REG - Lucara Diamond Corp - LUCARA ANNOUNCES Q3 2023 RESULTS

Lucara DiamondAnnouncement

13/11/2023 07:00

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RNS Number : 1573T  Lucara Diamond Corp  13 November 2023

November 10, 2023

 

 

NEWS RELEASE

 

LUCARA ANNOUNCES Q3 2023 RESULTS; STRONG REVENUE SUPPORTS CONTINUED
DEVELOPMENT OF THE UNDERGROUND EXPANSION

 

VANCOUVER, November 10, 2023 /CNW/ (LUC - TSX, LUC - BSE, LUC - Nasdaq
Stockholm)

 

Lucara Diamond Corp. ("Lucara" or the "Company") today reports its results for
the quarter ended September 30, 2023.

Q3 2023 HIGHLIGHTS

·      Revenue for the quarter ended September 30, 2023 totalled $56.9
million, a 14% increase from Q3 2022.

·      The Q3 2023 operating cash cost of $28.62 per tonne of ore
processed((1)) was well below the expected annual operating cash cost range of
$32.50 to $35.50 per tonne of ore processed.

·      All key operational metrics were achieved against plan, with 0.9
million tonnes of ore and 1.0 million tonnes of waste mined, 0.7 million
tonnes of ore processed, and 98,311 carats recovered from direct milled ore.

·      Cash flow generated from operating activities was $15.9 million.

·      A 1,080 carat Type IIA white gem quality diamond was recovered
from Karowe in August.  The fourth +1,000 carat stone recovered from the
Karowe Mine. A 692 carat Type IIA diamond was also recovered later that month.

·      An investment of $20.3 million in the Karowe Underground Project
("UGP") in Q3 2023 focused on sinking and grouting programs in the ventilation
and production shafts.  Grouting progressed well in both shafts during the
quarter and sinking rates were significantly higher than in previous quarters.

·      Changes were made to 2023 guidance for revenue, diamond sales,
ore and waste tonnes mined, and total operating cash costs per tonne
processed.

William Lamb, President & CEO commented: "The third quarter results for
the Company were very good when considering market dynamics and the current
state of the diamond sector. During this period of market weakness, the
Company is focusing on operational efficiency and key management positions,
starting with the promotion of Jennifer Harmer to VP Finance. Jennifer's
knowledge and understanding of the Company's operations and projects will be
invaluable as we move forward." William further added, "Lessons learned in
previous quarters of underground shaft sinking and development have been
successfully converted into knowledge which is delivering weekly sinking rate
records. Good progress has been made with the Company's Lenders on the Rebase
Amendment. A progress update will be provided before the end of the fourth
quarter."

 

REVIEW FOR THE QUARTER ENDED SEPTEMBER 30, 2023

·      Operational highlights from the Karowe Mine for Q3 2023 included:

o Ore and waste mined of 0.9 million tonnes (Q3 2022: 0.9) and 1.0 million
tonnes (Q3 2022: 0.5), respectively.

o 0.7 million tonnes (Q3 2022: 0.7) of ore processed.

o A total of 98,311 carats recovered (Q3 2022: 78,879) at a recovered grade of
13.6 carats per hundred tonnes ("cpht") of direct milled ore (Q3 2022: 11.4
cpht).

§ A total of 189 Specials were recovered, with six diamonds greater than 100
carats including three diamonds greater than 300 carats in weight.

§ Recovered Specials equated to 6.8% of the weight percentage of total
recovered carats from ore processed during Q3 2023 (Q3 2022 - 7.1%).

o The Karowe Mine has operated continuously for over two and a half years
without a lost time injury.

