Lucara Diamond Corp. · TSX:LUC
Lucara Diamond — H1 2016 Earnings Presentation
30 slides from Lucara Diamond's earnings presentation, 2016
Slide 1: Lucara Diamond H1 2016
NS Lucara Diamond WHERE BIGGER IS” H1 - 2016
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 and sales volumes, r
Slide 3: Content
Content Introduction Highlights Botswana Diamond and Key Exploration Market Performance Data 4 7 17 23 3
Slide 4: Introduction
Introduction
Slide 5: Lucara – The Investment Case
Lucara – The Investment Case Where Bigger Is™ 100% owned Karowe Diamond Mine in Botswana – one of the ✔ foremost producers of Type IIa diamonds in the world 8.0 carat fancy pink diamond Consistent delivery of large and exceptional stones generating ✔ strong free cashflow Regular dividend initiated i
Slide 6: Capital Structure
Capital Structure • Lucara is a public Company listed under the symbol “LUC” • TSX • NASDAQ OMX (Sweden) • BSE (Botswana) • Issued shares 381M • Fully diluted shares 383M • Debt Nil • Cash on hand US$ 210 million (Q2, 2016) Dividend • Progressive (annual) CDN $0.06 per share • Special CDN $0.45 per
Slide 7: Highlights and Key Performance Data
Highlights and Key Performance Data
Slide 8: H1 Highlights
H1 - 2015 FY16 Q1 Results Highlights Where Bigger Is™ 0 LTI’s recorded in H1, 2016 with more than 2,000,000 LTI free Q hours being recorded to the end of the June 2016 Recovery of 340 diamonds larger than 10.8 carats including 12 Q diamonds larger than 100 carats Progressive dividend: CND $0.015 per
Slide 9: Lucara 2016 Guidance
Lucara 2016 Guidance Karowe • Forecast 2016 revenues of $200 - $220 million – Excluding the sale of the two very large exceptional diamonds • Diamond sales of between 340,000 - 380,000 carats • Operating costs of $29.0 - $31.0 per tonne processed (adjusted downwards at the end of Q2) • Capital expen
Slide 10: Karowe Operating Performance
Karowe Operating Performance Revenue EBITDA Net Income (millions) (millions) (millions) $140.5 $63.3 $191.4 $67.8 $28.4 $14.6 H1 2016 H1 2015 H1 2016 H1 2015 H1 2016 H1 2015 Total Sales Cash Operating Cost Earnings per share (average dollar per (per tonne treated) $0.17 carat) $29.5 $25.9 $1,233 $0.
Slide 11: Karowe Operating Performance
Karowe Operating Performance Production Information H1 2016 H1 2015 Ore processed (tonnes) 1,332,099 1,110,507 Ore mined (tonnes) 1,802,509 1,284,142 Carats recovered (carats) 190,279 175,791 Plant feed grade (carats per hundred tonnes) 14.3 15.8 Waste mined (tonnes) 6,811,106 7,521,977 Costs $ per
Slide 12: Geological Model
Geological Model Plan View of Geological Model North Central South CKIMB(N) North North “gap” “gap” 1000masl WK(N) WK(S) WBBX(S) WK(C) WKBBX(N) “gap” CFK(C) 900 WKBBX(N) WKBBX(N) BBX(S) BBX(N) CKIMB(C) BBX(C) Central Central 800 M/PK(S) FK(N) FK(C) 700 South South CBBX(S) IntBas(S) 600 Indicated 520
Slide 13: Resource Performance
Resource Performance • Resource continues to deliver a significant quantity of stones greater than 10.8 carats with more than 340 being recovered during the first half of 2016 at an average stone size of 27.1 carat/stone • During H1, 2016, 12 diamonds larger than 100 carats were recovered
Slide 14: Sales Update
Sales Update • Regular Tender – Two regular and tender were held in H1 – 185,791 carats were sold for $85.2 million – Average price: $459 per carat • Exceptional stone tenders: – First EST of 2016 closed in April 2016 – 10 diamonds weighing 1,525 carats were sold for $51.3 million – Average price: $
Slide 15: Sales Update
Sales Update • Lesedi La Rona – Recovered in November 2015 weighing 1,109 carats post cleaning – Second largest gem quality diamond ever and the largest in more than 100 years – Roadshow to show the diamond in major cities around the world – Diamond did not sell at the live auction on June 29 – View
