s Chairman Lukas Lundin advised the Company of his intention to retire from
the Board of Directors upon completion of his term at the Company’s upcoming Annual General Meeting to
be held May 6, 2022.
DIAMOND SALES
IN 2021, diamond sales continued to be held through a combination of regular tenders, and the Clara platform,
for diamonds less than 10.8 carats, and through HB under the sales agreement for those gem and near -gem
diamonds greater than 10.8 carats which are to be manufactured and sold as polished . All other diamonds are
sold in quarterly tenders. The Company recognized revenue of $230.1 million or $603 per carat from the sale of
381,681 carats. The exceptionally strong performance throughout 2021 was driven by higher diamond prices
which were reflective of the impact of strong demand for both rough and polished diamonds, combined with
supply constraints in certain size classes . Beginning in Q2 2020, all +10.8 carat diamonds mined from Karowe
were delivered to HB pursuant to the terms of the diamond sales agreement described below.
HB SALES 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 in early 2020, Lucara decided 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 diamond
market, particularly for large, high quality rough stones. In July 2020, Lucara announced a partnership agreement
with HB, entering into a definitive sales agreement for the remainder of 2020, for all diamonds recovered that
exceed +10.8 carats from the Company’s 100% owned Ka rowe Diamond mine in Botswana. In April 2021, this
agreement was subsequently extended for a 24-month period, effective from January 1, 2021 to December 31,
2022.
Under the amended sales agreement, +10.8 carat gem and near gem diamonds from the Karowe Mine of
qualities that can directly enter the manufacturing stream are being sold to HB at prices based on the estimated
polished outcome of each diamond. The estimated polished value is determined through state -of-the-art
scanning and planning tech nology, with an adjusted amount payable on actual achieved polished sales, less a
fee and the cost of manufacturing. Following the extension of the HB Agreement in Q2 of 2021, all +10.8 carat
non-gem quality diamonds and all diamonds less than 10.8 carats in weight which did not meet the criteria for
sale on Clara are being sold as rough through the quarterly tender. In the agreement extension, changes to the
payment terms were amended to better reflect the timing of mine production and the manufacturing pr ocess.
This unique pricing mechanism delivers regular cash flow for this important segment of our production profile.
For the year ended December 31, 2021 the Company recorded revenue of $150.4 million from the HB agreement
from the sale of 23,832 carats, as compared to $55.2 million in 2020 from the sale of 19,556 carats. The increase
is attributed to the contract covering twelve months in 2021, versus six months in 2020. In addition, prices
achieved continued to increase through 2021 and certain high value stones delivered in 2020 were sold in 2021,
resulting in higher revenue and an increase in the average price per carat sold to $6,433 per carat in 2021 from
$2,822 per carat in 2020.
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CLARA SALES PLATFORM
Clara, Lucara’s 100% owned proprietary, secure, web-based digital sales platform, continues to gain scale and
interest. Interest in Clara has grown considerably since 2020, sparked by global restrictions on travel, combined
with a new openness to purchasing rough diamonds in an innovative way. In 202 1, 21 sales took place with a
total sales volume transacted of $28.7 million, a 168% increase from the $10.7 million transacted in 2020. During
Q4 2021, the sales volume transacted was $7.7 million (Q4 2020: $4.0 million), a 93% increase when compared
to Q4 2020. Clara also observed a steady upward price trend at each subsequent sale throughout fiscal 2021.
The number of buyers on the platform increased to 88 at December 31, 2021 with the Company maintaining a
waiting list to manage supply and demand.
While most of the stones transacted through the platform came from the Karowe Mine, during the last half of
2021, certain secondary market stones were also offered for sale through the platform, with good results.
Additional supply is required to meet exis ting demand and drive the platform’s growth. The Company intends
to continue to seek additional supply in 2022, both from third-party producers and the secondary market.
KAROWE UNDERGROUND EXPANSION UPDATE
The Karowe underground expansion project (“ UGP”) will extend the mine life to at least 2040, with mining
predominately from the highest value EM/PK(S) unit and is forecast to contribute approximately $4 billion in
additional revenues, using conservative diamond prices. Following Financial Close of the $220 million senior
secured project debt financing on September 2, 2021, the Company's Board of Directors formally approved the
UGP, which has a $534 million capital cost and a five -year construction period. Mine ramp up is expected in Q1
2026 with full production from the UGP expected in H2 2026.
$86.3 million has been spent during the year ended December 31, 2021, primarily in relation to engineering and
procurement of long lead items and the commencement of construction activities including:
• Pre-sink activities for both the production and ventilation shafts.
• Clearing for and construction of 40 out of 88 tower foundations for the 29 km 132kV transmission line
bulk power upgrade.
• Mobilization of headframe materials and surface infrastructure inc luding a 200 -person camp and a
water treatment facility.
• Pre-sinking of the ventilation and production shafts to -36 and 41m respectively below the shaft collar
with shaft liner toe-in construction completed in the ventilation shaft and shaft lining continuing back
to the sub-collar. Toe-in construction also was started in the production shaft by year end.