·      Financial highlights for the three months ended September 30,
2023, included:

o Revenues of $56.9 million (Q3 2022: $49.9 million) were achieved despite a
weaker rough diamond market. The strong performance reflects the weighting of
Lucara's revenue to larger goods where pricing was observed to be stable.
During Q3 2023, 16% of the carats processed were recovered from the Centre
Lobe and 84% were recovered from South Lobe material (Q3 2022: 100% South Lobe
ore).

o Operating margins of 63% were achieved (Q3 2022: 48%). A strong operating
margin continues to be achieved through cost reduction initiatives, a strong
U.S. dollar and despite price softness in the rough diamond market.

o Karowe's +10.8 carat production, sold through HB, accounted for 67% (Q3
2022: 58%) of total revenues recognized in Q3 2023.

o Adjusted EBITDA((1)) was $21.9 million (Q3 2022: $13.8 million), with the
change attributed to an increase in revenues, partially offset by higher
administrative expenses in the current quarter.

o Net income was $10.5 million (Q3 2022: $1.8 million), resulting in earnings
per share of $0.02 (Q3 2022: $0.00).

 

·      During Q3 2023, the Company invested $20.3 million into the
Karowe UGP:

o Sinking and grouting programs were the focus in both the ventilation and
production shafts in Q3 2023.

o The ventilation shaft reached 268.8 metres below collar, completed two
grouting events, and advanced the shaft 55.7 metres in the reporting period.
The ventilation shaft has completed sinking through the water-bearing
sandstone units.

o The production shaft reached 227 metres below collar, included completion of
two grouting campaigns and remedial grouting of previously dry sections of the
shaft. By the end of September, the shaft was sinking through the bottom
portion of the water-bearing sandstones. An advance of 32.5 metres was
achieved in Q3 2023.

·      In September 2023, Lucara terminated the definitive sales
agreement executed with HB in November 2022 (for all +10.8 carat diamonds
recovered from Karowe) due to HB's material breach of its financial
commitments.

·      During Q3 2023, the Company announced management changes with the
return of William Lamb as President and CEO, replacing Eira Thomas. Zara
Boldt, Chief Financial Officer and Corporate Secretary and Dr. John Armstrong,
VP, Technical Services, announced their departures with plans to step down in
Q4 2023. Jennifer Harmer has been promoted to VP, Finance, effective November
8, 2023.

·      Cash position and liquidity at September 30, 2023:

o  Cash and cash equivalents of $16.8 million.

o  Cost overrun facility of $18.4 million.

o $90.0 million drawn on the $170.0 million Project Loan for the Karowe UGP,
with no draws on the facility during the third quarter.

o  The outstanding balance on the working capital facility ("WCF") was
maintained at $35.0 million through Q3 2023.

The Company is not permitted to make further draws from the WCF or the Project
Loan until various amendments to the terms of these loan agreements are
negotiated with the Company's Lenders (the "Rebase Amendments").  As part of
the Rebase Amendments, the Lenders have granted certain waivers and extensions
to the Company.

The Company has near-term commitments under the Facilities, including the
maturity date of the WCF and the requirement to fund a cost overrun facility.
Due to these near-term commitments, there is doubt regarding the Company's
ability to meet its commitments and discharge its obligations in the normal
course of business. While Management believes the Company will be able to
resolve the noted items through its ongoing engagement with its Lenders, there
can be no assurance that those efforts will be successful. See further details
in the section "Liquidity and Capital Resources" and refer to Note 1 of the
condensed interim consolidated financial statements for the three and nine
months ended September 30, 2023.

On October 31, 2023, the Company received a short-term extension of the
maturity of the WCF and a deferral of the requirement to place $52.9 million
in a cost overrun facility (the "COF") to the earlier of the conclusion of
discussions with its Lenders or November 15, 2023 (the "Longstop Date"). An
earlier extension granted by the Lenders on August 23, 2023, was due to expire
on November 1, 2023.

DIAMOND MARKET

The longer-term outlook for natural diamond prices remains positive, anchored
on improving fundamentals around supply and demand as many of the world's
largest mines reach their natural end of life over the next decade.  A slow
recovery of economic growth in China and a voluntary import ban on rough
diamonds into India has muted the recovery of rough diamond prices following a
soft market in the first six months of 2023. Global economic concerns combined
with increasing geopolitical uncertainty have resulted in a challenging market
in Q3 2023 with demand reduced and downward pressure on pricing, especially in
the smaller size classes. With supply restricted by the largest producers, it
is possible that a floor in pricing will be established that will benefit the
broader market, including smaller producers, in late 2023.

