Lucara Diamond Corp. · TSX:LUC
Lucara Diamond — Q3 2019 Earnings Presentation
36 slides from Lucara Diamond's earnings presentation, Nov 5, 2019
Slide 1: Karowe Underground Feasibility 2019
Karowe Underground Feasibility 2019 November 5, 2019 LucaraDiamond.com | LUC.TO
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT Forward‐looking information uncertainties describe under Risks and Uncertainties disclosed under the heading “Risk Factors” in the Company’s most recent Annual Information This investor presentation contains forward‐looking statements and Form available at http://www.sedar.com.
Slide 3: Karowe Diamond Mine
KAROWE DIAMOND MINE • High operating margin (>60% LOM) sustained since production began in 2012 • 2.64 million carats sold, $1.49 billion in revenue in under 7 years • Total capital investment less than US$200 million • US$271 million in dividends paid since 2014 • Consistent recovery of high value
Slide 4: Karowe Diamond Mine
KAROWE DIAMOND MINE • UG development will double the mine life from original 2010 FS • Resource work completed since November 2017 identified a much larger economic opportunity at depth, on the basis of new drilling and open pit recoveries • UG would add ~ US$ 4 billion in additional revenue • + US$
Slide 5: Underground Feasibility Key Findings
UNDERGROUND FEASIBILITY KEY FINDINGS All currency figures in US Dollars, unless otherwise stated Updated geological Long hole shrinkage Strong Economics resource confirms selected as on both stand alone increasing value with underground mining UG and OP+UG depth method (700-310 masl) scenarios Under
Slide 6: Karowe Feasibility Team and Contributors
KAROWE FEASIBILITY TEAM AND CONTRIBUTORS Industry Leading Mine Builders Feasibility Study Lead, mine design , engineering, infrastructure, logistics, financial JDS Energy and modelling, Mining Inc. Industry veterans including Gord Doerksen, Trace Arlaud, Peer review Iain Ross, Andre Van As, Mu
Slide 7: Study Elements
STUDY ELEMENTS Stakeholders • Early engagement with Government of Botswana • Permitting and consultation framework in final preparation Comprehensive Dataset and Analysis • Geotechnical and delineation core drilling (23,000 metres, 33 holes) • Detailed core logging and geotechnical data collection •
Slide 8: Mineral Resource Update
MINERAL RESOURCE UPDATE • Mineral Resource and Geological model updated with recent 2018-2019 drilling • Converted South lobe resource to Indicated between 400 and 250 masl • Increased depth of South Lobe Inferred to 66masl (previously 250masl) • Internal geology of south lobe is dominated by two do
Slide 9: Mineral Reserve Statement
MINERAL RESERVE STATEMENT Ore Contained Carats Price Lobe - Type Classification Diluted Grade (cpht) (Mt) ('000s ct) (US$/ct) Open Pit North Probable 0.6 10.0 56 222 Centre Probable 3.2 15.1 478 349 South – EM/PK(S) Probable 3.6 23.9 850 777 South – M/PK(S) Probable 10.2 10.8 1,098 631 Open Pit Tota
Slide 10: Diamond Pricing: Karowe Underground Model
DIAMOND PRICING: KAROWE UNDERGROUND MODEL • $/ct models are a function of size frequency distribution a (SFD) and value per size class • SFD models are constructed on very robust datasets, informed and reconciled by over 7 years of production • Value based on actual sales: Lucara rough price book, s
Slide 11: Mineral Resource Estimate
MINERAL RESOURCE ESTIMATE Indicated 250 masl Inferred 11
Slide 12: UG Mine Design: Long Hole Shrinkage
UG MINE DESIGN:LONG HOLE SHRINKAGE • Trade off assessed block cave, sub level cave, assisted block cave • Geotechnical testing results did not support caving or caving with preconditioning • Higher value ore lies deeper and is attributable to higher grade and value EM/PK(S) • Long Hole Shrinkage (LH
