Lucara Diamond Corp. · TSX:LUC
Lucara Diamond — Q2 2021 Earnings Presentation
39 slides from Lucara Diamond's earnings presentation, Aug 11, 2021
Slide 1: Q2 2021 Results: Karowe Underground Expansion Update
Q2 2021 Results Karowe Underground Expansion Update AUGUST 11, 2021 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-looking Certain of the statements made and contained he
Slide 3: Q2 2021 Highlights
Q2 2021 Highlights (All currency figures in U.S. Dollars, unless otherwise stated) Karowe Diamond Mine Clara Diamond Solutions Balance Sheet & Liquidity $46.3 million in revenue in Q2; average 6 sales in Q2 2021; 38% increase in volume Executed loan documentation for a price per carat of $671 transa
Slide 4: COVID-19 Response
COVID-19 Response Health & Well-Being Focus As mining has been designated an essential service in Botswana, the Karowe mine has remained fully operational throughout the pandemic. COVID-19 measures and guidelines, which were implemented by the Government of Botswana in late March 2020, remain in pla
Slide 5: Consistent Recovery of Large Diamonds
Consistent Recovery of Large Diamonds Specials contribute ~70% by revenue and ~5% by volume historically Revenue and production includes 2015 to 2020 Life of mine recovery of Since 2012: 24 diamonds in 11 diamonds sold for > US$ 10 +198,000 carats of excess of 300 carats have million each (not inclu
Slide 6: Supply Agreement with HB Antwerp Extended
Supply Agreement with HB Antwerp Extended +10.8 Carat “Specials” Includes all +10.8 carat “specials” produced from the Karowe Mine 24-month extension to December 2022 Initial price is based on an estimated polished outcome, determined through state of the art scanning and planning technology, with a
Slide 7: Collaboration Agreement on Sethunya with Louis Vuitton and HB Antwerp
Collaboration Agreement on “Sethunya” with Louis Vuitton and HB Antwerp Revenue in 2021 549 carat white gem diamond “Sethunya”, meaning flower in Setswana, recovered from the Karowe Mine in February 2020 Lucara, Louis Vuitton and HB will collaborate and plan the creation of the highest value polishe
Slide 8: Diamond Market
Diamond Market Strong market due to healthy supply & demand balance; Increasing price performance in all sizes and qualities Longer term outlook remains strong supported by supply constraints Rough natural diamond supply and demand ($ billions) Forecast 20 Optimistic Demand 15 Conservative Demand Op
Slide 9: Clara
Clara Digital sales platform (1 to 15 carat) All currency figures in U.S. Dollars 53 sales completed since inception Buyers on the platform increased from ~$38.1 million 75 to 84 in 2021: of diamonds sold by value Wait-list being maintained through the platform Fifty-three sales between December 201
Slide 10: Q2 2021 Financial Highlights
Q2 2021 Financial Highlights Three months ending June 30, 2021 (All currency figures in U.S. Dollars) Adjusted EBITDA (1) (millions) Net income (loss) (millions) $22.2 $6.0 Q2 2020 Q2 2021 Q2 2020 Q2 2021 -$10.0 -$13.9 Revenue (millions) Average Price ($/Carat) Cash flow from operations per share (1
Slide 11: H1 2021 Financial Highlights
H1 2021 Financial Highlights Six months ending June 30, 2021 (All currency figures in U.S. Dollars) Average Price (Average $/Carat) (1) Operating Cost ($ per tonne processed)(1) Cash flow from operations per share(1) $618 $0.11 $27.14 $28.79 $268 $0.00 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021
Slide 12: Q2 2021 Operational Highlights – Karowe Mine
Q2 2021 Operational Highlights – Karowe Mine Three months ending June 30, 2021 (All currency figures in U.S. Dollars) Ore mined (tonnes) Ore processed (tonnes) 705,421 726,379 1,020,267 683,282 Q2 2020 Q2 2021 Q2 2020 Q2 2021 Carats recovered (carats) Carats sold (carats) Operating cost per carat so
Slide 13: Sales Channels Q2 2021
Sales Channels Q2 2021 Sales through Clara, HB Antwerp and Quarterly Tender • All +10.8 carat stones are sold through HB Antwerp; only high value Specials (+10.8 carats) are manufactured and sold as polished • Higher quality diamonds between 1 and 10 carats are sold through Clara; all other diamonds
Slide 14: 2021 Annual Guidance Updated
2021 Annual Guidance Updated (All currency figures in U.S. Dollars) Karowe Diamond Mine Full Year - 2021 Diamond revenue $180 million to $210 million Diamond sales 350,000 to 390,000 carats Diamonds recovered 340,000 to 370,000 carats Ore tonnes mined (revised) 3.8 million to 4.2 million* Waste tonn
Slide 15: Karowe Underground Expansion Project Update
Karowe Underground Expansion Project Update AUGUST 11, 2021 LucaraDiamond.com | LUC.TSX | LUC.XSTO | LUC.BSE
Slide 16: Karowe Underground Expansion Project
Karowe Underground Expansion Project Fully financed project with operating cash flow from the Karowe open pit supported by $220 Million project finance facilities and $33 Million equity financing Karowe mine life extended to at least 2040, adding approximately $4 Billion of additional revenue based
Slide 17: Karowe Underground Expansion Project