Sales of lab-grown diamonds increased beginning in late 2022. Intense
competition combined with improvements in technology continue to drive prices
of lab grown diamonds down. Signs are emerging of financial instability of
producers of lab-grown diamonds. This further differentiates this market
segment from the natural diamond market and highlights the unique nature and
inherent rarity of natural diamonds. The longer-term market fundamentals for
natural diamonds remain unchanged and positive, pointing to strong price
growth over the next few years as demand is expected to outstrip future
supply, which is now declining globally.

2023 OUTLOOK

This section of the press release provides management's production and cost
estimates for 2023. These are "forward-looking statements" and subject to the
cautionary note regarding the risks associated with forward-looking
statements. Diamond revenue guidance does not include revenue related to the
sale of exceptional stones (an individual rough diamond which sells for more
than $10 million), or the Sethunya.

Changes were made to the Company's 2023 Guidance for revenue, diamond sales,
ore and waste tonnes mined, and total operating cash costs per tonne processed
which was released in December 2022 as indicated below.

Revisions to diamond revenue guidance reflect changes to the sales mechanism
for the rough diamonds larger than 10.8 carats in size following the
termination of the Company's agreement with HB, combined with global rough
diamond market impacts. Revenue is expected to be lower than initial guidance
as the Company looks at the timing of sales of its goods greater than 10.8
carats in size.

 Karowe Diamond Mine                                                               Initial           Revised

                                                                                   2023              2023
 In millions of U.S. dollars unless otherwise noted                                Full Year         Full Year
 Diamond revenue (millions)                                                        $200 to $230      $160 to $190

 
 Diamond sales (thousands of carats)                                               385 to 415        365 to 385

 
 Diamonds recovered (thousands of carats)                                          395 to 425        395 to 405
 Ore tonnes mined (millions)                                                       1.9 to 2.3        2.4 to 2.6

 
 Waste tonnes mined (millions)                                                     2.2 to 2.8        2.8 to 3.1

 Ore tonnes processed (millions)                                                   2.6 to 2.9        2.6 to 2.9
 Total operating cash costs((1)) including waste mined((2)) (per tonne processed)  $32.50 to $35.50   $28.00 to $30.50

(1) Operating cash costs are a non-IFRS measure.  See "Non-IFRS Financial
Performance Measures".

(2) Includes ore and waste mined cash costs of $6.00 to $6.50 (per tonne
mined) and processing cash costs of $9.00 to $10.00 (per tonne processed).

Tonnes mined have been adjusted to reflect the acceleration of mining in the
open pit which has been implemented to access high value ore from the south
lobe earlier in the mine plan as well as to optimize costs. Following the
expected completion of processing of the ex-pit material, in Q1 2026, the
plant will transition to processing stockpiled material until the delivery of
ore from the underground expansion project begins in Q1 2028.

In 2023, capital costs expectations for the underground expansion remain at
$105 million. As a result of the rebase announced in July 2023, a review of
sustaining capital and project expenditures related to the open pit mining
operations commenced. Sustaining capital and project expenditures may be up to
$16 million in 2023, previously up to $20 million.

DIAMOND SALES

Karowe diamonds are sold through three separate and distinct sales channels:
through the HB sales agreement, on the Clara digital sales platform and
through quarterly tenders.

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.  In September 2023,
Lucara terminated the definitive sales agreement executed with HB Antwerp
("HB") in November 2022 (for all +10.8 carat diamonds recovered from Karowe)
due to HB's material breach of its financial commitments. The rough diamonds
delivered to HB prior to the termination of the agreement will continue to be
manufactured and sold as polished diamonds.  The Company retains a
contractual right to receive "top-up" payments from polished diamond sales for
goods delivered prior to the termination of the agreement. The Company plans
to sell its +10.8 carat production through its established sales channels,
subject to pre-approval from the Government of the Republic of Botswana.