• Commissioning of the temporary generator farm, which will be used to power the shaft hoists during
sinking until line power is commissioned, was completed.
Upcoming Activities for the UGP – 2022
Activities for the UGP in 2022 are expected to include the following:
• Commissioning of the four main sinking winders.
• Completion of the steel headframe structure for the production and ventilation shafts.
• Transition and sustained main sinking for the production and ventilation shafts.
• Continuation of detailed design and engineering of the underground mine infrastructure and layout.
• Commissioning of the 29 km 132kV bulk power supply powerline by December 202 2.
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DIAMOND MARKET
Diamond price recovery began in the fourth quarter of 2020 and had largely improved to pre -pandemic levels
by the end of 2021, owing to strengthening diamond jewelry demand against a backdrop of declining global
diamond supply. Importan tly, this price strength has been broad based, observed across a range of sizes,
qualities and colors for both rough and polished diamonds, highlighting a return to a healthier, balanced supply
chain and a positive outlook for sustained price strength goin g forward. The price performance of very large
(+50 carat polished), high value diamonds remained somewhat of an outlier to this trend owing to the significant
volume of large, high value rough diamond inventory that was sold by others at deep discounts du ring the
pandemic. Our novel, committed sales agreement with HB, initiated during 2020 and subsequently extended in
2021, afforded us the opportunity to begin protecting and defending prices for this important segment of our
production and by December 31, 2021 this market segment had stabilized and begin to strengthen also.
UPDATE ON COVID-19 RESPONSE
Measures and guidelines implemented by the Government of Botswana in late March 2020 have allowed the
Karowe Mine to remain fully operational throughout the pandemic. These measures designated mining as an
essential service in Botswana and included increas ed travel restrictions, reduced overall staffing levels and
appropriate social distancing, among other restrictions. The Government of Botswana extended the state of
emergency several times before it was lifted on September 30, 2021. The Company was able to continue mining
and processing activities during the state of emergency as most of the workforce (+98%) are Botswana Nationals.
The Company continues to operate under its approved crisis management plan, designed to protect the health
and well-being of our employees 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 which began in January
2021, and regular health screening, temperature checks and the use of infrared measurements are also routine.
All contractors and visitors are required to have negative COVID -19 tests and adhere to all COVID -19 protocols
while conducting work at company operations in Botswana. A government -sponsored vaccination program
commenced in Botswana mid -year. At the end of December 2021, 94% of the Company’s workforce was fully
vaccinated and 3% had received a first dose.
QUARTERLY AND ANNUAL FINANCIAL HIGHLIGHTS
Three months ended
December 31
Year ended
December 31
In millions of U.S. dollars, except carats or
otherwise noted
2021 2020 2021 2020
Revenues $ 57.9 $ 42.4 $ 230.1 $ 125.3
Operating expenses (22.3) (21.7) (80.3) (72.6)
Net income (loss) for the period 1.7 (3.9) 23.8 (26.3)
Earnings (loss) per share (basic and diluted) 0.00 (0.01) 0.06 (0.07)
Operating cash flow per share1 0.05 0.02 0.24 0.04
Cash on hand 27.0 4.9 27.0 4.9
Amounts drawn on working capital facility 23.0 30.5 23.0 30.5
Average price per carat sold ($/carat) 560 402 603 335
Operating expenses per carat sold ($/carat) 215 205 210 194
Operating margin per carat sold ($/carat)1 345 197 393 141
Carats sold 103,501 105,648 381,681 373,748
1 Operating cash flow per share before working capital adjustments and operating margin per carat sold are non-IFRS measures. See “Use of
Non-IFRS Financial Performance Measures”.
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QUARTERLY RESULTS OF OPERATIONS – KAROWE MINE, BOTSWANA
2022 OUTLOOK
This section of the press release provides management's production and cost estimates for 202 2. These are
“forward-looking statements” and subject to the cautionary note regarding the risks associated with forward -
looking statements. Based on updated expectations for revenue in 2022, attributed to the recent and expected
strength in the rough and polished diamond markets, diamond revenue guidance has been increased to between
$195.0 million and $225.0 million (from $185.0 million to $215.0 million). Diamond revenue guidance does not
include revenue related to the sale of exceptional stones, or the Sethunya.
Karowe Diamond Mine Full Year – 2022
In millions of U.S. dollars unless otherwise noted
Diamond revenue (millions) (revised) $195 to $225
Diamond sales (thousands of carats) 300 to 340
Diamonds recovered (thousands of carats) 300 to 340
Ore tonnes mined (millions) 3.1 to 3.5
Waste tonnes mined (millions) 1.5 to 2.1
Ore tonnes processed (millions) 2.6 to 2.8
Total operating cash costs(1) including waste mined(2) (per tonne processed) $29.50 to $33.50
Botswana general & administrative expenses including marketing costs (per tonne
processed)
$3.50 to $4.00
Tax rate(3) 0%
Average exchange rate – USD/Pula 11.0
(1) Operating cash costs are a non-IFRS measure. See “Non-IFRS Financial Performance Measures”.
