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REG - Lucara Diamond Corp - Lucara Diamond Corp. reports Q1 2022 Results

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RNS Number : 5358K  Lucara Diamond Corp  06 May 2022

May 5, 2022

 

NEWS RELEASE

 

LUCARA'S Q1 2022 REVENUE OF $68.2 MILLION REFLECTIVE OF A STRONG START TO 2022

 

VANCOUVER, May 5, 2022 /CNW/ (LUC - TSX, LUC - BSE, LUC - Nasdaq Stockholm)

 

Lucara Diamond Corp. ("Lucara" or the "Company") today reports its results for
the quarter ended March 31, 2022.

Q1 2022 HIGHLIGHTS:

·    Revenue in Q1 2022 increased by 28% to $68.2 million from $53.1
million in Q1 2021 a reflection of strong rough and polished diamond market
fundamentals into the first quarter.

·     The combination of a strong diamond market, combined with the sale
of several higher value rough diamonds in Q1 2022 generated an average price
per carat (excluding top-up payments) of $690 for Karowe diamonds sold during
the quarter (Q1 2021: $480 per carat).

·     A total of 186 Specials (single diamonds in excess of 10.8 carats)
were recovered, representing 6.9% weight percent Specials (Q1 2021: 6.8%).

·    Sales volumes transacted on Clara during Q1 2022 totalled $7.0
million, a 17% increase from the $6.0 million in sales volume transacted in Q1
2021. A third-party producer will commence a series of trial sales beginning
in Q2 of 2022.

·   A total project investment of $31.1 million into the Karowe UGP during
Q1 2022 focused on shaft pre-sinking activities and construction of a new 29km
132kV transmission line.

Eira Thomas, President & CEO commented: "Lucara begins the year on a
positive trajectory, having fully financed and significantly de-risked our
growth plans for the underground expansion in 2021 and delivered another
strong quarter of operating and financial results in Q1, reflecting solid
performance at the mine combined with continued buoyancy in diamond prices.
Preparation for main shaft sinking is well underway and anticipated to begin
in Q2.  Our multi-channel approach to sales through tenders, Clara and HB
continues to mature, creating alignment along the value chain, delivering
efficiencies and higher margins.  Despite current geo-political challenges,
Lucara remains optimistic about diamond prices as natural rough diamond supply
constraints continue to manifest globally."

 REVIEW FOR THE QUARTER ENDED MARCH 31, 2022

·      Operational highlights from the Karowe Mine for the three months
ended March 31, 2022 included:

o Mined 0.8 million tonnes (Q1 2021: 1.0) and 0.5 million (Q1 2021: 0.8) of
ore and waste, respectively.

o Processed 0.7 million tonnes of ore (Q1 2021: 0.7) and recovered 83,917
carats (Q1 2021: 80,014 carats), achieving a recovered grade of 12.6 carats
per hundred tonnes (Q1 2021: 11.9 cpht).

o A total of 10 diamonds greater than 100 carats were recovered during the
quarter.

o Total Recordable Injury Frequency Rate ("TRIFR") of 0.23 in Q1 2022 reflects
one medical treatment case reported (Q1 2021: zero).

·      Financial highlights for the three months ended March 31, 2022
included:

o Revenues from the sale of 80,295 carats recovered from the Karowe Mine were
$67.2 million (Q1 2021: $53.0 million from the sale of 91,734 carats from
Karowe). The sales agreement with HB Trading BV ("HB") accounted for 66% (Q1
2021: 72%) of total revenues recognized in the quarter.

o Operating cash costs of $29.30 per tonne processed((1)) (Q1 2021: $29.24 per
tonne processed) remained consistent with the comparative period.  Q1 2022
costs are inclusive of the impact of higher power, labour and insurance costs,
partially offset by a comparatively stronger U.S. Dollar.

o Adjusted EBITDA((1)) of $36.0 million increased by 62% from $22.2 million
for the same period in 2021, attributed primarily to higher revenues.

o Net income for the quarter increased to $19.0 million ($0.04 basic earnings
per share) from $3.4 million ($0.01 basic earnings per share) in Q1 2021.

((1)) Operating cash cost per tonne processed and adjusted EBITDA are non-IFRS
measures (See "Use of Non-IFRS Financial Performance Measures").

·      Cash position and liquidity:

o As at March 31, 2022, the Company had cash and cash equivalents of $39.1
million.

o The Company drew an additional $20.0 million from the $170.0 million project
loan facility in the quarter for a total drawn amount of $45.0 million.

o Strong cash flow from operations allowed for a reduction to the outstanding
balance on the working capital facility, from $23.0 to $12.0 million as at
March 31, 2022.

DIAMOND SALES

Consistent with the Company's approach through 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 $68.2 million in the first quarter
of 2022 from the sale of 80,295 carats from Karowe.  This amount included
top-up payments of $11.7 million as well as $1.0 million from the sale of
third-party goods on the Clara platform. In comparison, the Company achieved
revenues of $53.1 million from sales of 91,760 carats in the first quarter of
2021 which included top-up payments of $9.1 million as well as $0.1 million in
revenue from third-party goods sold through the Clara platform.

 

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. This strength continued into Q1 2022.  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.  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.

