Lucapa Raises 2021 Forecast Amid Strong Demand

RAPAPORT... Lucapa Diamond Company has raised its revenue guidance by up to 27% for the full year amid continuing positive market conditions.The Australia-based miner expects revenue for 2021 to be between AUD 66 million ($48.9 million) and AUD 71 million ($52.6 million), compared to the AUD 50 million ($37 million) to AUD 56 million ($41.5 million) it forecast in May, it said Thursday. The rise reflects strong demand for diamonds since the start of the year, driven by rough-supply constraints and the waning of the pandemic. Lucapa expects the average price to be $1,242 to $1,312 per carat, versus the $957 to $1,034 per carat it projected earlier this year. The new figure comes as rough prices on the market have spiked sharply, reaching their highest level since 2012, the miner explained. The company also saw an increase in the recovery of large and fancy-pink rough diamonds at its Lulo deposit in Angola, attributing this to a revised mine plan.The higher average prices will outweigh a drop in production to between 35,000 and 37,200 carats from the 40,400 to 42,600 Lucapa declared in May. The reduction in output is primarily due to the company's decision to source a higher proportion of lower-grade, higher-value ore from Lulo. Delays in the expansion ramp up at Lucapa's Mothae mine in Lesotho have also dented output volumes.The company believes earnings before interest, taxes, depreciation and amortization (EBITDA) will reach AUD 26 million ($19.2 million) to AUD 28 million ($20.7 million). That compares with previous guidance of AUD 17 million ($12.6 million) to AUD 21 million ($15.5 million).From the extra revenue, Lucapa will use between AUD 8 million ($5.9 million) and AUD 10 million ($7.4 million) for exploration at the Canguige catchment, which it believes to be the source of Lulo's diamonds. It will also conduct exploration work at its newly acquired Merlin mine in Australia and reduce the company's debt, it added.Image: Diamonds from Lucapa's Lulo and Mothae mines. (Lucapa Diamond Company)