For the three months ended September 30, 2023, the Company recorded revenue of
$38.4 million from the HB agreement (inclusive of top-up payments of $0.9
million), as compared to revenue of $27.1 million (inclusive of top-up
payments of $9.0 million) for the three months ended September 30, 2022. The
third quarter saw several high value stones recognized through the HB sales
agreement accounting for much of the 107% increase in initial revenue of $37.5
million. The remaining increase in revenue was due to the 26% increase in
carats sold through the HB agreement versus the comparable quarter. The
product mix delivered in Q3 2023 was predominately from the South Lobe ore
body, with some contribution from the Centre Lobe (Q3 2022 - 100% South Lobe
ore).

A decrease in top-up payments in Q3 2023 versus the comparative quarter can be
attributed primarily to the number of high value diamonds delivered to HB in
preceding quarters which were sold during the comparative period. Top-up
values will typically increase as the more valuable stones move through
production and are sold. The lower top-ups recognized in Q3 2023 reflect the
value of the stones delivered earlier in the year, consistent with the change
in product mix during H1 2023.

Recovered Specials equated to 6.8% of the weight percentage of total recovered
carats from ore processed during Q3 2023, with 84% of carats recovered coming
from the South Lobe and 16% recovered from the Centre Lobe (Q3 2022: 7.1%;
100% South Lobe ore). Natural variability in the quality profile of the
+10.8ct production in any production period or fiscal quarter results in
fluctuations in recorded revenue and associated top-ups.  This result is
consistent with the resource model and expected.

The large stone diamond market fundamentals continued to support healthy
prices from the multi-year highs observed at the peak in Q1 2022, despite an
overall softening of demand in the market.

CLARA SALES PLATFORM

During Q3 2023, the sales volume transacted was $4.4 million (Q3 2022: $8.3
million), as lower volumes and lower valued goods were placed for sale (due to
the shift in product mix from the Karowe Mine). Some sales are recognized on a
net revenue basis.  A softer market was observed; however, prices decreased
in most size categories from Q3 2022. Price stability continues to be observed
in stones between 5 to 10.8 carats in size.

QUARTERLY TENDER

A total of 106,148 carats were sold in the August 2023 tender, generating
revenues of $14.1 million (Q3 2022 tender: $14.5 million from the sale of
94,486 carats). Rough diamond prices began to soften in the third quarter of
2022 following a significant increase that started in 2021. The Q3 2023 tender
reflected a 16% decrease in the market from the comparative quarter's tender.
 

KAROWE UNDERGROUND EXPANSION UPDATE

The Karowe UGP is designed to access the highest value portion of the Karowe
orebody, with initial underground carat production predominantly from the
highest value eastern magmatic/pyroclastic kimberlite (south) ("EM/PK(S)")
unit.  The underground expansion is expected to extend mine life to at least
2040 and is forecast to contribute approximately $4 billion in additional
revenues using conservative diamond price assumptions which are un-escalated
and exclude exceptional stone revenues.

On July 16, 2023, an update to the Karowe UGP schedule and budget was
announced (Press Release
(https://lucaradiamond.com/newsroom/news-releases/lucara-provides-karowe-underground-expansion-proje-122862/)
).  This update was initiated in response to slower than planned ramp up to
expected sinking rates, and, to account for time incurred to date, as well as
for anticipated future grouting programs.  Grouting programs took longer than
anticipated due to a combination of high-water volumes in the sandstone
lithologies between 870 and 752 metres above sea level in depth (144 metres to
262 metres below the shaft collar) combined with technical challenges
associated with the transition to main sinking.

The updated schedule incorporates a 28% increase in the duration of
construction, extending the anticipated commencement of production from the
underground from H2 2026 to H1 2028.  The revised forecast of costs at
completion is $683 million (including contingency), a 25% increase to the May
2022 estimated capital cost of $547 million. The increase of $136.0 million in
estimated capital to reach project completion is predominantly related to
increased schedule duration and related labour costs (about 56% of the total),
grouting costs (approximately 20% of the total capital increase), with the
balance of the increase attributable to Owner's costs, procurement, and
indirect project costs.

