Lucara Diamond Corp. Second Quarter Results

Lucara Diamond Corp. Second Quarter Results 
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 08/09/13 -- 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 an exceptional first six months of the year with sales
proceeds in excess of $80 million and over 230 thousand carats sold.
Following the first large and exceptional stone sale, the Karowe mine
has continued to produce a high proportion of large stones and a
second exceptional stone sale will be held in September featuring 16
diamonds, including a pink stone and five stones which are over 100
carats each. The proceeds from this sale are expected to further
strengthen the Company's overall cash position." 
SUMMARY FINANCIAL RESULTS FOR THE QUARTER (1): 


 
                                Three months ended         Six months ended 
                                           June 30                  June 30 
In millions of U.S. dollars                                                 
 unless otherwise noted           2013        2012         2013        2012 
----------------------------------------------------------------------------
                                                                            
Revenues (2)               $      47.2 $         -  $      79.7 $         - 
Proceeds from quarterly                                                     
 sales tenders (2)                49.3           -         81.8           - 
Cash operating earnings           33.3           -         50.1           - 
EBITDA                            29.0        (6.2)        43.7       (10.9)
Net income (loss) for the                                                   
 period                           22.7        (7.6)        28.8       (11.8)
Basic earnings (loss) per                                                   
 share                            0.06       (0.02)        0.08       (0.03)
Cash flow from operations                                                   
 (before working capital                                                    
 adjustments)                     29.4        (4.3)        44.3        (8.8)
Cash on hand                      28.5         7.7         28.5         7.7 

 
Karowe Mine - Botswana 


 
--  During the second quarter the Company completed its first large and
    exceptional stone tender along with two regular tenders achieving gross
    proceeds of $49.3 million (2). Full year to date proceeds are $81.8
    million. The diamond sales completed during the second quarter included:
 
--  Large and exceptional stone tender held in May consisting of 15 single
    stone lots. All stones were sold for gross proceeds of $24.6 million
    ($30,184 per carat with a combined weight of 815 carats). 
--  The Company's two regular tenders during the second quarter totalled
    101,637 carats of diamond, achieving winning bids of $24.7 million or
    $243 per carat. 
--  The average value of run-of-mine diamonds recovered and sold during the
    quarter was $485 per carat. 
 
--  During the period the Company continued to recover a number of
    significant gem quality diamonds from its run of mine production. The
    Company is planning its second exceptional stone tender in September
    2013, which will feature 16 single diamond lots, including five diamonds
    larger than 100 carats and one small pink diamond.
    
    Operating costs per carat sold was $102 during the quarter compared to
    $86 per carat sold in the previous period. The increase is in line with
    budget and the Company's mine plan and reflects lower grades processed
    (15.6cpht) as the mine transitioned from the north lobe to the upper
    benches in the centre lobe as well as the planned increase in ore and
    waste mined. 
 
--  Cash operating earnings during the second quarter of 2013 (excluding
    depreciation, amortization and depletion) were $33.3 million or 71% of
    gross revenue. 

 
(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-IFRS
Measures" section in the MD&A for further details.  
(2) Total proceeds for diamond sales during the quarter were $49.3
million ($485 per carat) resulting in full year to June 30, 2013
proceeds of $81.8 million. Proceeds of $2.1 million or 12,833 carats
were collected post June 30, 2013 due to the timing of the June month
end sale and therefore not recognized as revenue in the Company's
condensed interim consolidated statement of operations resulting in
total revenue for the quarter of $47.2 million ($527 per carat).
These $2.1 million in proceeds were collected in early July and will
be recognized as revenues in the third quarter of 2013. 
Mothae Project - Lesotho 


 
--  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 June 30, 2013 was $28.5 million. The Company's $25
    million Scotiabank credit facility is currently undrawn. 
 
--  The principal balance of a $50 million debenture was reduced to $33.3
    million ($50.0 million at December 31, 2012) with the quarterly $8.3
    million payments being made as scheduled at the end of the first and
    second quarter 2013. 
 
--  Appointment of Mr Paul Day as Chief Operating Officer of the Company
    based in Gaborone effective April 15, 2013. Mr Day is a mining engineer
    with over 22 years of operational experience in the sub-Saharan mining
    industry. During this time Mr Day has been responsible for managing
    large scale open pit and underground mines as well as being involved in
    greenfield mine start ups and project development. 

 
Safety 


 
--  There was one Lost Time Injury ("LTI's") and no reportable environmental
    incidents at Karowe during the quarter. Karowe's Lost Time Injuries
    Frequency Rate ("LTIFR") was 0.67 for the quarter and is 0.36 for the
    year. LTIFR is defined as the total number of work hours lost per
    200,000 work hours. 

