REG - Lucara Diamond Corp - Lucara Diamond Corp. Announces Q2 2022 Results

Lucara DiamondAnnouncement

11/08/2022 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220811:nRSK6361Va&default-theme=true

RNS Number : 6361V  Lucara Diamond Corp  11 August 2022

August 10, 2022

 

NEWS RELEASE

 

LUCARA ANNOUNCES STRONG Q2 2022 FINANCIAL AND OPERATIONAL RESULTS AS
UNDERGROUND SHAFT SINKING COMMENCES

 

VANCOUVER, August 10, 2022 /CNW/ (LUC - TSX, LUC - BSE, LUC - Nasdaq
Stockholm)

 

Lucara Diamond Corp. ("Lucara" or the "Company") today reports its results for
the quarter ended June 30, 2022.

Q2 2022 HIGHLIGHTS:

·      Revenue for the three months and six months ended June 30, 2022
totalled $52.3 million and $120.5 million, respectively.

·      Strong rough and polished diamond market fundamentals continue,
despite growing global economic uncertainties.

·      Revenue from sales transacted on Clara during the three months
ended June 30, 2022 totalled $9.4 million, a 13% increase from the $8.3
million in revenue earned in the comparative quarter.

·      A third-party producer commenced a series of trial sales on Clara
in Q2 of 2022, which are continuing into Q3 of 2022.

·      Production metrics remained in line with 2022 guidance, with 1.1
million tonnes of ore and 0.4 million tonnes of waste mined, and 0.7 million
tonnes of ore processed during the three months ended June 30, 2022.

·      A strong U.S. Dollar helped to mitigate increases in input costs,
resulting in an operating cash cost of $28.78 per tonne of ore processed((1)).

·      A total project investment of $29.1 million into the Karowe UGP
during the current quarter focused on the transition to main sink activities
and construction of the upgraded transmission line and related substations.

Eira Thomas, President & CEO commented: "In Q2, Lucara celebrated 10 years
of continuous operations at its 100% owned Karowe Diamond Mine and delivered
production on plan in combination with healthy diamond sales, reflecting
stable polished diamond demand and a continued positive outlook for diamond
prices longer term.  Third party volumes on Clara also continued to grow
during the quarter, with Karowe goods reliably supplemented in each completed
sale. Momentum on the underground expansion continues to ramp up as we began
the transition towards the main shaft sinking phase; Lucara maintains access
to ample liquidity to support of its growth plans."

 

REVIEW FOR THE QUARTER ENDED JUNE 30, 2022

·      Operational highlights from the Karowe Mine for the three months
ended June 30, 2022 included:

o Mined 1.1 million tonnes (Q2 2021: 0.9) and 0.4 million tonnes (Q2 2021:
0.8) of ore and waste, respectively.

o Processed 0.7 million tonnes of ore (Q2 2021: 0.7) and recovered 86,317
carats (Q2 2021: 101,330 carats), achieving a recovered grade of 12.0 carats
per hundred tonnes (Q2 2021: 13.9 cpht).

o A total of five diamonds greater than 100 carats were recovered during the
quarter.

o The year-to-date Total Recordable Injury Frequency Rate ("TRIFR") of 0.09
(Q2 2021: zero) at the end of Q2 2022 reflects one medical treatment case
reported during the first quarter of 2022.

 

 (1) See "Non-IFRS Financial Performance Measures"

 

·      Financial highlights for the three months ended June 30, 2022
included:

o Revenues from the sale of 66,167 carats recovered from the Karowe Mine were
$50.0 million (Q2 2021: $45.9 million from the sale of 68,806 carats from
Karowe). The sales agreement with HB Trading BV ("HB") accounted for 65% (Q2
2021: 67%) of total Karowe revenue recognized in the quarter.

o Operating cash costs of $28.78 per tonne processed(1) (Q2 2021: $27.51 per
tonne processed) reflect the impact of higher input costs, partially offset by
a comparatively stronger U.S. Dollar.

o Adjusted EBITDA(1) of $24.4 million increased by 10% from $22.2 million for
the same period in 2021, attributed primarily to higher revenues.

o Net income for the quarter increased to $12.5 million ($0.03 basic earnings
per share) from $6.0 million ($0.02 basic earnings per share) in Q2 2021.

