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Lucara’s Q2 2019 Revenue Drops Y-o-Y to US$ 42.5 Mn; But H1 2019 Revenue at US$91.2 Mn Up Y-o-Y

Aug 14, 2019

Lucara Diamond Corp. reporting its results for the quarter ended June 30, 2019 said that “A strong operating environment prevailed at the Karowe Mine in Q2 2019, having met or exceeded guidance with respect to all mining and processing activities.” 

This included ore and waste mined of 0.8 million tonnes and 1.8 million tonnes respectively; 0.71 million tonnes of ore processed; a total of 109,312 carats recovered (including 8,172 carats recovered from re-processing historic recovery tailings from previous milling), thus achieving a recovered grade of 14.2 carats per hundred tonnes processed (direct milling carats). A total of 225 Specials were recovered from direct milling during the second quarter, representing 8.1% weight percentage of total recovered carats, in line with mine plan expectations, the Company said. Ten diamonds recovered were greater than 100 carats in weight.

Lucara’s revenue for Q2 2019, amounted to US$ 42.5 million as compared to US$ 64.5 million reported in Q2 2018.   

For the six months ended June 30, 2019 revenue stood at US$ 91.2 million; as compared to a revenue of US$ 89.9 million for the same period of the previous year.    

“Continued excellent operational performance at Karowe has driven a strong 63% operating margin (H1 2018: 65%) and adjusted EBITDA year to date of US$ 38.6 million (H1 2018: US$ 37.5 million),” the Company reported. “Operating expenses per carat sold have decreased from US$ 225 per carat in H1 2018 to US$ 171 per carat in H1 2019.”

However, the Company’s net income for Q2 2019 fell to US$ 0.7 million as compared to Q2 2018 net income of US$ 19.7 million; and for H1 2019, net income amounted to US$ 8.1 million as against US$ 12.7 million achieved in the same period of the previous year. Lucara paid a quarterly dividend of CA$ 0.025 per share on June 20, 2019.

“Net income and earnings per share performance were as expected for both the second quarter and year to date results and reflect the continued strength of production being realized at Karowe from the investments made over the past two years, as well as the transition to a blended sales tender in Q3 2018 creating a smoother revenue profile,” Lucara clarified. 

Two tenders surpassed revenue of US$ 89.9 million for the six months ended June 30, 2018 (H1 2018) in which two regular stone tenders and one exceptional stone tender was held, the Company said. 

“In 2019, the Company held blended tenders in which diamonds recovered in the period December 2018 – April 2019 were sold in the same period, with the exception of the particularly rare stone recovered, Sewelô,” Lucara said. “The Company has completed an initial analysis of Sewelô and is considering how best to maximize value from this unique and rare diamond.”

In H1 2019, Lucara sold a total of 196,989 carats of diamonds as compared to 138,646 carats in H1 2018; thus achieving a year-to-date average price of US$ 463/carat (H1 2018: US$ 648/carat).  

During H1 2019 the Company also sold rough diamonds at a value of US$ 2.9 million through the Clara platform; and total revenues of US$ 3.5 million have been achieved since sales began in December of 2018, the Company reported.   

The Company had cash and cash equivalents of $ 7.1 million as on June 30, 2019. “Funds drawn on the credit facility were US$ 5.0 million utilised for working capital, leaving US$ 45 million available on the facility at June 30, 2019,” the Company revealed.

As a result of record plant processing performance over consecutive quarters, Lucara has announced a change in guidance: annual carat recoveries are expected to increase to 375,000 - 420,000 carats (previously 300,000 – 330,000 carats); and carats sold to 375,000 - 420,000 carats (previously 300,000 – 320,000 carats) in 2019.

Eira Thomas, President & CEO commented: "The largest diamond to be unearthed in Botswana's 50+ year history and the second +1,000 carat diamond to be recovered at Karowe in just four years, Sewelô, the 1,758 carat near gem that was recovered undamaged in April, is a testament to Karowe's remarkable geological endowment and the strong operating environment that prevails at the mine.”

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