During the three months ended September 30, 2023, a total of $20.3 million was
spent on the Karowe UGP development, primarily in relation to ongoing shaft
sinking activities, including:

·      Main sinking in the production and ventilation shafts:

o  The ventilation shaft reached 268.8 metres below collar, with a planned
final depth of 731 metres. The shaft is currently 22 metres ahead of the July
schedule update. The production shaft reached 227 metres below collar, with a
planned final depth of 765 metres.

o  In response to water inflows from the sandstones, cover grouting continued
as a primary activity in both shafts. Backwall grouting programs were
completed in the production shaft and ventilation shaft as remedial work in
areas of the shaft that were previously dry.

o  Civil works related to construction of the temporary and permanent bulk
air cooler contractor started in September and detailed engineering was
completed for these units.

·      Contract for fabrication of the permanent men and materials
winder was signed during the quarter, representing the last major component
for the permanent winders.

·      Mining engineering advanced with a focus on supporting shaft
sinking, underground infrastructure engineering and finalizing level plans.

·      The impact of implementing a behavioural-based safety training
program in Q4 2022 has been evident in 2023. Year-to-date, the UGP achieved a
nine-month period with no reportable incidents delivering a nine-month rolling
Total Recordable Injury Frequency Rate of zero.

The capital cost estimate for the underground expansion in 2023 is $105
million - see "2023 Outlook".  Activities for the Karowe UGP in Q4 2023 are
expected to include the following:

·      Sinking within the ventilation and production shafts is expected
to continue.

o  Excavation of the 718 level station in the ventilation shaft and sinking
to the 670 level station and start of station development

o  Planned grouting events to the base of the Mosolotane sandstone/mudstone
transition are expected to be completed early in Q4 2023 for the production
shaft.

·      Thereafter, further grouting is not anticipated to be required
until sinking reaches the granite basement lithologies in late 2024. Grouting
in the granite lithologies is expected to be localized, rather than
formational in nature.

·      Procurement of underground equipment, including dewatering pumps,
underground crush and convey systems and the permanent stage winder.

·      Construction and commissioning of the temporary bulk air cooler
and construction of the permanent of the bulk air cooler system.

·      Preparation of tender documents for a request for proposal for
the underground lateral development work; and,

·      Continuation of detailed design and engineering of the
underground mine infrastructure and layout.

FINANCIAL HIGHLIGHTS - Q3 2023

                                                                    Three months ended September 30,           Nine months ended September 30,
 In millions of U.S. dollars, except carats or otherwise noted      2023               2022                    2023              2022

 Revenues                                                       $   56.9               $       49.9            $    140.8        $     170.5
 Operating expenses                                                 (21.3)             (25.8)                  (56.3)            (60.8)
 Net income for the period                                          10.5               1.8                     16.5              33.3
 Earnings per share (basic and diluted)                             0.02               0.00                    0.04              0.07
 Operating cash flow per share((1))                                 0.04               0.03                    0.11              0.17
 Cash on hand                                                       16.8               34.8                    16.8              34.8
 Cost overrun facility (restricted cash)                            18.4               -                       18.4              -
 Amounts drawn on working capital facility((2))                     35.0               -                       35.0              -
 Amounts drawn on project finance facility                          90.0               65.0                    90.0              65.0
 Karowe Revenue                                                     56.2               46.5                    136.1             163.7
 Carats sold                                                        111,673            99,301                  267,764           245,763

 