 
Karowe Mine, Botswana 


 
                 Unit  Q2-13 (1)      Q1-13      Q4-12      Q3-12      Q2-12
----------------------------------------------------------------------------
                                                                            
Sales                                                                       
Revenues         US$m $     47.2 $     32.5 $     29.1 $     12.7 $        -
Carats sold    Carats     89,619    144,712    100,987     51,737          -
Average price                                                               
 per carat        US$        527        225        289        245          -
                                                                            
Production                                                                  
Tonnes mined                                                                
 (ore)         Tonnes  1,163,761    968,871    701,931    561,230    337,810
Tonnes mined                                                                
 (waste)       Tonnes  1,259,478  1,109,727  1,267,343  1,240,062  1,566,791
Tonnes treated Tonnes    560,911    533,918    545,354    594,000    188,328
Average grade                                                               
 processed       cpht       15.6       23.1       25.4       15.4       34.1
Carats                                                                      
 produced      Carats     87,580    123,335    138,487     91,476     64,204
                                                                            
Costs                                                                       
                                                                            
Operating                                                                   
 costs per                                                                  
 carats sold      US$        102         86         84        107          -
                                                                            
Capital                                                                     
 expenditures    US$m        1.7        2.2        0.4       19.9        4.2
                                                                            
----------------------------------------------------------------------------

 
Tonnes of ore mined ex-pit for the quarter was in line with budget
with diamond grade favourable by 5%. Waste mining to access deeper
sections of the ore body in the south lobe was according to plan
during the period. A drill programme to deliver ten water supply
holes was completed with good water yields achieved. Equipping of
these boreholes will take place during the second half of the year. 
Process plant performance has been in line with expectations with
over 30% of the second quarter mill feed being competent ore from the
deeper section of the north lobe. Diamonds recovered surpassed budget
of 86,523 carats with a total production of 87,580 carats for the
quarter. A total of five diamonds in excess of 100 carats were
recovered during the second quarter. These diamonds will be sold
during the Company's second exceptional stone tender in September
2013. 
Mothae Diamond Project, Lesotho 
The Company is currently reviewing a number of development options
for Mothae following the completion of its trial mining program. 
SELECT FINANCIAL INFORMATION 


 
                                  Three months ended     Six months ended   
                                       June 30                June 30       
In millions of U.S. dollars                                                 
 unless otherwise noted               2013       2012       2013       2012 
----------------------------------------------------------------------------
                                                                            
Revenues                         $    47.2  $       -  $    79.7  $       - 
Operating expenses                    (9.1)         -      (21.6)         - 
Royalty expenses                      (4.8)         -       (8.0)         - 
                                ---------------------- ---------------------
Cash operating earnings (1)           33.3          -       50.1          - 
                                ---------------------- ---------------------
Exploration and other mining                                                
 costs                                (0.5)      (2.8)      (0.8)      (6.1)
Administration                        (2.8)      (3.4)      (4.7)      (4.8)
Gain on sale of diamonds                 -          -        0.6          - 
Sales and marketing                   (1.0)         -       (1.5)         - 
                                ---------------------- ---------------------
EBITDA (2)                            29.0       (6.2)      43.7      (10.9)
                                ---------------------- ---------------------
Depletion, amortization and                                                 
 accretion                            (3.3)         -       (7.7)         - 
Finance expenses                      (0.8)      (0.1)      (1.9)      (0.4)
Foreign exchange loss                 (2.2)      (1.3)      (5.3)      (0.5)
                                ---------------------- ---------------------
Net income (loss) for the period      22.7       (7.6)      28.8      (11.8)
                                ---------------------- ---------------------
                                                                            
Total equity                         169.1      157.8      169.1      157.8 
Cash flow from operations                                                   
 (before working capital                                                    
 adjustments)                         29.4       (4.3)      44.3       (8.8)
Total assets                         225.9      232.8      225.9      232.8 
Cash on hand                          28.5        7.7       28.5        7.7 
Income (loss) per share (basic                                              
 and diluted)                         0.06      (0.02)      0.08      (0.03)
                                                                            
Per carats sold                                                             
Sales price                      $     527  $       -  $     340  $       - 
Operating expenses                     102          -         92          - 
                                                                            
Average grade (carats per                                                   
 hundred tonnes)                      15.6          -       19.3          - 
----------------------------------------------------------------------------
                                                                            
