Lucara December tender exceeds expectations
Lucara Diamond reported that its final diamond tender of 2019, held on December 12th, generated sales proceeds of US$52.9 million, 16% higher than expected and achieved an average price of US$548 per carat. Market pricing improvements were noted in all size classes.
The December tender puts Lucara's 2019 revenue at $192.5 million exceeding the 2019 revenue guidance of $170 - $180 million. According to the 2019 sales highlights, total proceeds of US$192.5 million that includes Clara. Overall average price that bag during the 2019 remained of US$468 per carat, 30 diamonds sold for over $1 million each in 2019.
Clara has also continued to make excellent progress in 2019, completing 16 sales and growing its customer base well beyond expectations from 4 to 27 clients. Further, demand in recent sales has now outstripped available supply and the platform is ready to receive a larger quantity of third-party goods to support its next phase of growth. Trials with at least two other providers are anticipated beginning in early 2020.
The positive results of the Karowe Underground Feasibility Study announced on November 4, 2019 have been summarized in a Technical Report, prepared pursuant to the guidelines of National Instrument 43-101, and filed on SEDAR December 17, 2019.
A budget of up to US$53 million has been approved for early works related to the proposed underground mine at Karowe. An investment decision, subject to receipt of all required authorizations and the arrangement of financing, is expected in H2 2020.
The approved budget is based on the Company's ability to fund these initial capital expenditures from operating cash flow in 2020. The early works program will include detailed engineering, procurement, earth works and pre-sinking of production and ventilation shafts to mitigate key risks related to the schedule.
Eira Thomas, CEO commented: "Though it is too early to call a trend, prices achieved in our final sale of the year reflect a stronger, more stabilized market environment and continued strong demand for Karowe diamonds. As a result, we have exceeded our revenue guidance for 2019.
Lucara's continued focus on operational excellence underpins this strong performance, delivering strong margins despite the weaker pricing environment. The Company remains well positioned and highly levered towards further strengthening in diamond prices over the next 12-24 months as supply constraints from large, maturing, mines begin to manifest.
This bodes well, not only for our current open pit operations, but also supports our plans for underground expansion to extend Karowe's mine-life to at least 2040, with the potential to generate an additional US$4 billion in revenue." She further added, "Our strong performance at the mine, combined with the delivery of a robust underground feasibility study is supplemented by encouraging early results from Clara.
2019 marked the first of a two year ramp up period for our secure digital sales platform and we are pleased to report that our customer base has grown beyond expectations. We remain on track to deliver strong cash flows consistent with our five-year plan."
