Lucara Diamond Corp. · TSX:LUC
Lucara Diamond — BMO Global Metals & Mining Conference 2020
45 slides from Lucara Diamond's conference presentation, February 2020
Slide 1: BMO Global Metals & Mining Conference
BMO Global Metals & Mining Conference FEBRUARY 2020 LucaraDiamond.com | LUC.TSX | LUC.XSTO | LUC.BSE
Slide 2: Cautionary Statement
Cautionary Statement Forward‐looking information There can be no assurance that such forward looking statements will prove to be accurate, as the Company's results and future events could differ materially from those anticipated in this forward- Certain of the statements made and contained herein an
Slide 3: Karowe Diamond Mine (100%)
Botswana KAROWE DIAMOND MINE (100%) 3
Slide 4: High operating margin
High operating margin Total capital investment less than 2.64 million (>60% LOM) carats sold US$200 million sustained since production began in 2012 US$1.49 billion US$271 million in revenue in under 7years in dividends paid since 2014 Consistent recovery of high value Innovative Design Top of Class
Slide 5: Sewelô Collaboration with Louis Vuitton
Sewelô Collaboration with Louis Vuitton Botswana’s Largest Diamond Sewelô “rare find”, an unbroken 1,758 carat near gem quality diamond recovered in April 2019 Collaboration between Lucara (50%), Louis Vuitton (25%), HB Company (25%) – planning, cutting and polishing a collection of diamonds from Se
Slide 6: Record Recoveries
Record Recoveries 549 carat diamond recovered Recovered unbroken from the MDR (Mega Diamond Recovery) XRT circuit A diamond of exceptional purity Recovered from direct milling ore sourced from the EM/PK(S) unit of the South Lobe Follows the recent recovery of a gem quality 176 carat stone from the s
Slide 7: Historic Diamond Recoveries
Historic Diamond Recoveries Lucara has become renowned as one of the world’s foremost producers of large, gem quality diamonds Lesedi La Rona Constellation 1109 carat 813 carat Second largest Sold for a record gem diamond ever recovered US$63.1 million in the world 7
Slide 8: Lesedi La Rona & Constellation
Lesedi La Rona & Constellation The 1,109 carat Lesedi La Graded by the GIA, one of Rona was recovered in 2015 the world’s largest square and purchased by Graff in emerald cut diamond; 66 satellite 2017 for US$53 million diamonds were also resulting in the 302.37 carat cut ranging from <1 carat Graff
Slide 9: 2019 Highlights
2019 Highlights (All currency figures in U.S. Dollars, unless otherwise stated) Karowe Diamond Mine Clara Diamond Solutions Strong Balance Sheet & (100%) (100%) Dividend Policy Change Strong, stable operations for Fifteen sales completed for $22.4 million in dividends paid consecutive quarters in 20
Slide 10: Consistent Recovery of Large Diamonds
Consistent Recovery of Large Diamonds Specials contribute ~70% by revenue and ~5% by volume Revenue and production includes 2015 to 2019 Life of mine recovery of Since 2012: 15 diamonds in 10 diamonds sold for > US$ 10 157,000 carats of individual excess of 300 carats have million each (not included
Slide 11: Global Achieved Average Diamond Prices 2018/2019
Global Achieved Average Diamond Prices 2018/2019 (All figures in U.S. Dollars per carat) $2,131 $1,637 Lucara’s Average price ~4x Global Average $502 $468 $105 $79 $121 $122 $164 $133 $75 $73 $74 $63 2018 2019 2019 Median 11
Slide 12: Diamond Market
Diamond Market Long term fundamentals strong but pricing environment has been challenged; Evidence of market stability Rough diamond supply and demand Optimistic Demand 25 20 Base Demand Optimistic Supply 15 Base Supply 10 5 2000 2005 2010 2015 2020F 2025F 2030F Millennials will be the 2000‐2030: 20
Slide 13: 2019 Financial & Operational Highlights
2019 Financial & Operational Highlights Full Year ending December 31, 2019 (All currency figures in U.S. Dollars) Revenue (millions) Adjusted EBITDA(1) (millions) Average price ($/Carat)(1) $73.1 $502 $192.5 $60.5 $468 $176.2 Full Year 2018 Full Year 2019 Full Year 2018 Full Year 2019 Full Year 2018
Slide 14: 2020 Outlook
2020 Outlook (All currency figures in U.S. Dollars) $180 – $210 million 3.5 – 3.9 Million $32 – $36 per tonne Diamond Revenue Ore Tonnes Mined of ore processed Operating Cash Cost 350,000 – 390,000 2.5 – 2.8 million Diamond Sales (Carats) Ore Tonnes Processed 342 ct 370,000 – 410,000 3.6 – 4.2 milli
Slide 15: Karowe Underground