(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 three months ended June 30, 2013, the Company completed
two regular tenders and its first large and exceptional diamond
tender. The Company's large and exceptional diamond tender generated
gross proceeds of $24.6 million or $30,184 per carat. The regular
tenders achieved winning bids totalling $24.7 million or $243 per
carat. At June 30, 2013, proceeds of $2.1 million from 12,833 carats
of diamond had not been collected and have not been recognized as
revenues in the Company's condensed interim consolidated statement of
operations. These proceeds were collected in early July and will be
recognized as revenues in the third quarter of 2013. 
Cash operating earnings  
Cash operating earnings for the three months ended June 30, 2013 were
$33.3 million. 
Operating expenses were impacted by a decrease in grades during the
quarter combined with an increase in ore and waste mined. The average
grade for the quarter was 15.6 carats per hundred tonnes, which was
in line with budget and the mine plan. 
Cash operating earnings is a non-GAAP measure and is reconciled in
the table above. 
Exploration and other mining costs 
Exploration expenditures and other mining costs relating to the
Mothae project were $0.5 million during the second quarter of 2013
compared to $2.8 million during the second quarter of 2012. The costs
incurred during the quarter include the final expenses for Mothae's
PEA study and ongoing care and maintenance costs. 
Administration expenses 
Administration expenses increased $0.8 million during the quarter
when compared to the previous three month period due largely to
employee performance payments. 
Earnings before interest, tax, depreciation and amortization (EBITDA) 
EBITDA for the second quarter of 2013 was $29.0 million compared to a
loss of $6.2 million in the second quarter of 2012. This was a result
of cash operating earnings of $33.3 million earned from Karowe and
decreased exploration and other mining costs at Mothae. 
EBITDA is a non-GAAP measure and is reconciled in the table above. 
SUMMARY OF QUARTERLY RESULTS 
(All amounts expressed in thousands of U.S. dollars, except per share
data) 


 
----------------------------------------------------------------------------
Three months ended                        Jun-13   Mar-13   Dec-12  Sept-12 
----------------------------------------------------------------------------
Total revenues                            47,224   32,504   29,172   12,658 
----------------------------------------------------------------------------
Exploration recovery (expenditures)         (557)     374   (2,277)  (4,465)
----------------------------------------------------------------------------
Administration expenses                   (2,761)  (1,946)  (1,798)  (2,980)
----------------------------------------------------------------------------
Net income (loss)                         22,679    6,169    7,664   (3,413)
----------------------------------------------------------------------------
Earnings (loss) per share (basic and                                        
 diluted)                                   0.06     0.02     0.02    (0.01)
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Three months ended                        Jun-12   Mar-12   Dec-11  Sept-11 
----------------------------------------------------------------------------
Total revenues                               Nil      Nil      Nil      Nil 
----------------------------------------------------------------------------
Exploration recovery (expenditures)       (2,798)  (3,314)     565   (3,116)
----------------------------------------------------------------------------
Administration expenses                   (3,392)  (1,364)  (2,255)  (1,305)
----------------------------------------------------------------------------
Net income (loss)                         (7,606)  (4,170)  (5,438)  (5,453)
----------------------------------------------------------------------------
Earnings (loss) per share (basic and                                        
 diluted)                                  (0.02)   (0.01)   (0.01)   (0.01)
----------------------------------------------------------------------------

 
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 June 30, 2013, the Company had cash and cash equivalents of
$28.5 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 six month period ended June 30, 2013 was an inflow
of $44.3 million. These proceeds were partially offset by the
Company's $8.3 million debenture payments at the end of March and
June as well as repayment of the outstanding balance of the Company's
revolving credit facility of $4.5 million. In addition, the Company
incurred capital expenditures of $3.9 million, which includes payment
of $2.2 million for project retentions during the period, which had
been accrued. The project has been completed at a total expenditure
marginally below $120 million. 
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 June 30, 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 June 30, 2013 the full amount under this facility was
available. 
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 July to December 2013 at an average rate of
Botswana Pula 7.9749 per $1.00, in the aggregate amount of $32.5
million. 
FUTURE PLANS AND OUTLOOK 
Boteti Karowe Mine, Botswana 
Karowe is projected to process 2.5 million tonnes of ore and to sell
420,000 carats of diamond in 2013. 
The Company anticipates holding three further regular run-of-mine
diamonds and at least one sale of large and exceptional diamonds
during the remainder of the year. The September sale is expected to
be approximately 78,000 carats with the two sales in the fourth
quarter averaging 53,000 carats of diamond each and there will be
client viewings conducted in both Gaborone and Antwerp. 
Karowe's operating cash costs are expected to be in the order of $23
per tonne treated, in-line with previous guidance. Capital
expenditures for 2013, excluding any final project retention payments
are expected to be approximately $5m, which is line with previous
guidance. 
Mothae Diamond Project, Lesotho 
The Mothae project will remain on temporary care and maintenance
pending a decision regarding potential development options for the
project. 
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 http://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 Diamond Corp.
Robert Eriksson
Investor Relations, Sweden
+46 701-112615
lucara@namdo.com
www.lucaradiamond.com