 

·      Cash position and liquidity:

o As at June 30, 2022, the Company had cash and cash equivalents of $40.8
million.

o The Company drew an additional $20.0 million from the $170.0 million project
loan facility for a total drawn amount of $65.0 million.

o The outstanding balance on the working capital facility was reduced to zero
during the quarter and the full $50.0 million facility was unutilized as at
June 30, 2022.

DIAMOND SALES

Diamond sales in Q2 2022 continued 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. Other diamonds continued to be sold through
a combination of the Clara platform and regular tenders.

 

The Company recognized total revenues of $52.3 million in Q2 2022. This
included $50.0 million from the sale of 66,167 carats from Karowe, top-up
payments of $13.1 million as well as $2.3 million from the sale of third-party
goods on the Clara platform. In the comparative quarter, the Company achieved
revenues of $46.3 million which included $45.9 million from the sale of 68,806
Karats from Karowe, top-up payments of $7.9 million as well as $0.4 million in
revenue from third party goods sold through the Clara platform.

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 2020, Lucara
announced a partnership agreement with HB, entering into a definitive sales
agreement for diamonds recovered that exceed +10.8 carats from the Company's
100% owned Karowe Diamond mine in Botswana. This agreement was subsequently
amended and extended to December 31, 2022.  The mechanisms of the agreement
result in complete transparency within the value chain and create important
alignment between the producer and the manufacturer for the first time.

 

 (1) See "Non-IFRS Financial Performance Measures"

 

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 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, 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 three months ended June 30, 2022, the Company recorded revenue of
$32.4 million from the HB agreement (inclusive of top-up payments of $13.1
million), as compared to revenue of $30.7 million in Q2 2021 (inclusive of
top-up payments of $7.9 million). The increase in revenue in Q2 2022 is
attributed to higher prices achieved, despite lower overall sale volumes
delivered to HB during the current quarter. Diamond market fundamentals
continued to support healthy prices as steady demand and some inventory
shortages were reported. 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 between periods.
 This is expected and reflects a combination of current diamond market prices
as well as variability in the quality of Karowe's production profile in any
given period.

As a result of the sales agreement with HB, the Company also participated in
polished diamond price increases during Q2 2022 as rough diamonds sold to HB
in previous quarters were polished and sold.  In Q2 2022, top-up payments of
$13.1 million (Q2 2021: $7.9 million) were included in revenue for the
quarter. At June 30, 2022 a number of higher value and more technically
complex stones that take longer to manufacture had not fully completed the
manufacturing and sales process. These stones were delivered to HB in 2021 and
the first six months of 2022.  As these stones finish the manufacturing
process and are sold, the Company's may record additional revenue in the form
of "top-up" payments from these sales.

CLARA SALES PLATFORM

Clara, Lucara's 100% owned proprietary, secure, web-based digital sales
platform, continues to gain scale and interest.  Interest in Clara continues
to grow as the benefits of purchasing rough diamonds in an innovative way
become evident.  In Q2 2022, five sales (Q2 2021: six sales) took place with
a total sales volume transacted of $9.4 million, a 13% increase from the $8.3
million transacted in Q2 2021, continuing the strong price trends observed on
Clara during Q1 2022.  The number of buyers on the platform remained stable
during the quarter with the Company maintaining a waiting list to manage
supply and demand.

While most of the stones transacted through the platform are supplied from the
Karowe Mine, secondary market stones continued to be offered for sale through
the platform with good results.  Additional supply is required to meet
existing demand and drive the platform's growth and the Company launched a
series of trial sales on the Clara platform with a third-party producer in Q2
2022.  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 UGP is expected to extend the mine life to at least 2040, with
underground carat production predominantly from the highest value EM/PK(S)
unit and is forecast to contribute approximately $4 billion in additional
revenues, using conservative diamond prices.  The estimated capital cost for
the Karowe UGP has increased from $534 million (including contingency) to $547
million to reflect expected pricing changes following execution of the main
sink contract.  Mine ramp up is expected in Q1 2026 with full production from
the Karowe UGP expected in H2 2026.  The Company is using a combination of
cash flow from operations and project debt for the investment in the Karowe
UGP, which is fully financed.

