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2017-11-03

LUCARA ANNOUNCES THIRD QUARTER RESULTS

ANNOUNCES THIRD QUARTER RESULTS
NOVEMBER 2, 2017 (LUC – TSX, LUC – BSE, LUC – Nasdaq Stockholm) Lucara
Diamond Corp. (“Lucara” or the “Company”) is pleased to announce third
quarter revenues of $77.9 million or $1,161 per carat (all dollar amounts
are in US dollars unless otherwise stated). HIGHLIGHTS Financial: --

Revenue was $77.9 million or $1,161 per carat (Q3 2016: $38.1 million or
$332 per carat)

--

EBITDA was $49.8 million (Q3 2016: $12.4 million)

--

Ending Q3 cash position of $91.4 million (Year end 2016: $53.3 million)

--

Q3 average sales price of $389 per carat (excluding the sale of the Lesedi
La Rona), 17% higher than Q3, 2016. Year to date average sales price of
$687 per carat (excluding sale of Lesedi La Rona), 11% higher than year to
date 2016 (excluding sale of Constellation diamond)

--

Year to date operating costs were $32.40 per tonne processed (full year
guidance $36.0 to $40.0 per tonne). Year to date mining cost per tonne was
$2.45 compared to guidance of $2.70 to $2.90 per tonne and processing cost
per tonne was $11.50 compared to guidance of $11.0 to $12.0 per tonne.

--

Earnings per share for YTD 2017 was $0.17 (YTD 2016: $0.16 earnings per
share)

Operational - Karowe Mine: --

Strong high value diamond production continued from the south lobe during
the Quarter. 108 specials (+10.8 carats), including two poor quality stones
in excess of 100 carats, equating to a 4.1% weight percentage of recovered
carats

--

The MDR and Sub-middles XRT capital projects were completed on time and on
budget. This completes the major capital expenditure programs to address
comminution and diamond recovery

--

Longer than anticipated ramp up of new mining contractor and contractor
operating inefficiencies are being addressed and improved

--

The results of a Preliminary Economic Assessment prepared in accordance
with National Instrument 43-101 demonstrates the quality of the south lobe
and the economic viability for the development of an underground mine at
Karowe (see press release dated November 2, 2017).

Exploration: --

Drilling program at the Karowe Mine to test the AK06 kimberlite at depths
below 400 metres was completed in February 2017

--

Mineral Services Canada contracted to assist in the development of sampling
program and updated internal geological model that will be utilized for an
updated resource estimate for the current inferred portion of the Karowe
Mine between 400 and 600 metres below surface. Completion expected Q4, 2017

--

Three of the planned eight large diameter drilling holes completed at AK11.
Work programs at AK11 and AK13 continue to progress. Microdiamond samples
from AK13 are at the laboratory and positive results may lead to a further
drilling program

--

Extension applications were received from the Ministry of Mines in Q4 2017
for Prospecting Licenses (“PL’s”) (PL367/2014 and PL371/2014).

