Lucara Diamond Corp. First Quarter Results

Lucara Diamond Corp. First Quarter Results 
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 05/09/13 -- Lucara
Diamond Corp. (TSX:LUC)(BOTSWANA:LUC)(NASDAQ OMX First North:LUC)
("Lucara" or the "Company") today reports its first quarter 2013
results. 
William Lamb, President and Chief Executive Officer, commented:
"Lucara had solid operational performance and sales for the first
quarter continuing the growth trend from 2012. Also continuing is the
recovery of high quality diamonds from the Karowe Mine. An
exceptional 239 carat stone was recently recovered as well as several
excellent quality stones greater than 50 carats. This, along with the
multiple recoveries of extremely rare and valuable blue diamonds,
highlights the importance of this new mine. We are planning to
conduct our first special large stone tender in May in addition to
our normal tender (twice quarterly) of diamonds which is in excess of
50,000 carats." 
SUMMARY FINANCIAL RESULTS FOR THE QUARTER (1): 


 
                                                         Three months ended 
                                                                   March 31 
In millions of U.S. dollars unless otherwise noted          2013       2012 
----------------------------------------------------------------------------
                                                                            
Revenues                                               $    32.5  $       - 
Cash operating earnings                                     16.8          - 
EBITDA                                                      14.7       (4.7)
Basic and diluted earnings (loss) per share                 0.02      (0.01)
Cash flow from operations (before working capital                           
 adjustments)                                               15.0       (4.5)
Cash on hand                                                17.4       26.3 

 
Karowe Mine - Botswana  


 
--  During the first quarter of 2013 the Company completed two sales
    totalling 144,712 carats for proceeds of $32.5 million. The 2013 sales
    included six parcels totalling 18,233 carats, which were withheld from
    the December 2012 sale due to low volumes of competitive bidding.
    Excluding the December inventory sold in January, the average sales
    price for full 2013 production sold was $243 per carat. Total sales
    forecast for 2013 is 400,000 carats. 
 
--  The Company sold its second blue stone, a 4.77 carat diamond in its
    March sale for $1.6 million or $341,416 per carat. 
 
--  During the period the Company recovered a number of significant gem
    quality diamonds from its run of mine production. This includes 6
    diamonds in excess of 50 carats and 28 diamonds between 20 and 50
    carats. The company is planning its first large and exceptional stone
    tender in May, which is in addition to its normally planned tender of
    over 50,000 carats of diamond. The diamonds which will be sold during
    the large stone tender can be seen on the Company's website.  
 
--  Operating expenses per carat sold was $86 per carat. 
 
--  Cash operating earnings during the first quarter of 2013 (excluding
    depreciation, amortization and depletion) was $16.8 million or 52% of
    gross revenue. 
 
--  The mill treated 0.6 million tonnes during the first quarter of 2013 and
    produced a total of 123,228 carats of diamond. Average grade processed
    during the quarter was 22.4 carats per hundred tonnes, which exceeded
    expectations. 

 
Mothae Project - Lesotho 


 
--  A final sale of Mothae diamonds recovered from the test mining phase was
    held in February 2013. A total of 2,102 carats of diamond were sold for
    $918,828 for an average price of $437 per carat representing all unsold
    diamonds recovered from the Mothae test mining phase. 
 
--  The Mothae project remained on temporary care and maintenance during the
    quarter and the Company is currently reviewing a number of development
    options for Mothae. 

 
Corporate 


 
--  Cash on hand as at March 31, 2013 was $17.4 million. This included $4.5
    million drawn from the Company's Scotiabank credit facility. 
 
--  The principal balance of a $50 million debenture was reduced to $41.7
    million ($50.0 million at December 31, 2012) with the first payment
    being made as scheduled at the end of the first quarter. 

 
Safety  


 
--  There were no Lost Time Injuries ("LTI's") or reportable environmental
    incidents at Karowe during the year continuing its excellent safety,
    health and environment record. There have been over 3.2 million hours
    worked without any LTI's since March 2011, including 0.3 million hours
    since the beginning of 2013. Karowe's Lost Time Injuries Frequency Rate
    ("LTIFR") was zero for the quarter. LTIFR is defined as the total number
    of work hours lost per 200,000 work hours. 
 
