15 Aug 2022

Lucara Diamond Cooperation, which owns Karowe mine near Letlhakane has announced profitable financial results for the second quarter of 2022.

A media release from Lucara Diamond Cooperation says revenue for the three months and six months ended June 30  totalled US$52.3 million (about P651 million) and US$120.5 million (over P1.5 billion) respectively.

The company through the release highlights that Karowe’s large, high value diamonds have historically accounted for approximately 60 per cent to 70 per cent of Lucara’s annual revenues. It says in 2020 Lucara announced a partnership with HB, entering into a definitive sales agreement for diamonds recovered that exceed +10.8 carats from the company’s 100 percent owned Karowe Diamond mine.

“The company’s revenue is primarily generated from the sale of Karowe diamond mine with revenues from the sale of 66 167 carats recovered from the Karowe mine amounting to over P600 million.”

The release says Lucara diamond sales in quarter two of 2022 continued through HB under the sales agreement for those gem and near-gem diamonds greater than 10.8 carats which were to be manufactured and sold as polished.

It further says the Karowe underground production is expected to extend the mine life to at least 2040, with underground carat production predominantly from the highest value unit and is forecast to contribute approximately P48 billion in additional revenues, using conservative diamond prices.  The estimated capital cost for the Karowe underground production has increased from P6.4 billion to P6.5 billion to reflect expected pricing changes following execution of the main sink contract, says the release.

During the three months ended June 30, the release says, a total of P349 million was spent on the Karowe underground development, primarily in relation to ongoing construction activities and procurement of long lead items.

It says the diamond market continued its strong performance during the second quarter of 2022 with minor price corrections observed.

“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,” says the release.

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, the media statement says.

It also states that a strong US Dollar helped to mitigate increases in input costs, resulting in an operating cash cost of P345 million per tonne of ore processed.  ENDS