Karowe Underground Extending Mine-life to 2040 UG development will double the mine life from original 2010 Feasibility Study Resource work completed since November 2017 identified a much larger economic opportunity at depth, on the basis of new drilling and open pit recoveries UG would add ~ US$4 bi
Slide 16: Underground Feasibility Key Findings
Underground Feasibility Key Findings (All currency figures in U.S. Dollars) Updated geological resource Long hole shrinkage selected Strong Economics on both confirms increasing value as underground mining stand alone UG and OP+UG with depth method (700-310 masl) scenarios OP &UG Combined: Undergrou
Slide 17: Karowe Underground Next Steps
Karowe Underground Next Steps Based on the assumptions In the first half of The Company will also be The anticipated capital requirements used for this evaluation, the project shows 2020 reviewing in 2020 represent the Company will focus on financing options less than 10% positive detailed engineeri
Slide 18: Transforming the Diamond Sales Process
Transforming the Diamond Sales Process Using Innovation and Technology Opportunity to disrupt the existing supply Matched chain, driving efficiencies and unlocking value to buyer Rough diamonds are sold stone by stone based on polished demand Scan/ID Transparent supply chain for Diamond provenance i
Slide 19: Clara
Clara Clara sales platform 19 sales completed Manufacturers on with ~US$11 million the platform have grown of diamonds sold by value from 4 to 32 customers through the platform Nineteen sales between December 2018 and February 2020 Focus on growing supply and POSITIVE RESULTS demand concurrently thr
Slide 20: Sustainability
Sustainability Mokubilo Farm Initiative Community focused initiative to generate, broad based sustainable income Lucara’s Sustainability Report is prepared In 2018, Lucara became a UN GC participant Lucara is certified by the Responsible in accordance with the GRI Standards: and contributes to 10 of
Slide 21: Total Clarity
Total Clarity The facts on modern diamond mining Total Clarity Report by Trucost examined 150 metrics across the DPA members which comprise approximately 75% of the world’s diamond production with global operations including Botswana, Russia, South Africa, Lesotho, Australia, Zimbabwe and Tanzania.
Slide 22: Conclusions
Conclusions Lucara is a premier, mid-tier, investible diamond company, positioned for long term, sustainable growth High margin diamond producer Botswana - a low risk jurisdiction 813 ct Strong balance sheet Open pit mineable reserves to 2026, Underground reserves will double the mine life to 2040 A
Slide 23: Appendix: Operational Metrics
Appendix Operational Metrics
Slide 24: Diamond Sales Highlights 2019
Diamond Sales Highlights 2019 (All currency figures in U.S. Dollars) Total proceeds of $192.5 million (including Clara); Strong December tender; Higher carat recovery yoy Average Price $468/carat 30 diamonds which sold for > $1 million, including 7 for > $3 million 241 carat sold for $8.1 million; 1
Slide 25: 2019 Financial Highlights
2019 Financial Highlights Full Year ending December 31, 2019 (All currency figures in U.S. Dollars) Revenue (millions) Adjusted EBITDA(1) (millions) Net Income (millions) $73.1 $12.7 $192.5 $60.5 $11.7 $176.2 Full Year 2018 Full Year 2019 Full Year 2018 Full Year 2019 Full Year 2018 Full Year 2019 A
Slide 26: 2019 Operational Highlights
2019 Operational Highlights Full Year ending December 31, 2019 Ore mined (tonnes) Ore processed (tonnes) 2,804,517 3,303,375 2,629,048 3,113,363 Full Year 2018 Full Year 2019 Full Year 2018 Full Year 2019 Carats recovered (carats) Carats sold (carats) Operating margin (%) 433,060 411,732 57% 60% 366
Slide 27: Karowe Carat Production by Source 2014 - 2019
Karowe Carat Production by Source 2014 - 2019 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2014 2015 2016 2017 2018 2019 North Centre South EMPK(S) 27
Slide 28: Karowe Mineral Resource Update
Appendix Karowe Mineral Resource Update
Slide 29: Mineral Resource Update 2019
Mineral Resource Update 2019 An update to the mineral resource and Internal geology of the south lobe is 2019 Update utilised historical drilling and geological model increased the extent of dominated by two domains EM/PK(S) and sampling data augmented by detailed logging, the Indicated resource of
Slide 30: Mineral Resource Update 2019
Mineral Resource Update 2019 Indicated 250 masl Inferred 30
Slide 31: Karowe Underground
