Lucara Diamond Corp. · TSX:LUC
Lucara Diamond — Corporate Update (December 2019)
41 slides from Lucara Diamond's corporate update, December 2019
Slide 1: Corporate Update
Corporate Update December 2019 LucaraDiamond.com | LUC.TSX | LUC.XSTO | LUC.BSE
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 $200 million; $271 million in dividends paid since 2014 Innovative Design - First diamond mine to use s
Slide 4: Q3 2019 Highlights
Q3 2019 HIGHLIGHTS (All currency figures in U.S. Dollars, unless otherwise stated) Karowe Diamond Mine Clara Diamond Strong Balance (100%) Solutions (100%) Sheet & Dividend Policy Change Strong, stable operations for third Five sales successfully consecutive quarter in 2019 completed in Q3 2019; Qua
Slide 5: 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 Constellati Rona 1109 on 813 carat carat Second largest Sold for a gem diamond record ever recovered $63.1 M USD in the world 5
Slide 6: Lesedi La Rona & Constellation
LESEDI LA RONA & CONSTELLATION The 1,109 carat Lesedi La Rona was recovered in 2015 and purchased by Graff in 2017 for US$53 million resulting in the 302.37 carat Graff Lesedi La Rona; Graded by the GIA, one of the world’s largest square emerald cut diamonds; 66 satellite diamonds were also cut rang
Slide 7: 2019 Record Diamond Recovery
2019 RECORD DIAMOND RECOVERY Sewelô, an unbroken 1,758 carat near gem quality diamond recovered in April 2019; largest diamond from Karowe to date One of the largest diamonds in the world and the largest for Botswana A ‘kernel’ stone of clean white material with windows through the diamond, domain o
Slide 8: Safety, Health, Environment & Community Relations
SAFETY, HEALTH, ENVIRONMENT & COMMUNITY RELATIONS Very Strong safety Mokubilo Farm record Initiative First Place Winner – Community Botswana Chamber of focused initiative to Mines Inter-Mines First generate, broad Aid Competition based sustainable income Phase 1: butternut, tomatoes, peppers and egg
Slide 9: Sustainability
SUSTAINABILITY Lucara’s Sustainability Report is prepared in accordance with the GRI Standards: Core option, and selected G4 Mining and Metals Sector Disclosures In 2018, Lucara became a UN GC participant and contributes to 10 of the 17 UN SDGs Lucara is certified by the Responsible Jewellery Counci
Slide 10: 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 11: Diamond Market
DIAMOND MARKET Long term fundamentals strong but pricing environment in short to medium term is challenged, De Beers and Alrosa sales at lowest levels since 2017, mid-stream continues to struggle, polished demand weak Millennials will be the ROUGH DIAMOND Overlap of supply and demand in highest‐spen
Slide 12: Lucara Diamond Sales 2019 YTD
LUCARA DIAMOND SALES 2019 YTD (All amounts in U.S. Dollars unless otherwise indicated) • A total of 313,189 carats were sold for gross revenue of $136.5 million, $436/carat • 19 diamonds which sold for > $1 million, including 6 for > $3 million • 115 carat sold for $3.66 million; 77 carat faint pink
Slide 13: Consistent Recovery of Large Diamonds
CONSISTENT RECOVERY OF LARGE DIAMONDS REVENUE AND PRODUCTION Includes 2015 to 2018 Specials contribute ~70% by revenue and ~5% by volume • Life of mine recovery of 152,000 carats of individual stones 100% > 10.8ct (over 5,318 diamonds) 80% • Since 2012: 15 diamonds in excess of 300 carats have been
Slide 14: Global Achieved Average Diamond Prices 2018/2019
GLOBAL ACHIEVED AVERAGE DIAMOND PRICES 2018/2019 (All amounts in U.S. Dollars per carat unless otherwise indicated) $2,131 $1,608 Lucara’s Average price ~4x Global Average 2018 2019 Year to Date 2019 Median $122/ct $502 $436 $164 $105 $79 $121 $122 $126 $75 $72 $74 $64 Gem Lucara Stornoway Petra Alr
Slide 15: YTD 2019 Operational Highlights
YTD 2019 OPERATIONAL 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 OPER
Slide 16: 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 17: 2020 Outlook
2020 OUTLOOK (all amounts 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 million DIAMON
Slide 18: Transforming the Diamond Sales Process
TRANSFORMING THE DIAMOND SALES PROCESS Using Innovation and Technology Opportunity to disrupt the existing supply chain, driving efficiencies and unlocking value Rough diamonds are sold stone by stone based on polished demand Diamond provenance is assured Exclusive collaboration with Sarine Technolo
Slide 19: Clara Sales Platform 2019
