Lucara Diamond Corp. · TSX:LUC
Lucara Diamond — Investor Presentation (August 2018)
33 slides from Lucara Diamond's investor presentation, August 2018
Slide 1: Lucara Diamond Corp. Investor Presentation August 2018
Lucara Diamond Corp. Investor Presentation August 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 worlds’ foremost producers of large Type IIa gem quality diamonds • 170 diamonds have sold for >$1 million each and 10 single diamonds h
Slide 4: Safety
Safety LTIFR ICMM 2.00 1.87 • Zero LTI over the last 12 1.80 1.81 months 1.60 1.45 • LTI free days – 404 days 1.40 • 1,668,284 manhours 1.23 worked as at end of Q2 1.20 1.20 1.00 1.00 0.87 • 3,819,652 manhours worked since the last LTI 0.78 0.80 0.70 0.64 0.60 0.40 0.20 0.00 0.00 0.00 0.00 0.00 0.00
Slide 5: 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 0.00 and 3.8 million hours since last LTI Community Relations Key Focus Areas • Collaboration between Lucara and Lundin Foundat
Slide 6: Resource – Carats Recovered
Resource – Carats Recovered Karowe Quarterly Specials Count Karowe Cumulative Weight % Specials • 253 specials recovered in Q2, highest quarterly tally Life of Mine, 10.5 wt.% (Q2-17 5.9%) of recovered carats • 11 diamonds > 100 carats, including 3 > 300ct • EM/PK(S) continues to contribute positive
Slide 7: Diamond Market
Diamond Market • Overall, strong continued diamond demand in Q2 • Positive outcome at the Hong Kong diamond and jewelry show in February and JCK in June 2018 • Markets appear stable, manufacturers achieving better margins • Diamond producers association (DPA) announced increase to marketing budget •
Slide 8: 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 9: Q2 2018 Highlights
Q2 2018 Highlights 100% owned Karowe Mine in Botswana • No LTI’s / 3.8 million man hours since last LTI / LTIFR of 0.00 • Ore mined, processed and carats recovered within forecast • 253 specials (single diamonds larger than 10.8 carats), representing 10.5% of the total recovered carats by weight and
Slide 10: H1 2018 Financial Highlights
H1 2018 Financial Highlights Revenue EBITDA (1) Net Income (millions) (millions) (millions) $56.7 $105.7 $37.5 $30.6 $89.9 $12.7 H1 2017 H1 2018 H1 2017 H1 2018 H1 2017 H1 2018 Total Sales ($ per carat) (1) US$ per tonne processed (1) Earnings per share $852 $37.53 $0.08 $648 $30.14 $0.03 H1 2017 H1
Slide 11: Lucara Diamond Sales YTD
Lucara Diamond Sales YTD RST Sales: • 137,193 carats sold for proceeds of $57.4 million at an average price of $418 per carat • 6 individual diamonds sold for more than $1mln each EST Sales: • 10 single stones totaling 1,453.06 carats; Ranging from 472.37 to 40.4 carat stones sold for proceeds of $3
Slide 12: Diamond Sales Strategy
Diamond Sales Strategy • Historically, Lucara has held both Regular Stone Tenders (RSTs) and Exceptional Stone Tenders (ESTs) • As of Q3 Lucara will be holding a blended tender process, whereby a greater number of exceptional stones will be sold as part of RSTs • A blended tender process decreases t
Slide 13: 2018 Lucara Diamond Sales
2018 Lucara Diamond Sales $/CT CONTRIBUTION TO OVERALL AVERAGE PRICE * REGULAR & EXCEPTIONAL TENDERS 800 RST $/Ct EST $/Ct 700 $644 $647 $649 $648 600 $593 $251 $210 $230 500 $329 $411 $261 $ CT 400 300 $165 200 $397 $434 $418 $315 $332 100 $254 $247 0 2012 2013 2014 2015 2016 2017 2018** Steady sta
Slide 14: 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 are in line with budget (guidance 270-290k) • Average $/carat sold is forecast at budget between $630/carat and $690/carat • Average $/carat for Karowe diamonds so
Slide 15: Growth Strategy 2018: Karowe Underground and Clara
Growth Strategy 2018 Karowe Underground and Clara
Slide 16: Building on Positive PEA: Next Steps Toward Feasibility Study
Building on Positive PEA Next Steps Toward Feasibility Study Understanding Risk • Incorporation of Q2/18 resource update • Geotechnical and hydrogeological studies progressing well • Open Pit to Underground transition • Mine design, mining options, trade off studies in progress Opportunities • Finan
Slide 17: 2018 Updated Mineral Resource
2018 Updated Mineral Resource • 7.9 million carats hosted in 57.85 million tonnes, average grade of 13.7 cpht, average diamond value of US$ 673 per carat (NI 43-101) M/PK(S) EM/PK(S) • Successful reclassification to Indicated Resource of the AK06 kimberlite between 600 and 400 metres above sea level
Slide 18: Mining: Impact of EM/PK(S)
Mining: Impact of EM/PK(S) • Gain in mining along SE quadrant of South Lobe, recovered grade 472 ct circa 17-20cpht, coarse SFD (>6 wt.% up to 10 wt.%), good plant throughput, moderate yield • Recovery of a number of high value diamonds, major 327 ct contribution to Q2 revenue has been realized, ong
Slide 19: Current Sump
Current Sump • Recoverable Grade Models with depth LoM Pit Base • Above 600masl –soft boundaries • Below 600masl – hard 2013 INF boundaries • Increase in South Lobe grade results from greater volume of EM/PK(S) 2018 IND Base 19
Slide 20: Lucara’s Next Generation Growth Project
Lucara’s Next Generation Growth Project
Slide 21: CLARA
CLARA A secure, digital diamond sales platform that uses proprietary analytics together with cloud and blockchain technologies to transform the sales process, matching diamond demand to supply, ensuring diamond provenance from mine to finger, driving efficiencies and unlocking value for all stakehol
Slide 22: 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 23: 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 24: 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 25: 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. 25
Slide 26: 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 27: 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 28: 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 29: 2018 Guidance
2018 Guidance LUCARA DIAMOND
Slide 30: 2018 Outlook
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 31: Catalysts
Catalysts • Commercialization of Clara platform Q3 • Feasibility Study underway on Karowe underground with potential to extend the mine life to 2036 • Blended tender process to start Q3 - lowers inventory time for large, high value diamonds, smoother more predictable revenue profile • Brownfields ex
Slide 32: Capital Structure
Capital Structure Lucara is a publicly listed company trading under the symbol “LUC” • TSX • NASDAQ Sweden • BSE (Botswana) Issued shares 396,509,387 (as at Aug 31, 2018) Fully diluted shares 402,179,417 (as at Aug 31, 2018) Insider Holdings 22% on a fully diluted basis Debt NIL Cash on hand $49.6 m
Slide 33: 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