(1) The Company's financial results are prepared in accordance with IFRS.   
This press release refers to cash operating earnings and EBITDA, which are  
not measures recognized under IFRS and do not have a standardized meaning   
prescribed by IFRS. Refer to the "Non-GAAP Measures" section in the MD&A for
further details.                                                            

 
SELECT FINANCIAL INFORMATION 


 
                                                         Three months ended 
                                                                   March 31 
In millions of U.S. dollars unless otherwise noted         2013        2012 
----------------------------------------------------------------------------
                                                                            
Revenues                                              $    32.5   $       - 
Operating expenses                                        (12.5)          - 
Royalty expenses                                           (3.2)          - 
                                                    ------------------------
Cash operating earnings (1)                                16.8           - 
                                                    ------------------------
Exploration expenditures                                   (0.2)       (3.3)
Administration                                             (1.9)       (1.4)
Gain on sale of diamonds                                    0.6           - 
Sales and marketing                                        (0.6)          - 
                                                    ------------------------
EBITDA (2)                                                 14.7        (4.7)
                                                    ------------------------
Depletion, amortization and accretion                      (4.4)          - 
Finance expenses                                           (1.0)       (0.3)
Foreign exchange gain (loss)                               (3.1)        0.8 
                                                    ------------------------
Net income (loss) for the period                            6.2        (4.2)
                                                    ------------------------
                                                                            
Total equity                                              152.8       171.9 
Cash flow from operations (before working capital                           
 adjustments)                                              15.0        (4.5)
Total assets                                              222.0       244.7 
Cash on hand                                               17.4        26.3 
Income (loss) per share (basic and diluted)                0.02       (0.01)
                                                                            
Per carats sold                                                             
  Sales price                                         $     225   $       - 
  Operating expenses                                         86           - 
                                                                            
Average grade (carats per hundred tonnes)                  22.4           - 
----------------------------------------------------------------------------
                                                                            
(1) Cash operating earnings is a non-GAAP measure defined as sales less     
operating expenses and royalty expenses.                                    
(2) EBITDA is a non-GAAP measure defined as earnings before interest,       
taxation, depreciation and amortization.                                    

 
Revenues 
During the first quarter of 2013 the Company had two sales totalling
144,712 carats for gross proceeds of $32.5 million, which included
the sale of 18,233 carats withheld from the its December 2012 sale.
The average sales price for 2013 run of mine production was $243 per
carat. 
Cash operating earnings  
Cash operating earnings for the three months ended March 31, 2013 was
$16.8 million. This reflects a $225 per carat price received for
diamonds sold net of royalties of 10% and operating expenses of $86
per carat sold. 
Cash operating earnings of $16.8 million result in a gross margin of
52% on sales. The average grade for the quarter was 22.4 carats per
hundred tonnes, which was in excess of budget.  
Cash operating earnings is a non-GAAP measure and is reconciled in
the table above. 
Exploration expenditures 
Exploration expenditures relating to the Mothae project were $0.2
million during the quarter compared to $3.3 million during the first
quarter of 2012. The Mothae project was placed on temporary care and
maintenance at the end of 2012 and as a result, incurred limited
operating expenditures in the first quarter of 2013.  
Administration expenses 
Administration expenses increased 0.5 million when comparing the
three month period ended March 31, 2013 to the three month period
ended March 31, 2012. The increase in administration expenses is
largely due to costs in Botswana, which are now expensed rather than
being capitalized as was done in 2012 as part of the commissioning of
Karowe. 
Earnings before interest, tax, depreciation and amortization (EBITDA) 
EBITDA for the first quarter of 2013 was $14.7 million compared to a
loss of $4.7 million in the first quarter of 2012. This was a result
of cash operating earnings of $16.8 million earned from Karowe and
decreased exploration expenditures of $3.1 million at Mothae. 
EBITDA is a non-GAAP measure and is reconciled in the table above. 
SUMMARY OF QUARTERLY RESULTS 