 QUARTERLY RESULTS OF OPERATIONS - KAROWE MINE, BOTSWANA

                                                 UNIT        Q3-23    Q2-23    Q1-23    Q4-22    Q3-22
 Sales
 Revenues from the sale of Karowe diamonds       US$M        56.2     38.6     41.3     40.1     46.5
 Karowe carats sold                              Carats      111,673  72,717   83,374   81,264   99,301
 Production
 Tonnes mined (ore)                              Tonnes      869,188  682,636  541,400  484,705  920,410
 Tonnes mined (waste)                            Tonnes      954,226  907,051  761,295  199,385  453,860
 Tonnes processed                                Tonnes      724,640  720,345  700,678  690,946  693,398
 Average grade processed((1))                    cpht ((*))  13.6     12.6     12.8     12.5     11.4
 Carats recovered((1))                           Carats      98,311   90,497   89,640   86,655   78,879
 Costs
 Operating cost per tonne of ore processed((2))  US$         28.62    27.97    26.65    26.20    29.33

 Capital Expenditures
 Sustaining capital expenditures                 US$M        3.2      2.4      0.8      9.9      4.0
 Underground expansion project((3))              US$M        20.3     22.5     30.5     22.3     23.9

CONFERENCE CALL

The Company will host a conference call and webcast to discuss the results on
Monday, November 13, 2023 at 9:00am Pacific, 12:00pm Eastern, 5:00pm UK,
6:00pm CET.  To join the conference call please use the following link
https://emportal.ink/45LcfFu (https://emportal.ink/45LcfFu) or the phone
numbers listed below.

 

Conference ID:

42548403 / Lucara Diamond

 

Dial-In Numbers:

Toll-Free Participant Dial-In North America
   (+1) 888 390 0605

UK Toll
free
   0800 652 2435

Local Toronto
 
(+1) 416 764 8609

 

Webcast:

To view the live webcast presentation, please log on using this direct link:
https://app.webinar.net/X7Z2M2wLaxW

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 November 20, 2023.  The pass code for the replay
is: 548403 #

 

Replay number (Toll Free North America)      (+1) 888 390 0541

Replay number (Local)
                (+1) 416 764 8677

 

On behalf of the Board,

William Lamb

President and Chief Executive Officer

 

Follow Lucara Diamond on Facebook (https://www.facebook.com/LucaraDiamond/) ,
Instagram (https://www.instagram.com/lucaradiamond/) , and LinkedIn
(https://www.linkedin.com/company/lucara-diamond-corp-)

 

For further information, please contact:

 

 Hannah Reynish       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 Diamond Mine in Botswana. The Karowe Mine
has been in production since 2012 and is the focus of the Company's operations
and development activities. Clara Diamond Solutions Limited Partnership
("Clara"), a wholly-owned subsidiary of Lucara, has developed a secure,
digital sales platform that uses proprietary analytics together with cloud and
blockchain technologies to modernize the existing diamond supply chain,
driving efficiencies, unlocking value and ensuring diamond provenance from
mine to finger.  Lucara has an experienced board and management team with
extensive diamond development and operations expertise.  Lucara and its
subsidiaries operate transparently and in accordance with international best
practices in the areas of sustainability, health and safety, environment, and
community relations.  Lucara has adopted the IFC Performance Standards and
the World Bank Group's Environmental, Health and Safety Guidelines for Mining
(2007).  Accordingly, the development of the Karowe underground expansion
project ("UGP") adheres to the Equator Principles. Lucara is committed to
upholding high standards while striving to deliver long-term economic benefits
to Botswana and the communities in which the Company operates.

 

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 November 10, 2023 at 6:00pm 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 quarter ended September 30, 2023 for an explanation of non-IFRS measures
used.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

Certain of the statements made herein contain certain "forward-looking
information" and "forward-looking statements" as defined in applicable
securities laws. Generally, any statements that express or involve discussions
with respect to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance and often (but not
always) using forward-looking terminology such as "expects", "is expected",
"anticipates", "believes", "plans", "projects", "estimates", "budgets",
"scheduled", "forecasts", "assumes", "intends", "strategy", "goals",
"objectives", "potential", "possible" or variations thereof or stating that
certain actions, events, conditions or results "may", "could", "would",
"should", "might" or "will" be taken, occur or be achieved, or the negative of
any of these terms and similar expressions) are not statements of historical
fact and may be forward-looking statements.

