Lucara Q1 loss widens

JOHANNESBURG (miningweekly.com) – Lower revenues, higher depletion and amortisation costs and higher administrative and other expenses contributed to a widening in Lucara Diamonds’ net loss to $7-million for the quarter ended March 31, compared with a loss of $1.5-million in the first quarter of 2017.

The Vancouver-based miner, which operates the Karowe mine, in Botswana, achieved earnings before interest, taxes, depreciation and amortisation (Ebitda) of $1.4-million for the quarter under review, compared with an Ebitda of $4.9-million reported for the prior comparable period.

Lucara earned revenues of $25.4-million, or $401/ct, for its first regular tender, yielding an operating margin of $170/ct or 42% during the period.

Operating cash costs were $43.04/t processed.

Operating costs, excluding depletion and amortisation, for the quarter were $17.1-million, a year-on-year increase of $500 000.

Karowe delivered a solid performance in the first quarter, underpinned by production from the South Lobe, which yielded 218 special diamonds – the third best quarterly tally ever – and included eight diamonds greater than 100 ct in size.

“Large stone recoveries continued into April and included a 472 ct top light brown and a 327 ct white gem. The strong sales result achieved from our first regular tender of the year is consistent with the improving sentiment of the broader diamond market, and positions Lucara well for its June sale, which will include both a regular stone tender and an exceptional stone tender,” CEO Eira Thomas said.

Based on a production profile of 270 000 ct/y to 290 000 ct/y, primarily sourced from the South Lobe, Lucara expects to consistently achieve average diamond values of between $625/ct and $680/ct.

Lucara also completed the acquisition of Clara – a secure, digital rough diamond sales platform that combines proprietary analytics with existing cloud and blockchain technologies to modernise the current diamond supply chain – during the quarter.

The company, meanwhile, noted that it has decided to conduct an exceptional diamond tender during the regular tender scheduled for June and, thereafter, will move to a blended tender process, whereby a greater number of exceptional stones will be sold.

“This will decrease the inventory time for large, high-value diamonds and will generate a smoother, more predictable revenue profile, that better supports price guidance on a per sale basis,” Thomas said.