 
----------------------------------------------------------------------------
Three months ended               Mar-13      Dec-12     Sept-12      Jun-12 
----------------------------------------------------------------------------
A. Total revenues            32,503,543  29,171,742  12,658,547         Nil 
----------------------------------------------------------------------------
B. Exploration recovery                                                     
 (expenditures)                 374,318  (2,277,062) (4,464,791) (2,798,489)
----------------------------------------------------------------------------
C. Administration expenses   (1,945,896) (1,798,381) (2,979,850) (3,392,079)
----------------------------------------------------------------------------
D. Net income (loss)          6,168,786   7,664,989  (3,413,079) (7,607,000)
----------------------------------------------------------------------------
E. Earnings (loss) per share                                                
 (basic and diluted)               0.02        0.02       (0.01)      (0.02)
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Three months ended               Mar-12      Dec-11     Sept-11      Jun-11 
----------------------------------------------------------------------------
A. Total revenues                   Nil         Nil         Nil         Nil 
----------------------------------------------------------------------------
B. Exploration recovery                                                     
 (expenditures)              (3,313,504)    564,851  (3,116,383) (2,866,454)
----------------------------------------------------------------------------
C. Administration expenses   (1,363,964) (2,254,982) (1,304,914) (1,845,748)
----------------------------------------------------------------------------
D. Net income (loss)         (4,169,711) (5,438,374) (5,453,107) (5,921,521)
----------------------------------------------------------------------------
E. Earnings (loss) per share                                                
 (basic and diluted)              (0.01)      (0.01)      (0.01)      (0.02)
----------------------------------------------------------------------------