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 March 31, 2022, the Company recorded revenue of
$45.2 million from the HB agreement (inclusive of top-up payments of $11.7
million), as compared to revenue of $38.0 million in Q1 2021 (inclusive of
top-up payments of $9.1 million).  In Q1 2021, all +10.8 carat stones were
sold through HB.  Beginning in April 2021 when the HB agreement was extended,
any +10.8 carat stones not earmarked for manufacturing by HB were sold through
the Company's quarterly tender process. The increase in revenue in Q1 2022 is
attributed to higher prices achieved, despite lower sale volumes.  This
reflects a significant improvement in diamond market fundamentals between the
two comparative quarters. Due to natural variability in the quality profile of
the +10.8ct production in any production period or fiscal quarter, the
recorded revenue and associated top ups will fluctuate.  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 Q1 2022 as rough diamonds sold to HB
in previous quarters were polished and sold.  In Q1 2022, top-up payments of
$11.7 million (Q1 2021: $9.1 million) were included in revenue for the
quarter. At March 31, 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
Q1 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 Q1 2022, three sales (Q1 2021: six sales) took place with
a total sales volume transacted of $7.0 million, a 17% increase from the $6.0
million transacted in Q1 2021, reflecting a strong upward price trend observed
on Clara during Q1 2022.  The number of buyers on the platform increased to
92 at March 31, 2022 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 expects to
commence 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 Karowe UGP has an estimated
$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.  The Company is financing the Karowe UGP through a combination of cash
flow from operations and project debt.

During the three months ended March 31, 2022, a total of $31.1 million was
spent on the Karowe UGP development, primarily in relation to engineering,
procurement of long lead items and ongoing construction activities, including:

·        Pre-sink activities for both the production and ventilation
shafts continued with a focus on the setup and transition to main sinking.

·        Placement of the ventilation shaft main sinking stage into the
shaft column along with placement of the ventilation shaft headgear over the
shaft collar.

·        Assembly of the production shaft main sink stage with
outfitting planned for Q2 in preparation for its installation in the shaft
column, while pre-assembly of the production shaft headgear steel continued.

·      Cold commissioning of the ventilation shaft kibble winder was
completed, with progress on the ventilation shaft stage winder in preparation
for winder rope-ups in April, while installation of the production shaft stage
winder commenced.

·        Completed construction of all 88 tower foundations for the 29
km 132kV transmission line bulk power upgrade and commenced construction at
both Letlhakane and Karowe substations.

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

·       Execution of the main sinking contract for the production and
ventilation shafts

·       Completion of the steel headgear structure for the production
and ventilation shafts.

·       Commissioning of the four main sinking winders.

·       Commencement of 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

A strong rebound in diamond jewelry demand, combined with growing global
natural rough diamond supply constraints, contributed to a healthy recovery in
diamond prices in 2021.  This price strength continued into the first quarter
of 2022 where increases were observed across most sizes, qualities and colors
of diamonds.

 

Current pricing trends have been impacted by uncertainty triggered by
geopolitical events, including the conflict in Ukraine and the COVID-19
pandemic, however, we continue to observe healthy market fundamentals overall,
and our longer-term outlook remains positive for diamond prices.  The diamond
price impact of sanctions on Russian diamond supply, which accounts for a
significant portion of global reserves, cannot be predicted at this time.

 

The benefits of the committed sales agreement with HB continued to be realized
during the first quarter of 2022 as the Company participated in polished
diamond price increases during Q1 2022 for diamonds 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.

 

QUARTERLY FINANCIAL HIGHLIGHTS

 

                                                                            Three Months ended
                                                                            March 31
 In millions of U.S. dollars, except carats or otherwise noted              2022                 2021

 Revenues                                                                   $       68.2         $         53.1
 Operating expenses                                                         (18.0)               (19.7)
 Net income for the period                                                  $       19.0         $           3.4

 Earnings per share (basic and diluted)                                     $       0.04         $         0.01
 Operating cash flow per share(1)                                           $       0.08         $         0.06

 Cash on hand                                                               $       39.1         $         27.9
 Amounts drawn on working capital facility                                  $       12.0         $         50.0
 Amounts drawn on project finance capital facility                          $       45.0         $               -

 Average price per carat sold ($/carat)(2)                                  $        690         $          480
 Carats sold                                                                80,295               91,734

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

(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
payment 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 Q1 2022 MD&A for additional information.

 

QUARTERLY RESULTS OF OPERATIONS - KAROWE MINE, BOTSWANA

                                                                                             UNIT        Q1-22    Q4-21    Q3-21      Q2-21    Q1-21
 Sales
 Revenues generated from the sale of Karowe diamonds in the quarter                          US$M        67.2     56.5     72.5       45.9     53.0
 Carats recovered from Karowe sold for revenues recognized during the period                 Carats      80,295   102,791  117,162    68,806   91,734
 Average price per carat for proceeds received during the period, excluding top-up payments  US$         690      418      588        522      480
 Production
 Tonnes mined (ore)                                                                          Tonnes      811,947  610,072  1,190,856  900,660  967,089
 Tonnes mined (waste)                                                                        Tonnes      482,104  276,263  696,907    787,227  859,347
 Tonnes processed                                                                            Tonnes      666,488  705,877  738,986    726,379  673,646
 Average grade processed                                                                     cpht ((*))  12.6     12.8     13.2       13.9     11.9
 Carats recovered                                                                            Carats      83,917   90,634   97,412     101,330  80,014
 Costs
 Operating expense per carat sold                                                            US$         224      217      198        219      215
 Sustaining capital expenditures                                                             US$M        0.8      9.1      3.4        2.4      0.4
 Underground expansion project((1))                                                          US$M        31.1     21.8     32.0       22.6     9.9
 (*) carats per hundred tonnes

 (1)   Excludes qualifying borrowing cost capitalized in Q1 2022 and 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. 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
Friday, May 6, 2022 at

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

 

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:

39751892 / 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=1544386&tp_key=18045919de
(https://produceredition.webcasts.com/starthere.jsp?ei=1544386&tp_key=18045919de)
 

 

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

May 13, 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: 044225 #.

 

 

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 May 5, 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 March 31, 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 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
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.

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 or visit
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.

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