During the three months ended June 30, 2022, a total of $29.1 million was
spent on the Karowe UGP development, primarily in relation to ongoing
construction activities and procurement of long lead items, including:

·      Pre-sink activities for both the production and ventilation shafts
were completed, including placement and erection of headgear for the
production shaft.

·      The main sink contract for the production and ventilation shafts
was executed and main sinking of the ventilation shaft commenced. The
transition from the pre-sink to the main sinking phase has been slower than
anticipated however, opportunities have been identified to decrease main sink
cycle times and reduce the impact to the schedule.

·      The production shaft stage winder was installed and roped-up.

·      Procurement of shaft station underground mobile equipment and the
mine bulk air cooler was initiated.

·      Letlhakane and Karowe power substation construction continued. The
transmission line towers were erected in preparation for the stringing of the
transmission lines.

 

Activities for the Karowe UGP in the upcoming quarters of 2022 are expected to
include the following:

·      Commencement of main sinking for the production shaft.

·      Awarding of bulk air cooler tender and continued procurement of
underground equipment.

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

·      Commissioning of the 29 km 132kV bulk power supply powerline by the
end of the year.

DIAMOND MARKET

The diamond market continued its strong performance during the second quarter
of 2022 with minor price corrections observed. Solid market fundamentals
supported diamond prices despite growing concerns of a global economic
slowdown as high levels of reported inflation persisted and governments
respond with increasingly forceful measures in attempts to reduce it to
sustainable levels.

 

A cautious economic outlook combined with the uncertainty caused by
geopolitical events, including the conflict in Ukraine and continuing
implications of the COVID-19 pandemic (specifically in China where the demand
for diamonds has not yet recovered) remain a risk to diamond pricing trends in
the short term but the longer-term price outlook remains positive.

 

The benefits of the committed sales agreement with HB continued to be realized
during the second quarter of 2022 as the Company participated in the upside to
manufacturing polished diamonds for goods delivered in previous quarters. The
integrated approach, using state of the art scanning and planning technology
has further enhanced the final achieved polished outcome for very large (+50
carat polished) and high value diamonds, a critical production segment for the
Company.

 

FINANCIAL HIGHLIGHTS

                                                                    Three months ended June 30,                 Six months ended
                                                                                                                June 30,
 In millions of U.S. dollars, except carats or otherwise noted      2022                    2021                2022              2021

 Revenues                                                           52.3                    46.3                120.5             99.4
 Operating expenses                                                 (17.0)                  (15.1)              (34.9)            (34.8)
 Net income for the period                                          12.5                    6.0                 31.5              9.4

 Earnings per share (basic)                                         0.03                    0.02                0.07              0.02
 Earnings per share (diluted)                                       0.03                    0.01                0.07              0.02
 Operating cash flow per share((1))                                 0.05                    0.05                0.13              0.11

 Cash on hand                                                       40.8                    13.7                40.8              13.7
 Amounts drawn on working capital facility                          -                       50.0                -                 50.0
 Amounts drawn on project finance facility                          65.0                    -                   65.0              -

 Karowe Revenue                                                     50.0                    45.9                117.2             98.9
 Average price per carat sold ($/carat)((2))                        557                     552                 631               510
 Carats sold                                                        66,167                  68,806              146,462           160,540

 (1)   Operating cash flow per share before working capital adjustments is a
 non-IFRS measure. See "Use of Non-IFRS Performance Measures" below.

 (2)   The Company's revenue is primarily generated from the sale of Karowe
 diamonds. The average price per carat sold presented in this table relates
 exclusively to the sale of Karowe diamonds and excludes top-up payments
 received during the quarter.  Also excluded is the value of diamonds
 purchased from third parties and sold by the Company through Clara. See Table
 2 in the Q2 2022 MD&A for additional information.