Appendix Karowe Underground
Slide 32: Underground Mine Design
Underground Mine Design Long hole shrinkage Trade off assessed block cave, sub level cave, and assisted block cave Capacity 2.6 mtpa from UG mining Geotechnical testing results did not support caving Life 13-year UG production or caving with preconditioning Higher value ore lies deeper and is attrib
Slide 33: Vent. Shaft and Prod. Shaft
Karowe Underground Mine Design Prod. Shaft (767 m deep) Vent. Shaft (717 m deep) Final Pit 680 Level 580 Level Total development: 16,300 m lateral 2,800 m vertical 480 Level 380 Level 310 Level 33
Slide 34: Stope Design and Sequence
Stope Design and Sequence Kimberlite skin left until drawdown to support Mining advances upwards carbonaceous shales in 17.5m average high lifts Drawdown 200 m (50%) vertical mining within competent Muck is left in stope for sidewall granite; Payback while in support until all blasting is granite ho
Slide 35: Diamond Pricing
Diamond Pricing Karowe Underground Model $/ct models are a function of Current Value models adjust size frequency distribution for market downturn in high 327 ct (SFD) and value per size class colour large goods SFD models are constructed 2014-2019 LOM average on very robust datasets, prices are wei
Slide 36: Karowe Open Pit + Underground Metrics
Karowe Open Pit + Underground Metrics (All currency figures in U.S. Dollars) 7.84 million Carats 50 million tonnes NPV $1,266 million LOM diamonds produced Ore mined Pre-tax @ 5% discount 56 million tonnes $2.2 billion Cash Flow ore treated NPV $718 million From 2020-2040 Post-tax @ 5% discount Pre-
Slide 37: Karowe Open Pit + Underground Production by Source
Karowe Open Pit + Underground Production by Source Open Pit Underground 600 Underground 100% South Lobe – 500 Highest Value Ore Yearly Production KCt 400 300 200 100 0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 EM/PK(S) M/PK(S) North/Cent
Slide 38: Karowe Production Carats by Source
Karowe Production Carats by Source (All currency figures in U.S. Dollars) 2019 Carats by Source UG Carats By Source 2025-39 South Lobe Ore 82% South Lobe Ore 100% 9% 9% 25% 36% Average Price Average Price $468/carat $725/carat 64% 57% EM/PK(S) M/PK(S) Centre North EM/PK(S) M/PK(S) Production schedul
Slide 39: Underground Estimated Pre-production Capital
Underground Estimated Pre-production Capital (All currency figures in U.S. Dollars) $51.6 $46.9 $161.5 $47.7 Total Pre -Production $19.6 Capital Costs $1.6 $514 $5.9 million $0.1 $161.0 $18.8 Mining - Shaft Mining - non-shaft Bulk Earthworks Process Plant Onsite Infrastructure Buildings & Facilities
Slide 40: Underground Only Opex Estimate
Underground Only Opex Estimate (All currency figures in U.S Dollars) Estimate Estimate Area ($/t milled) ($/carat) UG Mining $8.53* $57 Processing $15.70 $104 G&A $6.33 $42 Total $30.57 $202 *excluding $1.20 /t for mine overheads captured in G&A 40
Slide 41: High Margin Operation Cash Cost Summary
High Margin Operation (Open Pit + Underground) (All currency figures in U.S Dollars) $1,000 Cash Cost Summary ($/ct) $900 $800 Mining $56 $700 $600 Processing $108 $500 Margin $522/ct $400 On Site G&A $40 $300 Total $204 $200 $100 Average Operating Cost* $204/ct Carat margin $522 $0 * Non IFRS Measu
Slide 42: Combined Open Pit + Underground Post-tax Cash Flow
Combined Open Pit + Underground Post-tax Cash Flow (All currency figures in U.S. Dollars) 150 1500 100 1000 Cumulative CF $millions Annual CF $millions 50 500 0 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 0 0 -50 -500 -100 -100
Slide 43: Underground High Level Indicative Schedule
Underground High Level Indicative Schedule 2020 2021 2022 2023 2024 2025 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Activity Preparation Detailed Engineering Detailed Schedule Permitting BPC Powerline Permitting and Eng. Early Procurement Early Recruitment Underground Development
Slide 44: Capital Structure
Capital Structure ~C$330M 402.5M (December 2019) Market Cap LUC Fully diluted Shares Lucara is a publicly listed $Nil US$11.2M company trading under (December 2019) (December 2019) the symbol “LUC” Working capital facility Cash on hand US$50.0M (available) TSX 396.9M (December 2019) Credit Facility
Slide 45: 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 LucaraDiamond.com | LUC.TSX | LUC.XSTO | LUC.BSE
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