Outlook: -- The Company has experienced a longer than anticipated ramp up
of its new mining contractor, Aveng Moolman as well as contractor operating
inefficiencies. The Company is working with its mining contractor to
address these issues and performance is improving. These mining issues have
led to a reduction in carats being recovered during the year as lower grade
stockpile has been processed in place of fresh south lobe ore -- The
reduction in carats processed has resulted in revenue guidance being
decreased to between $165 million and $175 million, excluding the sale of
the Lesedi La Rona. This does not reflect on the value of the Karowe
resource as the south lobe diamonds sold in 2017 have increased in price
compared to each of the past four years and the weight percentage of
specials (+10.8 carats) recovered remains strong and firm at 5.0% for the
year William Lamb, President and Chief Executive Officer commented “Cash
flow generation during the quarter was strong reflecting robust sale prices
including the sale of the Lesedi La Rona. The continued recovery of
specials and an increase in prices compared to the prior year and in
difficult market conditions emphasizes the quality of the Karowe stones
over the long term. We are addressing issues with our mining contractor,
improvements are being made and we expect the shortfall in recovered carats
from the south lobe this year to contribute to future cash flows. We are
pleased with the results of the Preliminary Economic Assessment which
demonstrates the quality of our south lobe diamonds and the potential for
long term operations at Karowe with the development of an underground
mine”. FINANCIAL UPDATE Revenues and operating margins: The Company
achieved revenue of $77.9 million during the quarter (Q3 2016: $38.1
million), including the sale of the Lesedi La Rona (“LLR”) for $53 million
($47,777 per carat), a regular diamond tender of $24.6 million and $0.3
million of proceeds received from the Company’s Q2 regular tender. The Q3
average price was $389 per carat (excluding the sale of the LLR) compared
to Q3 2016 average sales price of $332 per carat, an increase of 17%. The
Company has achieved strong year to date rough diamond prices at $687 per
carat excluding the sale of the LLR (Year to date 2016: $618 per carat
excluding the sale of the 813 carat Constellation diamond). Year to date
sales prices achieved an increase of 11% compared to the sales prices in
the same period in 2016. Karowe sales remain strong compared to the diamond
sector which is experiencing an influx of new production, weakness in the
smaller and poorer quality stones, as well as low colour brown diamonds.
Average diamond prices, as reported by other diamond producers, are
estimated to have decreased by up to 8% compared to the prior year in
certain size and quality fractions. This price decrease has been compounded
by the increase diamond production from new producers. The high quality
south lobe and rarity of some of the Karowe diamonds has created strong
demand for its diamonds leading to price increases. These strong prices and
a continued focus on costs have resulted in a year to date operating margin
of 80% (year to date operating margin of 67% excluding the sale of the
LLR). Karowe’s operating cash cost: Karowe’s total operating year to date
cash cost is $32 per tonne processed (2016: $25.00 per tonne processed) and
is expected to end the year within guidance of $36-$40 per tonne processed.
The Company’s expenditures remain well controlled with mining and
processing cost per tonne and all site costs within forecast. Net cash
position: The Company’s Q3 cash balance was $91.4 million (Q3 2016: $49.7
million and FY 2016 $53.3 million). The increase in cash during the period
is primarily due to the LLR sale, which was partially offset by the
Company’s capital expenditures of $20.3 million and dividend payments of
$7.7 million. The Company’s $50 million credit facility remains undrawn.
Earnings per share: Earnings per share were $0.09 for Q3 2017 (Q3 2016:
$0.01 loss per share) and $0.17 for year to date September 30, 2017 (year
to date September 30, 2016: $0.16). Dividend: In Q3 2017, the Company paid
its quarterly dividend of CDN 2.5 cents per share, or $7.7 million, on
September 14, 2017 bringing the total dividend paid in 2017 to $21.9
million. FINANCIAL HIGHLIGHTS Three months ended Nine months ended
September 30 September 30
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In millions 2017 2016 2017 2016 of U.S. dollars unless otherwise noted
--------------------------------------------------------------------------------
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Revenues * $ 77.9 $ 38.1 $ 183.6 $ 229.4 Average 1,161 332 960 850 price
per carat sold ($/carat)** Operating 229 149 231 143 expenses per carat
sold ($/carat)** Operating 932 183 729 707 margin per carat sold
($/carat)** Net income 32.9 (3.8) 63.6 59.5 (loss) for the period Earnings
0.09 (0.01) 0.17 0.16 (Loss) per share (basic and diluted) Cash on hand
91.4 49.7 91.4 49.7
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(*) Revenue is presented based on cash receipts received during the period
and excludes tender proceeds received after each quarter end. (**) Average
price per carat sold, operating expenses per carat sold and operating
margin per carat sold are Non-IFRS measures. RESULTS OF OPERATIONS Karowe
Mine, Botswana
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UNIT YTD-17 Q3-17 Q2-17 Q1-17 Q4-16 Q3-16 Sales Revenue US$M 183.6 77.9
79.6 26.1 66.0 38.1 s Proceed US$M 183.6 77.6 79.9 26.1 66.0 29.8 s genera
ted from sales tender s conduc ted in the quarte r are compri sed of: Sales
US$M 183.6 77.9 79.6 26.1 66.0 38.1 procee ds receiv ed during the quarte r
Q2 2017 US$M - (0.3) 0.3 - - - tender procee ds receiv ed post Q2 2017 Q2
2016 US$M - - - - - (8.3) tender procee ds receiv ed post Q2 2016 Carats
Carats 191,167 64,289 62,434 64,444 88,957 84,059 sold for procee ds genera
ted during the period Carats Carats 191,167 67,125 59,598 64,444 88,957
114,659 sold for revenu es recogn ized during the period Average US$ 960
1,207 1,280 405 743 355 price per carat for procee ds genera ted during the
period ** Average US$ 960 1,161 1,336 405 743 332 price per carat for
procee ds receiv ed during the period *** Product ion Tonnes Tonnes 950,303
386,906 432,017 131,380 582,169 650,290 mined (ore) Tonnes Tonnes
11,119,512 5,540,139 4,992,196 587,177 2,728,915 3,092,110 mined (waste )
Tonnes Tonnes 1,703,773 591,196 513,643 598,934 630,471 650,646 proces sed
Average cpht 10.9 10.6 11.2 10.9 13.0 12.5 grade (*) proces sed Carats
Carats 185,290 62,425 57,624 65,241 82,272 81,423 recove red Costs Operati
US$ 231 229 247 217 197 149 ng costs per carats sold Capital expend itures
-8+4mm US$M 13.0 5.3 4.9 2.8 7.2 - sub-mi ddles XRT projec t LDR and US$M
7.0 3.6 1.8 1.6 0.8 2.3 MDR circui t Sustain US$M 4.6 1.9 2.2 0.5 2.0 5.8
ing capita l Total US$M 24.6 10.8 8.9 4.9 10.0 8.1
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- (*) carats per hundred tonnes(**) Average price per carat for proceeds
generated during the period includes all sales tendered during the period
including proceeds received post the quarter end(***) Average price per
carat for proceeds received during the period includes all sales proceeds
collected during the period including proceeds received during the quarter
OPERATIONS - KAROWE MINE Karowe had no lost time injuries during Q3
resulting in a twelve month rolling Lost Time Injuries Frequency Rate
(“LTIFR”) of 0.68. The Company’s mining contractor, Aveng Moolman,
experienced eq...

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