Slide 13: Karowe Underground Mine Design
KAROWE UNDERGROUND MINE DESIGN Prod. Shaft (767 m deep) Vent. Shaft (717 m deep) Final Pit 680 Level 580 Total Level development: 16,300 m lateral 2,800 m vertical 480 Level 380 Level 310 Level 13
Slide 14: Karowe Underground Mine Design
KAROWE UNDERGROUND MINE DESIGN Shaft Access Shafts Diameter Depth Elevation Notes Production 7.5m 765m 245masl 2 x 21 tonne skips, service cage, fresh air intake Ventilation 6.0m 715m 295masl heavy lift hoist, secondary egress, ventilation exhaust 8 Levels Extraction Level Design Levels Access Purpo
Slide 15: Stope Design and Sequence
STOPE DESIGN AND SEQUENCE Kimberlite skin left Mining advances upwards in 17.5 m Stoping until drawdown to support average high lifts carbonaceous shales Muck is left in stope for sidewall support Drawdown 200 m (50%) until all blasting is vertical mining complete. Only within competent swell is ext
Slide 16: South Lobe Recoverable Carats by Level
SOUTH LOBE RECOVERABLE CARATS BY LEVEL Recoverable Carats (kc) 0 50 100 150 200 250 300 350 400 450 775 750 725 700 675 650 625 600 Elevation (masl) 575 550 525 500 475 450 425 400 375 350 MPK 325 300 EMPK 275 250 16
Slide 17: Indicative Production Schedule
INDICATIVE PRODUCTION SCHEDULE 3,000,000 Open Pit Underground 160 140 2,500,000 120 Material Milled (tonnes) 2,000,000 Value / Tonne ($/t) 100 1,500,000 80 60 1,000,000 40 500,000 20 - - 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 UG-South
Slide 18: FS Combined OP/UG Production Metrics
FS COMBINED OP/UG PRODUCTION METRICS Carat Production 600 9000 Open Pit Underground Production Metrics OP UG Base Case 8000 500 7000 Waste Tonnes mined (millions) 13.43 400 6000 Ore Tonnes mined (millions) 49.97 Yearly Production KCt Cumulative KCt 5000 Processed Tonnes (millions) 56.03 300 4000 Rec
Slide 19: Estimated Pre-Production Capital
KAROWE UNDERGROUND FEASIBILITY ESTIMATED PRE-PRODUCTION CAPITAL (All amounts in U.S. Dollars ) $51.60 $161.50 $46.90 Mining - Shaft Mining - non-shaft Bulk Earthworks Total Pre-Production Process Plant $47.70 Capital Costs Onsite Infrastructure Buildings & Facilities $19.60 $514 Million Offsite Infr
Slide 20: 2019 Karowe Underground Feasibility Stand-Alone Scenario
2019 KAROWE UNDERGROUND FEASIBILITY STAND-ALONE SCENARIO (all amounts in U.S. Dollars, UG carats only) $ 35 M Tonnes @15 Long Hole Shrinkage NPV $454 M / 20.8% IRR Cpht BETWEEN 700-310 masl PRE-TAX @ 8% DISCOUNT NI 43-101 INDICATED NPV $226 M / 16.0% IRR RESOURCE 5.1 M Carats @ $725/Carat 7,200 tpd
Slide 21: 2019 Karowe Underground + Open Pit
2019 KAROWE UNDERGROUND + OPEN PIT (All Amounts In U.S. Dollars ) $ 7.84 million Carats 50 M Ore Tonnes Mined NPV $945 M LOM DIAMONDS PRODUCED 56 M Ore Tonnes PRE-TAX @ 8% DISCOUNT Treated $2.2 billion Cash FROM 2020-2040 NPV $536 M Flow 7,200 tpd / 2.6 Mt/a POST-TAX @ 8% DISCOUNT PRE-TAX MAINTAINS
Slide 22: Pre-Production Capital Breakdown with OP and UG Sustaining Capex
PRE-PRODUCTION ESTIMATED CAPITAL BREAKDOWN WITH OP and UG SUSTAINING CAPEX (all amounts in U.S. Dollars ) Pre-Production Sustaining/Closure Total Capital Costs (US$M) (US$M) (US$M) Mining 321.5 38.1 359.6 Bulk Earthworks 18.8 - 18.8 Process Plant 0.1 87.8 87.9 Tailings - 30.7 30.7 Onsite Infrastruct
Slide 23: High Margin Operation
HIGH MARGIN OPERATION (All amounts in US $) (US$) $1,000 $900 Cash Cost Summary (US$/ ct) $800 Mining $56 $700 Processing $108 $600 Margin US$522/ct On Site G&A $40 $500 Total $204 $400 Carat margin $522 $300 Average $200 Operating $100 Cost* US$204/ct $0 * Non IFRS Measure 23
