REG - Lucara Diamond Corp - Lucara Announces 2021 Annual Results

Lucara DiamondAnnouncement

25/02/2022 07:00

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RNS Number : 7900C  Lucara Diamond Corp  25 February 2022

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, representing 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 recovery 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."

 

 

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 recovered 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
(2020: $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 common shares by the
Company's largest shareholder, Nemesia S.a.r.l. ("Nemesia").

 

 

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 Karowe 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 technology, 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 process. 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.

 

 

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
2021, 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 existing 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 including 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 2022.

 

 

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.
Importantly, 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 going 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 during 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 increased 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                                        Year ended

December 31                                              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 share(1)                               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".

QUARTERLY RESULTS OF OPERATIONS - KAROWE MINE, BOTSWANA

                                                UNIT        Q4-21    Q3-21      Q2-21    Q1-21    Q4-20
 Sales
 Revenues generated from the sale of Karowe     US$M        56.5     72.5       45.9     53.1     42.3
     diamonds in the quarter
 Carats recovered from Karowe sold for          Carats      102,791  117,162    68,806   91,734   105,329
     revenues recognized during the period
 Average price per carat for proceeds           US$         550      619        667      579      401
     received during the period
 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$M        9.1      3.4        2.4      0.4      4.4
 Underground expansion project(2)               US$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.

2022 OUTLOOK

This section of the press release provides management's production and cost
estimates for 2022. 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         $3.50 to $4.00
      processed)
 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.

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 supply 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
(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
(https://lucaradiamond.com/newsroom/presentations/) ).

 

 

 

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 (https://www.facebook.com/LucaraDiamond/) ,
Twitter (https://twitter.com/LucaraDiamond) , Instagram
(https://www.instagram.com/lucaradiamond/) , and LinkedIn
(https://www.linkedin.com/company/lucara-diamond-corp-)

 

For further information, please contact:

 

 Tetiana Konstantynivska  Investor Relations & Communications
                          +1 604 674 0272| info@lucaradiamond.com (mailto:info@lucaradiamond.com)

 Sweden                   Robert Eriksson, Investor Relations & Public Relations
                          +46 701 112615 | reriksson@rive6.ch (mailto:reriksson@rive6.ch)

 UK Public Relations      Charles Vivian / Jos Simson, Tavistock
                          +44 778 855 4035 | lucara@tavistock.co.uk (mailto:lucara@tavistock.co.uk)

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 Company 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.

 

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 not 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.

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, forward-looking information and forward-looking statements in
this news release may include, but are not limited to, information or
statements with respect to the equity and project debt financings, the
intended use of proceeds, the Company's ability to comply with the terms of
the Facilities which are required to construct the Karowe UGP, that expected
cash flow from operations, combined with external financing will be sufficient
to complete construction of the UGP, the economic potential of a mineralized
area, the size and tonnage of a mineralized area, anticipated sample grades or
bulk sample diamond content, future production activity, the future price and
demand for diamonds, future forecasts of revenue and variable consideration in
determining revenue, estimation of mineral resources, exploration and
development plans, cost and timing of the development of deposits and
estimated future production, permitting time lines, currency exchange rates,
success of exploration, requirements for and availability of additional
capital, capital expenditures, operating costs, timing of completion of
technical reports and studies, tax rates, timing of drill programs, government
regulation of operations, environmental risks and ability to comply with all
environmental regulations, reclamation expenses, title matters including
disputes or claims, limitations on insurance coverage, negotiations and
agreements among the Company and the Botswana Mine Workers Union, the
completion of transactions and timing and possible outcome of pending
litigation, the profitability of Clara and the Clara Platform, and the scaling
of the digital platform for the sale of rough diamonds owned by Clara, the
benefits to the Company of diamond supply agreements with HB and the ability
to generate better prices from the sale of the Company's +10.8 carat
production as a polished stone.

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 those factors discussed in or referred to under the heading
"COVID-19 Global Pandemic" in the Company's most recent MD&A and under the
heading "Risks and Uncertainties" in the Company's most recent Annual
Information Form, both available at http://www.sedar.com, as well as changes
in general business and economic conditions, the ability to continue as a
going concern, changes in interest and foreign currency rates, changes in
inflation, the supply and demand for, deliveries of and the level and
volatility of prices of rough diamonds, costs of power and diesel, impacts of
potential disruptions to supply chains, 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
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