Lucara Diamond Corp. · TSX:LUC
Lucara Diamond — Investor Presentation (July 2018)
34 slides from Lucara Diamond's investor presentation, July 2018
Slide 1: Lucara Diamond Corp. Investor Presentation July 2018
Lucara Diamond Corp. Investor Presentation July 2018
Slide 2: Cautionary Statement
Cautionary Statement Forward‐looking information This investor presentation contains forward‐looking statements and information as defined in applicable securities laws including: the estimates of the Company’s mineral reserve and resources; estimates of the Company’s production volumes; forecasted
Slide 3: The Investment Case
The Investment Case All currency figures in USD, unless otherwise stated. 100% owned Karowe Mine in Botswana • High margin diamond producer since 2012 • One of the world’s foremost producers of large Type IIa gem quality diamonds • 168 diamonds have sold for >$1 million each and 10 single diamonds h
Slide 4: Catalysts 2018
Catalysts 2018 • Update LOM open pit plan based on new resource statement • PFS underway on Karowe underground with potential to extend the mine life to 2036 • Move to a blended tender process ‐ lowers inventory time for large, high value diamonds, smoother predictable revenue profile • Commercializ
Slide 5: Q1 2018 Highlights
Q1 2018 Highlights 100% owned Karowe Mine in Botswana • No LTI’s / 2.9 million man hours since last LTI / LTIFR of 0.06 • Ore mined, processed and carats recovered within forecast • 218 specials (single diamonds larger than 10.8 carats), representing 6.8% of the total recovered carats by weight • 32
Slide 6: Safety, Health, Environment and Community Relations
Safety, Health, Environment and Community Relations Safety, Health & Environment • Continued strong focus; all leading and lagging indicators trending favourably • LTIFR of 0.06 and 2.9 million hours since last LTI Community Relations Key Focus Areas • Collaboration between Lucara and Lundin Foundat
Slide 7: Karowe Resource continues to deliver..
Karowe Resource continues to deliver.. Karowe Quarterly Specials Count Karowe Cumulative Weight % Specials (single stones +10.8 carats) (single diamonds +10.8 carats) 250 218 20 3 Num ber of Specials (>10.8ct) 200 175 177 165 16 9 143 150 1 23 113 10 8 100 50 0 Q 4 1 5 Q 1 1 6 Q 2 1 6 Q 3 1 6 Q 4 1
Slide 8: Diamond Market
Diamond Market • 2018 began with a sense of cautious optimism, bolstered by a reasonably strong US holiday season and healthy demand from China • Positive outcome at the Hong Kong diamond and jewelry show in February and JCK in June 2018 • Markets appear stable, manufacturers achieving better margin
Slide 9: Karowe Diamond Production
Karowe Diamond Production • Coarse size frequency distribution (SFD) that includes the regular recovery of diamonds greater than 10.8 carats in size, referred to as “specials” • Specials from Karowe are consistently high value and gem quality • South Lobe production rates of 270,000 to 290,000 carat
Slide 10: Lucara Diamond Sales YTD
Lucara Diamond Sales YTD RST Sales: • Q1 RST 63,317 carats sold for proceeds of $25.4 million at an average price of $401 per carat, 4 single diamonds > $1 million/each • 113 companies attended the tender with 93 placing a bid; 43 companies won, one or more parcels EST Sales: • 10 single stones tota
Slide 11: Diamond Sales Strategy
Diamond Sales Strategy • Historically, Lucara has held both Regular Stone Tenders (RSTs) and Exceptional Stone Tenders (ESTs) • Lucara intends to move towards a blended tender process, whereby a greater number of exceptional stones will be sold as part of RSTs • A blended tender process decreases th
Slide 12: 2018 Lucara Diamond Sales
2018 Lucara Diamond Sales $/CT CONTRIBUTION TO OVERALL AVERAGE PRICE * REGULAR & EXCEPTIONAL TENDERS 1000 RST $/Ct EST $/Ct $893 900 800 $644 $647 $649 700 $593 $501 600 $210 $411 $251 $ CT 500 $329 $261 400 300 $165 200 $397 $434 $392 $315 $332 100 $254 $247 0 2012 2013 2014 2015 2016 2017 2018** S
Slide 13: Lucara Diamond Sales Forecast 2018
Lucara Diamond Sales Forecast 2018 2018 Forecast • Forecast sales remain in line with guidance ($170‐$200m) • Carats forecast to be sold is in line with budget (guidance 270‐290k) • Average $/carat sold is forecast at budget between $630/carat and $690/carat • Average $/carat for Karowe diamonds sol
Slide 14: Q1 2018 Karowe Operations
Q1 2018 Karowe Operations Production Q1 2017 Q1 2018 Ore processed (tonnes) 598,934 599,407 Ore mined (tonnes) 131,380 630,242 Carats recovered (carats) 65,241 75,698 Plant feed grade (cpht) 10.9 12.6 Waste mined (tonnes) 587,177 3,991,648 Revenues & Operating Margins Q1 2017 Q1 2018 Revenue ($ mill
Slide 15: Q1 2018 Financial Highlights
Q1 2018 Financial Highlights Revenue EBITDA Net Loss (millions) (millions) (millions) $4.9 $26.1 $25.4 $1.4 Q1 2017 Q1 2018 Q1 2017 Q1 2018 Q1 2017 Q1 2018 $(1.5) $405 $401 $43.04 $(7.0) $19.86 Q1 2017 Q1 2018 Q1 2017 Q1 2018 Q1 2017 Q1 2018 $(0.00) $(0.02) Total Sales ($ per carat) US$ per tonne pr
Slide 16: Growth Strategy 2018
Growth Strategy 2018 Karowe Underground and Clara
Slide 17: Underground PEA 2026-2036 (November 2017)