(2) Includes ore and waste mined cash costs of $5.75 to $6.25 (per tonne mined) and processing cash costs of $12.00 to $13.00 (per tonne
processed).
(3) The Company is subject to a variable tax rate in Botswana based on a profit and revenue ratio which increases as profit as a percentage
of revenue increases. The lowest variable tax rate is 22% while the highest variable tax rate is 55% (only if taxable income were equal
to revenue). Capital expenditures are deductible when incurred. With planned capital expenditures of up to $110 million for the UGP,
a tax rate of 0% is forecast for 2022. Should capital expenditures vary from plan, the Company could be subject to current tax.
UNIT Q4-21 Q3-21 Q2-21 Q1-21 Q4-20
Sales
Revenues generated from the sale of Karowe
diamonds in the quarter
US$M 56.5 72.5 45.9 53.1 42.3
Carats recovered from Karowe sold for
revenues recognized during the period
Carats 102,791 117,162 68,806 91,734 105,329
Average price per carat for proceeds
received during the period
US$ 550 619 667 579 401
Production
Tonnes mined (ore)1 Tonnes 610,072 1,190,856 900,660 967,089 748,296
Tonnes mined (waste)1 Tonnes 276,263 696,907 787,227 859,347 434,082
Tonnes processed Tonnes 705,877 738,986 726,379 673,646 684,768
Average grade processed cpht (*) 12.8 13.2 13.9 11.9 14.6
Carats recovered Carats 90,634 97,412 101,330 80,014 100,059
Costs
Operating expense per carat sold US$ 217 198 219 215 205
Sustaining capital expenditures US$M 9.1 3.4 2.4 0.4 4.4
Underground expansion project2 US$M 21.8 32.0 22.6 9.9 8.3
(*) carats per hundred tonnes
(1) The ore and waste tonnes for Q1 2021, Q2 2021 and Q3 2021 were adjusted in Q4 2021 to reflect the results of the year-end depletion
reconciliation, which impacted the allocation of tonnes mined between ore and waste.
(2) Excludes qualifying borrowing cost of $1.5 million capitalized during Q4 2021.
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In 2022, the Company's revenue forecast assumes that 100 % of the carats recovered will come from the higher
value M/PK(S) and EM/PK(S) units within the South Lobe in accordance with the mine plan.
The assumptions for carats recovered and sold are consistent with achieved performance in recent years. The
number of tonnes processed is also consistent with recent achievements, noting that actual tonnes processed
in 2021 was about 6% higher than 2020 due to improving plant reliability because of the success of the
preventative maintenance plan that has been implemented.
Waste tonnes that were deferred in 2021 as other mining areas in the open-pit were prioritized are expected to
be caught up in between 2022 and 2024. The estimated processing cost per tonne processed is higher than
previous years, reflecting expected inflationary pressure on labour and commodity costs.
In 2022, capital costs for the underground expansion are expected to be up to $110 million and will focus on the
commencement of main shaft sinking activities, the commissioning of the bulk power s upply 132 kV line and
substations and detailed engineering for the underground development. Sustaining capital and project
expenditures are expected to be up to $17 million with a focus on completion of a community sports facility,
dewatering activities and an expansion of the tailings storage facility.
Lucara Botswana’s progressive tax rate computation allows for the immediate deduction of operating costs,
including capital expenditures, in the year in which they are incurred. Based on the updated 2022 revenue
guidance of $195 million to $225 million and assuming the underground development expenditures are incurred,
the expected tax rate will be 0% for 2022.
CONFERENCE CALL
The Company will host a conference call and webcast to discuss the results on Friday, February 25, 2022 at 7:00am
Pacific, 10:00am Eastern, 3:00pm UK, 4:00pm 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:
80467256 / 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=1528332&tp_key=a5283bd7b2
The presentation slideshow will also be available in PDF format for download from the Lucara website ( Link to
presentation).
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Conference Replay:
A replay of the telephone conference will be available two hours after the completion of the call until March 4,
2022.
Replay number (Toll Free North America) (+1) 888 390 0541
Replay number (International) (+1) 416 764 8677
The pass code for the replay is: 467256 #.
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:
Tetiana Konstantynivska 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 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 d iamond supply chain and ensure diamond provenance from mine to
finger. The Company has an experienced board and management team with extensive diamond development
and operations expertise. The Company operates transparently and in accordance with interna tional best
practices in the areas of sustainability, health and safety, environment, and community 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 February 24, 2022 at 3:30pm Pacific Time.
NON-IFRS FINANCIAL PERFORMANCE MEASURES
This news release refers to certain financial measures, such as adjusted EBITDA, adjusted operating earnings,
operating cash flow per share, operating margin per carat sold and operating cost per tonne of ore processed,
which are not measures recognized under IFRS and do no t 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 corporations. These 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 Company’s MD&A for
the year ended December 31, 2021 for an explanation of non-IFRS measures used.