Fading sparkle

Baitshepi Sekgweng
IN TRANSITION: Karowe Diamond Mine

Lucara revenue on downward spiral

While Lucara Diamond Corporation continues to revamp its Karowe Diamond Mine as it transitions from open pit to underground, the company saw its sales drop considerably in the opening quarter of the year.

In the first three months of 2023, Lucara’s diamond sales stood at $42.8 million, way below the $68.2 million raked in during the same period a year ago.

The $68.2 million represented the highest quarterly sales of 2022, with the following quarters recording $50 million, $46.5 million and finally $40.1 million to end the year.

According to CEO, Eira Thomas, while the performance is influenced by weaker diamond prices, change in ore mix played a key role too.

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Thomas was quick to point out the drop in sales was expected and nothing to panic about.

“As anticipated, the period delivered lower revenues owing to the change in ore mix processed and diamond pricing weakness resulting from continued geopolitical and economic uncertainty. However, our outlook for the year remains unchanged as the largest influence on our revenue in Q1, ore mix, returns to higher contributions of south lobe ore in subsequent quarters,” he said.

As a result, Lucara remains unshaken with a production guidance of 395-425 million carats recovery, sales of 385-415 million carats and subsequently revenue of $200-230 million for the year 2023.

Despite a positive, longer-term outlook for natural diamonds, softer diamond prices, which were observed in the latter half of 2022, have continued into 2023 due to geopolitical uncertainty, including the ongoing conflict in Ukraine.

However, prices are beginning to show signs of stabilization as China open-up post-Covid, a trend which is anticipated to continue for the rest of the year.

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Though sales of lab-grown diamonds increased during the period, intense competition combined with improvements in technology continue to drive prices of lab grown diamonds down.

Meanwhile, during Q1 of 2023, Lucara spent $30.5 million on the Karowe underground expansion project, with key focus areas on the successful completion of the first grouting programmes in each shaft, completion and energisation of the 11kv transmission line from the new substation to the underground mine.

Further, stage two of bulk power supply upgrade to connect all mine power requirements to the new substation and 132kv power line has been done, with both existing operations and the underground project now fully fed with electricity through the upgraded grid supplied power.

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With an overall capital cost estimate of $105million for 2023, the expansion is set to continue in Q2, with priority areas being initiation of construction on the bulk air cooler system, procurement of underground equipment including dewatering pumps, underground crush and convey systems.

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