Underground PEA 2026‐2036 (November 2017) Parameter Output NPV5 (USD) ~ $451 million • Potential 10 year extension of mine life to NPV8 (USD) ~ $318 million 2036 Undiscounted Free Cash • PEA presents a stand‐alone scenario, does ~ $820 million Flow (after tax) not incorporate the economics of the Li
Slide 18: Building on Positive PEA
Building on Positive PEA Next Steps Toward PFS and FS Understanding Risk • Recently released Mineral Resource Update to support studies • Feasibility level geotechnical and hydrogeological studies with accompanying drill programs – In progress • Mine design, mining options, trade off studies – In pr
Slide 19: 2018 Updated Mineral Resource
2018 Updated Mineral Resource • 7.9 million carats hosted in 57.85 million tonnes, average grade of 13.7 cpht, average diamond value of M/PK(S) US$ 673 per carat (NI 43‐101) EM/PK(S) • Successful reclassification to Indicated Resource of the AK06 kimberlite between 600 and 400 metres above Base LoM
Slide 20: Mining: Impact of EM/PK(S)
Mining: Impact of EM/PK(S) • Gain in mining along SE quadrant of South Lobe, 472 ct recovered grade circa 17‐ 20cpht, coarse SFD (>6 wt.% up to 10 wt.%), good plant throughput, moderate yield 327 ct • Recovery of a number of high value diamonds, major contribution to Q2 revenue has been realized, on
Slide 21: EM/PK(S) Impact
EM/PK(S) Impact South Lobe Plan View : 920masl TR_O1 Nov/15 • 02/18 Sampling of EM/PK(S), coarse SFD (9.5wt.% specials) • 47 diamonds > 10.8ct, 6>50ct, 1>100ct MPKS • Observed price per carat of $753/ct • Nov 2015 – TR_O1 – now shown to to lie within EMPKS: ~$150 million in revenue, EMPKS produced t
Slide 22: Recoverable Grade Models with depth Above 600masl
Current Sump Recoverable Grade Models with depth LoM Pit Base Above 600masl –soft boundaries 2013 INF Below 600masl – hard boundaries Increase in South Lobe grade results from greater 2018 IND Base volume of EM/PK(S) 22
Slide 23: Lucara's Next Generation Growth Project
Lucara’s Next Generation Growth Project
Slide 24: Summary of Clara Acquisition
Summary of Clara Acquisition Clara is an affordable, potentially high value growth opportunity for Lucara that is compatible with our core diamond mining business • All share transaction; low dilution (3.7%) and no impact to dividend • 13.1 million shares up front • Contingent payments of 13.4 milli
Slide 25: Why?
Why? • Current supply chain is static, inefficient, and inflexible; uses an entrenched system that hasn’t changed in over 100 years, and is ripe for disruption • Recent technological advances make disruption possible and inevitable • Value is being lost across the entire diamond pipeline; producers
Slide 26: Push System
Prevailing Supply Chain 100 yrs old, Highly Inefficient, Unoptimized; Value Loss Throughout Supply Chain Producers (25, 5 Principal) Push System Sightholders/Primary Customers (<100) Secondary, Tertiary Rough Traders/ Manufacturers (1000’s) Integrated Unfulfilled Manufacturers/Jewelers Demand (1000’
Slide 27: How Can This be Improved?
How Can This be Improved? By disrupting the existing diamond value chain, using proprietary analytics together with cloud and blockchain technologies to match diamond demand to supply, ensuring diamond provenance from mine to finger, driving efficiencies and unlocking value for all stakeholders. 27
Slide 28: How?
How? Producers Manufacturers/Retailers • Galaxy scan all rough diamonds as they • Upload polished diamond orders are extracted (continuous, real time) (using Polished Diamond • Diamonds undergo a “basic” Parameters “PDP”s) and price list assortment for size and color for each diamond Clara Platform
Slide 29: Benefits
Benefits Benefits Producers Manufacturers/Retailers • Maximum selling price achieved for every • Purchase of rough based on polished stone orders • Not reliant on tender sale cycles • Eliminates financial carrying costs of unwanted inventory • Reduces sorting inefficiencies, removes • Eliminates man
Slide 30: Benefits to Lucara
Benefits to Lucara • Clara is an affordable, potentially high value, near term growth platform, compatible with the Company’s core diamond mining business • Supports Lucara’s reputation as an industry‐leader in the adoption of new technology. Non‐cash transaction with no expected impact on the divid
Slide 31: 2018 Guidance
iB ~ Le la Na LUCARA DIAMOND x 2018 Guidance
Slide 32: 2018 Outlook (all amounts in USD)
2018 Outlook (all amounts in USD) Diamond revenue ($ million) 170 – 200 Diamond sales (thousand carats) 270 – 290 Diamonds recovered (thousand carats) 270 – 290 Ore tonnes mined (million) 2.5 – 2.8 Waste tonnes mined (million) 13.0 – 16.0 Ore tonnes processed (million) 2.4 – 2.7 Operating cash costs
Slide 33: Capital Structure
Capital Structure Lucara is a publicly listed company trading under the symbol “LUC” • TSX • NASDAQ Sweden • BSE (Botswana) Issued shares 396,376,054 Fully diluted shares 402,564,418 Insider Holdings 22% on a fully diluted basis Debt NIL Cash on hand $43.6 million (Q1 2018) $50 million Credit Facili
Slide 34: Contact
Contact Suite 2000 885 West Georgia St. Vancouver, BC V6C 3E8 Tel: +1 604 689 7872 Fax: +1 604 689 4250 Email: info@lucaradiamond.com Website: lucaradiamond.com