Slide 24: UG Mining Opex Summary
UG MINING OPEX SUMMARY Unit Cost Unit Cost LOM Estimate Area ($/t milled) ($/carat) (M$) Mine Development 0.22 1.5 7.5 Production Stoping 2.84 18.8 94.9 Crushing & Hoisting 1.87 12.4 62.7 Mine Maintenance 1.06 7.0 35.3 Mine General 2.14 14.2 71.5 Contingency 0.41 2.7 13.6 Total 8.53 56.5 285.6 *excl
Slide 25: UG Only Opex Estimate
UG ONLY OPEX ESTIMATE 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 $1.20 /t for mine overheads captured in G&A 25
Slide 26: Annual CF US$M
ANNUAL CF US$M 100 150 -100 50 -50 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Annual Cash Flow 2030 OP UG POST-TAX CASH FLOW 2031 2032 2033 2034 2035 2036 Cumulative Cash Flow 2037 2038 2039 2040 2041 0 0 0 500 -500 1000 1500 -1000 CUMULATIVE CF US$M 26
Slide 27: Sensitivities
SENSITIVITIES Sensitivity analyses were performed using diamond prices, mill head grade, CAPEX, and OPEX as variables. The value of each variable was changed plus and minus 20% independently while all other variables were held constant. The Project is most sensitive to the diamond price and head gra
Slide 28: High Level Indicative Schedule
HIGH LEVEL INDICATIVE SCHEDULE 2020 2021 2022 2023 2024 2025 Activity Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Preparation Detailed Engineering Detailed Schedule Permitting BPC Powerline Permitting and Eng. Early Procurement Early Recruitment Underground Development Shaft Grout
Slide 29: Next Steps
NEXT STEPS • Based on the assumptions used for this evaluation, the project shows positive economics and should proceed to detailed engineering, financing and construction. • In the first half of 2020, the Company will focus on detailed engineering and early procurement initiatives. • The Company wi
Slide 30: Third Quarter 2019 Results
Third Quarter 2019 RESULTS November 5, 2019 Conference Call LucaraDiamond.com | LUC.TO
Slide 31: Q3 2019 Highlights
Q3 2019 HIGHLIGHTS All currency figures in U.S. Dollars, unless otherwise stated Karowe Diamond Mine 100% Owned Strong Balance Strong, stable operations for third Clara Diamond Sheet & Dividend consecutive quarter in 2019 Solutions Policy Change 0.68 million tonnes of ore Five sales successfully Qua
Slide 32: YTD 2019 Financial Highlights
YTD 2019 FINANCIAL HIGHLIGHTS Nine months ended September 30, 2019 (All amounts in U.S. Dollars unless otherwise indicated) REVENUE ADJUSTED NET INCOME (MILLIONS) EBITDA(1) (MILLIONS) (MILLIONS) $135.6 $136.5 $55.7 $50.2 $17.8 $4.0 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 AVERAGE PRICE OPERAT
Slide 33: YTD 2019 Operational Highlights
YTD 2019 OPERATIONAL HIGHLIGHTS Nine months ended September 30, 2019 (All amounts in U.S. Dollars unless otherwise indicated) ORE MINED ORE (TONNES) PROCESSED (TONNES) 2,550,084 2,608,785 2,026,672 2,157,015 Q3 2018 Q3 2019 Q3 2018 Q3 2019 CARATS CARATS SOLD OPERATING RECOVERED (CARATS) MARGIN (CARA
Slide 34: 2019 Outlook
2019 OUTLOOK (all amounts in U.S. Dollars) $170 – $180 million (revised) 3.0 – 3.4 million $32 – $34 per tonne DIAMOND REVENUE ORE TONNES MINED of ore processed (revised) OPERATING CASH COST 400,000 – 425,000 (revised) 2.5 – 2.8 million DIAMOND SALES (CARATS) ORE TONNES PROCESSED 342 ct 400,000 – 42
Slide 35: Capital Structure
CAPITAL STRUCTURE LUC ~C$421M US$4.8M (September 2019) Lucara is a publicly MARKET CAP listed company US$50.0M (available) Credit Facility trading under the symbol “LUC” $Nil (September 2019) CASH ON HAND WORKING CAPITAL FACILITY TSX 22% NASDAQ Sweden Fully Diluted Basis 396.9M (September 2019) ISSU
Slide 36: 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.TO