Slide 16: CSR and Health & Safety
CSR and Health & Safety • Safety performance for the first half of the year was excellent with Safety and Health Lost time injury frequency rates (‘LTIFR’) for 2016 of zero (measured per 1,000,000 hours) (2015: 0.4) • Letlhakane abattoir handed over to the district counsel with official opening taki
Slide 17: Botswana Exploration
Botswana Exploration 17
Slide 18: Resource Replacement
Resource Replacement Prospecting Licenses (PLs) • Boteti awarded 2 PL’s in mid Sept 2014 • Both PL’s host known diamondiferous kimberlites • Block A (BK02) • Block E (AK11, 12, 13, 14)
Slide 19: Prospecting License: Block A
Prospecting License: Block A Work Plan • Bulk sampling and processing activities at BK02 were completed yielding a recovered grade of 4.6 carats per hundred tonnes with 274.33 carats being recovered from 5,916 tonnes of kimberlite material • Three largest diamonds recovered were 5.48ct, 2.26ct, and
Slide 20: Prospecting License: Block E
Prospecting License: Block E Background • License area is 55.4km2, host up to 4 known kimberlites, potential for additional discoveries, northern edge is contiguous with Debswana Orapa Mine Lease. Excellent road access, 15 kilometers north of Karowe Mine • AK11 is poorly constrained, AK12 is diamond
Slide 21: Lucara – A Summary
Lucara – A Summary Lucara • 100% owned Karowe Diamond Mine • Strong free cashflow generation from operations which is enhanced by the consistent recovery of large and exceptional Type IIa diamonds • Growth potential through exploration and M&A (strong balance sheet) • Regular dividend paid since H1,
Slide 22: Contact Information
Contact Information Phone and Fax Address Email and Web Suite 2000 Ph. 604-689-7842 lucara@namdo.com 885 West Georgia St. Fx. 604-689-4250 Vancouver, B.C. www.lucaradiamond.com Canada V6C 3E8
Slide 23: The Diamond Market
The Diamond Market 23
Slide 24: Key Factors Affecting The Diamond Market
Our Business Key Factors Affecting The Diamond Market Long Term Factors • Consumer preference trends • Macroeconomic fundamentals (GDP, growth of middle class) • Supply fundamentals Short Term Factors • Short term volatility in macroeconomic factors • Pipeline efficiencies – Maximizing the Value of
Slide 25: The Diamond Sector – Supply/Demand
The Diamond Sector – Supply/Demand The gap between supply and demand is expected to widen starting in 2019 according to the base scenario Rough-diamond supply and demand $ billions, 2000 - 2030 (2015 prices) 40 35 CAGR (2015-2030) 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F 30 25 Base demand ~3-
Slide 26: Lucara versus World Production
Lucara versus World Production (est.) Carat Production Profile Revenue Profile 100% 5% 90% 80% 70% 47% 60% 79% +10.8ct 50% +2ct +.1 40% <.1 30% 47% 20% 27% 10% 11% 2% 0% World Ct* Luc Ct World Revene* Luc Revenue *world revenue and ct proportions estimated 26
Slide 27: Global Rough Diamond Production
Global Rough Diamond Production Annual production - Carats 200 Millions 180 176 176 168 159 163 Botswana 160 DRC 140 133 130 South Africa 128 127 120 122 124 120 Angola Zimbabwe 100 Russia 80 Australia 60 Canada Others 40 20 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Kimbe
Slide 28: Expected New Mine Production
Expected New Mine Production Bain & Company – The Global Diamond Report 2013 28
Slide 29: The Diamond Market
The Diamond Market Inventory accumulation led to a fall in polished prices starting in 2014, with rough prices following Bain & Company – The Global Diamond Report 2015 29
Slide 30: Polished Diamonds 101
Polished Diamonds 101 Scan technology used extensively even on very small rough diamonds 30