 
Operating expenses and net income (loss), quarter over quarter, vary
in relation to the level of activities undertaken by the Company
during the financial quarters reported. These activities include the
volumes and timing of diamond sales, the net price realized in such
sales, cost of goods sold, corporate development initiatives and net
exploration expenditures incurred. 
LIQUIDITY AND CAPITAL RESOURCES 
As at March 31, 2012, the Company had cash and cash equivalents of
$17.4 million compared to cash and cash equivalents of $13.3 million
at December 31, 2012. 
Cash generated from operating activities before working capital
movements for the quarter was an inflow of $15.0 million. These
proceeds were offset by the Company's $8.3 million debenture payment
at the end of March and payment of $2.2 million for project
retentions during the quarter, which completes the capital book for
the project at a total expenditure marginally below $120 million. 
Net cash from financing activities for the three months ended March
31, 2013 included an $8.3 million repayment on the Company's
debenture.  
In April 2012 the Company signed a definitive agreement with the Bank
of Nova Scotia for a $25 million revolving term credit facility with
a maturity date of March 26, 2014, which may be extended if both
parties agree.  
The facility contains financial and non-financial covenants customary
for a facility of this size and nature. As at March 31, 2013, the
Company is in compliance with all financial and non-financial
covenants. The applicable interest rate of any loan under the
facility will be determined by the Company's leverage ratio at any
given time. The Company has provided security on the two year
facility by way of a charge over the Company's Karowe assets and a
guarantee by the Company's subsidiaries, which hold the Karowe
assets. As at March 31, 2013 the Company had drawn $4.5 million of
the credit facility. 
The Company has entered into a series forward exchange contracts to
fix the rate at which future anticipated cash flows in U.S. dollars
are exchanged in Botswana Pula. Such contracts include forward sales
of U.S. dollars from May to December 2013 at an average rate of
Botswana Pula 7.9586 per $1.00, in the aggregate amount of $39.0
million.  
FUTURE PLANS AND OUTLOOK 
Boteti Karowe Mine, Botswana 
Karowe's 2013 budget is to mine and process 2.5 million tonnes of ore
and to produce 400,000 carats of diamond for sale. 
The Company anticipates holding eight sales (two per quarter) of
regular run-of-mine diamonds and at least one sale for large and
special diamonds in 2013. The sales are anticipated to average 50,000
carats of diamond each and there will be client viewings conducted in
both Gaborone and Antwerp. 
Mothae Diamond Project, Lesotho 
The Mothae project will remain on temporary care and maintenance
pending a decision regarding potential development options for the
project. 
Other Matters 
At a meeting of the Board of Directors of the Company (the "Board")
held on March 21, 2013, the Board adopted an Advance Notice Policy
(the "ANP"), which includes, among other things, a provision that
requires advance notice be given to the Company in circumstances
where nominations of persons for election to the Board are made by
shareholders of the Company. In the case of an annual meeting of
shareholders, notice to the Company must be made not less than 30
days nor more than 65 days prior to the date of the annual meeting.
However, in the event that the annual meeting is to be held on a date
that is less than 50 days after the date on which the first public
announcement of the date of the annual meeting was made, notice may
be made not later than the close of business on the 10th day
following such public announcement. In the case of a special meeting
of shareholders (which is not also an annual meeting) notice to the
Company must be made not later than the close of business on the 15th
day following the day on which the first public announcement of the
date of the special meeting was made. 
Additionally, the ANP sets forth the information that a shareholder
must include in the notice of the Company, and establishes the form
in which the shareholder must submit the notice for that notice to be
in proper written form. The full text of the ANP is available on the
Company's website and on SEDAR. 
About Lucara 
Lucara is a well-positioned new diamond producer. The Company has an
experienced board and management team with extensive diamond
development and operations expertise. The Company's two key assets
are the Karowe Mine in Botswana and the Mothae Project in Lesotho.
The 100% owned Karowe Mine is in the production. The 75% owned Mothae
Project has completed its trial mining program. 
On Behalf of the Board, 
William Lamb, President and CEO 
Lucara's Certified Advisor on NASDAQ OMX First North is Pareto Ohman
AB. 
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS 
Certain of the statements made and contained herein in the press
release constitute forward-looking statements as defined in
applicable securities laws. Generally, these forward-looking
statements include any statements with respect to predictions,
expectations, beliefs, plans, projects, objectives, assumptions or
future events or performance and often (but not always) 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 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. In particular, this press release
contains forward looking information pertaining to the following: the
estimates of the Company's mineral reserve and resources; estimates
of the Company's production and sales volumes for the Karowe Mine;
estimated costs to construct the Karowe Mine, start-up, exploration
and development plans and objectives, production costs, exploration
and development expenditures and reclamation costs; expectation of
diamond price and changes to foreign currency exchange rate;
expectations regarding the need to raise capital;  
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 correct.
Forward-looking statements are subject to a variety of known and
unknown risks, uncertainties and other factors that could cause
actual events or results to materially differ from those reflected in
the forward-looking statements including, without limitation, the
following risks and uncertainties for the Company: general global
financial and economic conditions; future market prices for diamonds;
the supply and demand for rough diamonds; ability to access capital;
fluctuations in interest rates and foreign currency exchange rates;
inherent hazards and risks associated with mining operations;
estimations of the Company's production and sales volume for the
Karowe Mine; costs associated with the construction of the Karowe
mine; operational costs, including costs of power and diesel;
operational difficulties, including failure of plant, equipment or
processes to operate in accordance with specifications or
expectations; industrial job disturbances; environmental and other
regulatory requirements, including changes in the same; the acts of
the governments of the jurisdictions in which the Company's
operations are located; obtaining governmental approvals and permits;
estimation of mineral resources, including the continuity of grade of
diamondiferous mineralization; risks related to property titles; the
dependence on transportation facilities and infrastructure; the
Company is required to carry uninsurable risks; the mining industry
is competitive; risks associated with current and future legal
proceedings; conflicts of interest; dependence on management and
technical personnel; and risks associated with volatility in the
securities market. 
Certain of these risks are discussed under the heading "Risk Factors'
in the Company's Annual Information Form dated March 22, 2012
available at www.sedar.com. This list is not exhaustive of the
factors that may affect any of the Company's forward-looking
statements. Forward-looking statements are statements about the
future and are inherently uncertain, and actual achievements of the
Company or other future events or conditions may differ materially
from those reflected in the forward looking statements due to these
risks, uncertainties and other factors. Accordingly, readers are
cautioned not to place undue reliance on these forward-looking
statements. The Company disclaims any intention or obligation to
update or revise forward-looking statements if circumstances or
management's beliefs, expectations, or opinions should change, except
as required by law.
Contacts:
Lucara Diamond Corp.
Sophia Shane
Corporate Development
+1 (604) 689-7842
+1 (604) 689-4250 (FAX)
lucara@namdo.com
www.lucaradiamond.com 
Lucara Diamond Corp.
Robert Eriksson
Investor Relations, Sweden
+46 701-112615
 
 
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