 

QUARTERLY RESULTS OF OPERATIONS - KAROWE MINE, BOTSWANA
                                                   UNIT        Q2-22      Q1-22    Q4-21    Q3-21      Q2-21
 Sales
 Revenues from the sale of Karowe diamonds         US$M        50.0       67.2     56.5     72.5       45.9
 Karowe carats sold                                Carats      66,167     80,295   102,791  117,162    68,806
 Average price per carat - excluding top-ups((1))  US$         557        690      436      596        552
 Production
 Tonnes mined (ore)                                Tonnes      1,091,192  811,947  610,072  1,190,856  900,660
 Tonnes mined (waste)                              Tonnes      357,764    482,104  276,263  696,907    787,227
 Tonnes processed                                  Tonnes      719,207    666,488  705,877  738,986    726,379
 Average grade processed((2))                      cpht ((*))  12.0       12.6     12.8     13.2       13.9
 Carats recovered                                  Carats      86,317     83,917   90,634   97,412     101,330
 Costs
 Operating expense per Karowe carat sold((3))      US$         221        212      200      193        211
 Margin (mining operations) per Karowe carat sold  US$         336        478      236      403        341
 Operating cost per tonne of ore processed((4))    US$         28.78      27.80    29.74    29.73      27.51

 Capital Expenditures
 Sustaining capital expenditures                   US$M        4.1        0.8      9.1      3.4        2.4
 Underground expansion project((5))                US$M        29.1       31.1     21.8     32.0       22.6

(*) carats per hundred tonnes

(1)       Previously presented as $418 (Q4 2021), $588 (Q3 2021) and $522 (Q2 2021) per carat, respectively.

(2)       Average grade processed is from direct milling carats and excludes carats recovered from re-processing historic recovery tailings from previous milling.
(3)       Previously presented as $224 (Q1 2022), $217 (Q4 2021), $198 (Q3 2021) and $219 (Q2 2021) per carat, respectively.
(4)       Operating cost per tonne of ore processed is a non-IFRS measure.
(5)       Excludes qualifying borrowing cost capitalized in each quarter since 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. No changes were made to the Company's 2022 Guidance as of Q2
2022.  In February 2022, based on updated expectations for revenue in 2022,
the diamond revenue guidance issued was 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
(an individual rough diamond which sells for more than $10 million), or the
Sethunya.

 

 Karowe Diamond Mine                                                                     Full Year - 2022
 In millions of U.S. dollars unless otherwise noted
 Diamond revenue (millions) (revised as of February 2022)                                $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

CONFERENCE CALL

The Company will host a conference call and webcast to discuss the results on
Thursday, August 11, 2022 at

7:00 a.m. Pacific, 10:00 a.m. Eastern, 3:00 p.m. UK, 4:00 p.m. 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:

7733206 / Lucara Diamond

 

Dial-In Numbers:

   Toll-Free Participant Dial-In North America                 (+1)
800 289 0720

   UK Toll free
                                0 800 279 6877

   Local
                                        (+1) 647 484 0258

 

Webcast:

To view the live webcast presentation, please log on using this direct link:
https://app.webinar.net/OnWVxNl9gv0
(https://can01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fapp.webinar.net%2FOnWVxNl9gv0&data=05%7C01%7C%7Cff513d6be37440eb2d8f08da636b6ba0%7C27f9c5157710404a8e352c9662ee984b%7C0%7C0%7C637931610267005457%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=qJPO4NTLFKSXM3AHh%2FJno%2FrlK0OghDrbbN23H2aRfG0%3D&reserved=0)

 

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 conference call will be available two hours after the
completion of the call until August 18, 2022.

 

   Replay number (Toll Free North America)                    (+1)
888 203 1112

   Replay number (Local)
                   (+1) 647 436 0148

 

The passcode for the replay is: 7733206 #.

 

 

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 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 August 10, 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 three months ended June 30, 2022 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 Karowe UGP, that the estimated timelines to
achieve mine ramp up and full production from the Karowe UGP can be achieved,
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
forward-looking statements which speak only as of the date the statements were
made, and the Company does not assume any obligations to update or revise them
to reflect new events or circumstances, except as required by law.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  IR FBLLFLVLZBBB