Lucara Diamond Corp. (“Lucara” or the “Company”) today reports its results for the quarter ended September 30, 2020.
- Recognized $41.3 million in revenue during Q3 2020 or $365 per carat. This includes diamonds sold through a combination of regular tenders and Clara as well as 5,633 carats sold through HB Antwerp (“HB”) under the supply agreement announced in July 2020.
- Operating cash cost(1) of $26.92 per tonne of ore processed, due to a combination of cost optimization efforts and depreciation of the Botswana Pula against the U.S. dollar.
- EBITDA(1) of $9.9 million earned in Q3 2020 marks a return to a strong operating margin of 47%.
- Lucara continues to have a strong availability of working capital, including $10.1 million in cash at the end of Q3 and $30.0 million available from a revolving term credit facility.
- Clara’s customer base doubled during Q3 2020, from 35 to 71 customers. The platform began selling stones on behalf of third party sellers, meeting a significant objective for 2020.
- An agreement was announced on November 4, 2020 between Lucara, Louis Vuitton and HB to collaborate on the planning, cutting and polishing of the exceptional, 549 carat white gem diamond referred to as “Sethunya” meaning “Flower” in Setswana recovered from the Karowe Mine in February 2020.
Eira Thomas, President & CEO commented: “Moving into Q3, Lucara was pleased to see a stabilization of the rough diamond market and an improvement in consumer demand for polished diamonds in both Asia and the U.S. markets. Karowe continued to perform well, delivering safe, reliable production in line with plan. In Q3 we began recognizing revenue from our new sales agreement with HB Antwerp, and though it is still in its infancy, Lucara is now receiving regular, predictable revenue for its +10.8 carat diamonds using a superior pricing mechanism based on estimated polished outcomes less a commission and the cost of polishing. For diamonds -10.8 carats in size, Clara continues to deliver strong results, growing its customer base to more than 70 clients during this period and completing its first sales of third party goods through the platform. Clara continues to resonate strongly with manufacturers that are restricted from traveling to purchase diamonds in traditional venues and we are expecting to expand trials with third party goods in Q4 and into 2021.
Finally, we are delighted to have entered into a second, strategic collaboration with Louis Vuitton, the world’s leading luxury brand, and HB Antwerp for the planning and polishing of the exceptional, 549 carat white gem diamond referred to as “Sethunya” meaning “Flower” in Setswana and recovered from the Karowe Mine in February 2020. Sethunya is one of the highest quality exceptional diamonds ever recovered at Karowe and we believe this partnership is a unique opportunity to showcase it to the world and ultimately transform it into an extraordinary, bespoke, polished diamond collection, catering exclusively to Louis Vuitton’s global customer base.”
REVIEW FOR THE QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2020
- The Karowe Mine continued to deliver strong, safe, reliable production results in the third quarter with the process plant continuing to operate at full capacity.
- Operational highlights from Q3 2020 were as follows:
- Ore and waste mined of 0.7 million tonnes and 0.4 million tonnes, respectively
- 0.65 million tonnes of ore processed resulting in 88,909 carats recovered, achieving a recovered grade of 13.8 carats per hundred tonnes
- 193 Specials (+10.8 carats) recovered from direct milling during the third quarter, representing 6.5% weight percentage of total direct milling recovered carats, in line with mine plan expectations
- 8 diamonds were recovered greater than 100 carats in weight, including 3 stones > 200 carats in weight
- No lost time injuries, resulting in a rolling twelve-month Long Term Injury Frequency Rate of zero.
- The Company recorded a net loss of $5.4 million for Q3 2020 (Q3 2019 – $4.0 million net loss) resulting in a $0.01 loss per share (Q3 2019 – loss of $0.01) for the quarter.
- Lucara recognized revenue of $82.9 million for the nine months ended September 30, 2020 from the sale of 268,101 carats or $309 per carat. This represents a decrease from revenue of $136.5 million recognized for the nine months ended September 30, 2019 (313,189 carats sold at an average price of $436 per carat). The reduction in revenue results from a combination of a 15% decrease in the number of carats sold and a deliberate decision not to sell any diamonds +10.8 carats in favour of entering into a committed supply agreement for these diamonds for the remainder of the year. All +10.8 carat diamonds produced since the second quarter sales cut off in March 2020 are now being sold to HB at regular intervals, approximately twice a month. As a result, revenue for stones ordinarily part of the Q2 and Q3 tenders will continue to be recognized in Q4 2020.
- Capital allocated for the underground expansion program has been reduced to $22 million (from the original $53 million budget) and the 2020 program objectives have been re-scoped to focus on long lead time critical-path items, detailed engineering and design, and limited site activity focused on earth works and geotechnical studies. During the nine months ended September 30, 2020, $10.4 million was spent on these project execution activities.
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