In particular, forward-looking information and forward-looking statements may
include, but are not limited to, information or statements with respect to the
Company's ability to continue as a going concern, the project schedule and
capital costs for the Karowe UGP, the diamond sales, projection and outlook
disclosure under "2023 Outlook", the Company's ability to successfully agree
the Rebase Amendments with its Lenders, the Company's ability to receive a
deferral of the deadline to fill the COF, the impact of supply and demand of
rough or polished diamonds, expectations regarding top-up values, estimated
capital costs, the timing, scope and cost of additional grouting events at the
Karowe UGP, the Company's ability to comply with the terms of the Facilities
which are required to construct the Karowe UGP, including future funding
requirements to the COF, that expected cash flow from operations, combined
with external financing will be sufficient to complete construction of the
Karowe UGP, that the estimated timelines to achieve mine ramp up and full
production from the Karowe UGP can be achieved, that sufficient stockpiled ore
will be available to generate revenue prior to the achievement of commercial
production of the Karowe underground mine, the economic potential of a
mineralized area, the size and tonnage of a mineralized area, anticipated
sample grades or bulk sample diamond content, expectations that the Karowe UGP
will extend mine life, forecasts of additional revenues, future production
activity, that depletion and amortization expense on assets will be affected
by both the volume of carats recovered in any given period and the reserves
that are expected to be recovered, the future price and demand for, and supply
of, diamonds, expectations regarding the scheduling of activities for the
Karowe UGP in 2023, future forecasts of revenue and variable consideration in
determining revenue, the impact of the termination of the HB sales agreement
on the Company's projected revenue and sales channels, estimation of mineral
resources, exploration and development plans, cost and timing of the
development of deposits and estimated future production, interest rates,
including expectations regarding the impact of market interest rates on future
cash flows and the fair value of derivative financial instructions, currency
exchange rates, rates of inflation, success of exploration, credit risk, price
risk, requirements for and availability of additional capital, capital
expenditures, operating costs, timing of completion of technical reports and
studies, production and cost estimates, 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, the
profitability of Clara and the Clara Platform, and the scaling of the digital
platform for the sale of rough diamonds owned by Clara, expectations regarding
the Clara platform's growth, the expected use of the Clara Facility, that the
Company intends to continue to seek additional supply, both from third-party
producers and the secondary market for Clara, and the potential impacts of
COVID-19, economic and geopolitical risks, including potential impacts from
the Russian military invasion of Ukraine and the escalating conflict between
Israel and Hamas.

Forward-looking information and statements are based on the opinions and
estimates of management as of the date such statements are made, and they are
subject to several 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 correct.  Certain risks which could impact the Company are discussed
under the heading "Risks and Uncertainties" in the Company's most recently
filed Interim MD&A and, in the Company's most recent Annual Information
Form available at http://www.sedar.com (the "AIF").

The foregoing is not exhaustive of the factors that may affect any of our
forward-looking statements. Forward-looking statements are statements about
the future and are inherently uncertain, and our actual achievements or other
future events or conditions may differ materially from those reflected in the
forward-looking statements due to a variety of risks, uncertainties, and other
factors, including, without limitation, those referred to in this news
release.

Although the Company has attempted to identify important factors that could
cause actual actions, events, or results to differ materially from those
described in forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or intended.
The forward-looking statements contained in this news release are based on the
beliefs, expectations, and opinions of management as of the date of this
disclosure. There can be no assurance that forward-looking statements will
prove to be accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly, readers and
investors should not place undue reliance on forward-looking statements.
Forward-looking information and statements are made as of the date of this
disclosure and accordingly are subject to change after such date. Except as
required by law, the Company disclaims any obligation to revise any
forward-looking information and statements to reflect events or circumstances
after the date of such information and statements. All forward-looking
information and statements contained or incorporated by reference in this news
release are qualified by the foregoing cautionary statements.

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