Lucara Diamond Corp. · TSX:LUC
Lucara Diamond — Investor Presentation (March 2016)
28 slides from Lucara Diamond's investor presentation, March 2016
Slide 1: Where Bigger Is
Where Bigger Is March 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: Lucara Diamond Corp.
Lucara Diamond Corp. 3
Slide 4: 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 5: 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 $33.5 - $36.5 per tonne processed • Capital expenditure of up to $15 - $18 million (meg
Slide 6: Capital Structure
Capital Structure • Lucara is a public Company listed under the symbol “LUC” • TSX • NASDAQ OMX (Sweden) • BSE (Botswana) • Issued shares 380M • Fully diluted shares 381M • Debt Nil • Cash on hand US$ 134.8 million (YE 2015) • Progressive dividend CDN $0.06 per share 6
Slide 7: Focused on Southern Africa
Focused on Southern Africa Karowe Mine Boteti Exploration 100% Owned Block A & E Production BK 02, AK 11, 12, 13 and 14 7
Slide 8: The Karowe Mine - Botswana
The Karowe Mine - Botswana 8
Slide 9: Geological Model Plan View of 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 10: Resource
Resource • Large diamonds continue to be recovered across the surface area of the AK6 kimberlites and at depth N S 336cts North Central South Lobe Lobe Lobe Kimberlite extent showing location of large gem diamond recoveries 10
Slide 11: Resource Performance
Resource Performance • Resource continues to deliver a significant quantity of stones greater than 10.8 carats with more than 727 being recovered during 2015 at an average stone size of 36.7 carat/stone • During 2015, 47 diamonds larger than 100 carats were recovered including 20 larger than 200 car
Slide 12: Sales Update
Sales Update • In 2015 - 377,136 carats of diamond were sold for gross proceeds of $223.8 million or $593 per carat. • Exceptional Stone Tenders: • 2015 - $98.4 million ($31,597 per carat) • First EST of 2016 announced – April 2016 Lucara Exceptional Stone Sales (with values greater than $250,000) 1
Slide 13: Historical Recoveries
Historical Recoveries • In Dec 2015, the Company announced the recovery of two very special diamonds. • The Lesedi La Rona is the largest gem quality stone to have been recovered in more than 100 years weighing 1,109 carats (post cleaning). Lesedi La Rona, the second largest gem quality 813 carat di
Slide 14: Karowe Operating Performance
Karowe Operating Performance Net Income Operating Earnings (millions) (millions) Variance +70.2% +61.5% 2015 2014 $77.8 % $0.21 Mining and Process $45.7 $0.13 Ore processed (t) 2,238,974 2,421,506 -8% Carats recovered (cts) 365,690 430,292 -15% Plant feed grade (cpht) 16.3 17.7 -8% Waste mined (t) 1
Slide 15: Botswana Exploration
os ¥) we “" rh ) = SSRN CRG ae, Botswana Exploration 15
Slide 16: Resource Replacement
Resource Replacement Prospecting Licenses (PLs) • Boteti awarded 2 PLs in mid- Sept 2014 • Both PLs host known diamondiferous kimberlites • Block A (BK02) • Block E (AK11, 12, 13, 14) 16
Slide 17: Prospecting License: Block A – BK02
Prospecting License : Block A – BK02 Work Plan • Bulk sampling activities at BK02 were 50% complete at year end and processing of the surface sample was initiated during Q4 2015. • The BK02 diamond results will be released once processing of the sample is complete – forecast during the first half of
Slide 18: Prospecting License: Block E – AK11, 12, 13, 14
Prospecting License : Block E – AK11, 12, 13, 14 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 constrai
Slide 19: 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 20: Contact Information
Contact Information Ph. 604-689-7842 lucara@namdo.com Email and Web Phone and Fax Address Suite 2000 885 West Georgia St. Fx. 604-689-4250 Vancouver, B.C. www.lucaradiamond.com Canada V6C 3E8
Slide 21: The Diamond Market
The Diamond Market 21
Slide 22: Our Business: 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 23: 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 24: Global Rough Diamond Production
Global Rough Diamond Production Annual production - Carats 200 Millions 176 176 180 168 159 163 Botswana 160 DRC 140 133 130 128 South Africa 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 Source: Kimberley Proc
Slide 25: Expected New Mine Production
Expected New Mine Production Bain & Company – The Global Diamond Report 2013 25
Slide 26: 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 26
Slide 27: Polished Diamonds 101
Polished Diamonds 101 Scan technology used extensively even on very small rough diamonds 27
Slide 28: Lucara versus World Production (est.)
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 28