CLARA SALES PLATFORM 2019 • 15 sales completed year to date with ~$8million of diamonds sold by value Fifteen sales between through the platform; 16th sale ongoing December 2018 and December 2019 • Frequency of sales and number of POSITIVE RESULTS participants increasing • Manufacturers on the platf
Slide 20: 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 ~ U
Slide 21: 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 22: Mineral Resource Update 2019
MINERAL RESOURCE UPDATE 2019 • An update to the mineral resource and geological model increased the extent of the Indicated resource of the high value South Lobe between 400 and 250 masl and increased the depth of South Lobe Inferred to 66masl (previously 250masl) • Internal geology of south lobe is
Slide 23: Mineral Resource Update 2019
MINERAL RESOURCE UPDATE 2019 Indicated 250 masl Inferred 23
Slide 24: Diamond Pricing: Karowe Underground Model
DIAMOND PRICING: KAROWE UNDERGROUND MODEL • $/ct models are a function of size frequency distribution a (SFD) and value per size class • SFD models are constructed on very robust datasets, informed and reconciled by over 7 years of production • Value based on actual sales: Lucara rough price book, s
Slide 25: UG Mine Design: Long Hole Shrinkage
UG MINE DESIGN:LONG HOLE SHRINKAGE • Trade off assessed block cave, sub level cave, assisted block cave • Geotechnical testing results did not support caving or caving with preconditioning • Higher value ore lies deeper and is attributable to higher grade and value EM/PK(S) • Long Hole Shrinkage (LH
Slide 26: Karowe Underground Mine Design
KAROWE UNDERGROUND MINE DESIGN Prod. Shaft (767 m deep) Vent. Shaft (717 m deep) Final Pit 680 Level 580 Total Level development: 16,300 m lateral 2,800 m vertical 480 Level 380 Level 310 Level 26
Slide 27: Stope Design and Sequence
STOPE DESIGN AND SEQUENCE Kimberlite skin left Mining advances upwards in 17.5 m Stoping until drawdown to support average high lifts carbonaceous shales Muck is left in stope for sidewall support Drawdown 200 m (50%) until all blasting is vertical mining complete. Only within competent swell is ext
Slide 28: Indicative Production Schedule
INDICATIVE PRODUCTION SCHEDULE 3,000,000 Open Pit Underground 160 140 2,500,000 120 Material Milled (tonnes) 2,000,000 Value / Tonne ($/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 29: 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 30: Karowe Underground + Open Pit
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 Mtpa POST-TAX @ 8% DISCOUNT PRE-TAX MAINTAINS CURRE
Slide 31: Underground Estimated Pre-Production Capital
UNDERGROUND 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 $514 Million Offsite Infrastructure Project
Slide 32: High Margin Operation
HIGH MARGIN OPERATION (All amounts in US$) (US$) $1,000 Cash Cost Summary ($/ ct) $900 Mining $56 $800 Processing $108 $700 On Site G&A $40 $600 Margin Total $204 $522/ct $500 Carat margin $522 $400 $300 Average $200 Operating $100 Cost* $204/ct $0 32 * Non IFRS Measure
Slide 33: Underground Only Opex Estimate
UNDERGROUND ONLY OPEX ESTIMATE (All amounts in US $) Estimate Estimate Area ($/t milled) ($/carat) UG Mining 8.53* 57 Processing 15.70 104 G&A 6.33 42 Total 30.57 202 * *excluding Excluding $1.20/t$1.20 for mine/toverheads for mine overheads captured in G&A captured in G&A 33
Slide 34: Combined OP Post-Tax Cash Flow
COMBINED OP POST-TAX CASH FLOW (All Amounts In U.S. Dollars ) 150 1500 100 1000 CUMULATIVE CF US$M ANNUAL CF US$M 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 -1000 Annual Cash Flow Cumulative Cash Flo
Slide 35: 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 36: 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 37: Conclusions
• High margin diamond producer CONCLUSIONS • Botswana - a low risk jurisdiction • Strong balance sheet Lucara is a premier, mid-tier, investible diamond company, • Open pit mineable reserves to 2026, Underground reserves will double the positioned for long term, mine life to 2040 sustainable growth
Slide 38: Capital Structure
CAPITAL STRUCTURE LUC ~C$325M 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 39: 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
Slide 40: Polished Price Erosion 2017 - 2019
POLISHED PRICE EROSION 2017 - 2019 10ct/20ct Polished Round (D, IF/F) 100 95 90 Price Index Jan 2015 = 100 85 80 75 70 65 60 55 50 Q1/17 Q2/17 Q3/17 Q4/16 Q1/18 Q2/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 20ct D IF 10ct D F
Slide 41: Karowe Carat Production by Source 2014 - 2019
KAROWE CARAT PRODUCTION BY SOURCE 2014 - 2019 100% 90% 80% 70% 60% EMPKS 50% South Centre 40% North 30% 20% 10% 0% 2014 2015 2016 2017 2018 EOM Oct 2019