Karowe Underground Expansion Project LHS mining method allowing for early access to the EM/PK(S) unit with minimal dilution, less than 3 year payback, All necessary permits, including a mining license extension to 2046 have been obtained to support Project activities. Lucara has adopted IFC Performa
Slide 18: Karowe Underground Expansion Project Update
Karowe Underground Expansion Project Update • No material variances between the 2019 feasibility study (“2019 FS”) and current project design following the completion of detailed design and engineering work undertaken in 2020 and 2021. • Due to COVID-19 related delays pre-sink was delayed by 1 year,
Slide 19: Karowe Underground Mine Design
Karowe Underground Mine Design 19
Slide 20: Stope Design and Sequence
Stope Design and Sequence Stoping Kimberlite skin left until drawdown to support Mining advances upwards carbonaceous shales in 17.5 m average high lifts Drawdown 200 m (50%) vertical mining within competent Muck is left in stope for sidewall granite, minimal dilution. support until all blasting is
Slide 21: Mine Design Change
Mine Design Change Addition of sub-level to aid in draw bell construction Ventilation raise reduction due to inclusion of ventilation on demand technology 2019 FS Design Current Design • No undercut level • Addition of Undercut level • Individual draw bells • Trough Style draw points • Major apex’s
Slide 22: LHS Benefits: Early Access to High Value EM/PK(S) Feed
LHS Benefits: Early Access to High Value EM/PK(S) Feed LHS mining method brings several advantages during the first years of underground operations: • Access to the highest value portion of the lower South Lobe- EM/PK(S) unit • Over 90% of the recoverable carats between the 310 and 400 levels are at
Slide 23: Historic Diamond Recoveries: Driven by EM/PK(S) and MPK(S)
Historic Diamond Recoveries: Driven by EM/PK(S) and MPK(S) 393 ct 549 ct Sethunya 1,109 ct 998 ct Lesedi La Rona 1,758 ct Sewelô 378 ct 470 ct 813 ct 1,174 ct Constellation 23
Slide 24: Diamond Pricing
Diamond Pricing Karowe Underground Model (all amounts in US$) $/ct models are a function No price escalation post 2023 of size frequency distribution in financial model, UG LoM (SFD) and value per size class AP of $725/ct SFD models are constructed 2014-2019 LOM $/ct weighted on very robust datasets
Slide 25: Karowe Open Pit + Underground Metrics (2021 Updated)
Karowe Open Pit + Underground Metrics (2021 Updated) (All currency figures in U.S. Dollars) 7.5 million Carats ~47 million tonnes NPV $1.28 million LOM diamonds recovered Ore mined Pre-tax @ 5% discount ~54 million tonnes NPV $750 million ~13.8 cpht Post-tax @ 5% discount Recovered grade processed 7
Slide 26: Capital Expenditure Estimate Comparison
Capital Expenditure Estimate Comparison (all amounts in US$) 2019 FS 2021 Base Case Capital Costs Pre-Production Pre-Production Mining 321.7 309.4 Bulk Earthworks 19.0 18.1 Process Plant 0.1 0.1 Onsite Infrastructure 5.9 13.2 Buildings & Facilities 1.6 1.1 Offsite Infrastructure 19.6 23.2 Project In
Slide 27: Capital Expenditure Forecast
Capital Expenditure Forecast Capital Spend estimate including contingency Spending dip through 2023 related to one major activity (shaft sinking) 2024/25 increase related to procurement of UG crush/convey systems and ramp up of lateral development Project to-date capital spend: $51.4 Million out of
Slide 28: Underground Opex Estimate
Underground Opex Estimate (All currency figures in U.S. Dollars) Estimate Estimate Area ($/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 Current assumptions are based on contracted items for cert
Slide 29: Capital Expenditure 2020 - H1 2021
Shaft Sinking Internals Capital Expenditure 2020 - H1 2021 Project to-date capital spend: $51.4 million out of the total 5 year development budget of $534 million Engineering Contracting Shaft pre-sink engineering Civil works, shaft complete, main shaft engineering, shaft pre-sink, ongoing, main sha
Slide 30: Underground High Level Indicative Schedule
Underground High Level Indicative Schedule Item Start Complete Camp Phase 1 (100 rooms) Q1 2021 Q2 2021 Bulk power supply Q3 2021 Q4 2022 COVID-19 related delays have pushed out Pre-sink by 1 year Shaft Pre-Sink Q3 2021 Q2 2022 Change over to Main sink Q2 2022 Q3 2022 Additional time for deeper sink
Slide 31: Design Change: Shafts
Design Change: Shafts Production Shaft Headframe • Production Shaft diameter increase from 8.0 to 8.5m • Ventilation Shaft, increased sinking depth to 733 m depth (17 metre increase) • Ventilation Shaft, removed heavy lift hoist, removes need for head frame • Ventilation installation relocated to su
Slide 32: Hydrogeology
Hydrogeology • COVID-19 related delays have resulted in removal of 680L dewatering infrastructure • Dewatering and depressurization for Open Pit operations and UG are now focused on surface activity, in-pit inclined dewatering wells, coupled with additional in-pit sub-horizontal wells • Shaft pilot
Slide 33: Bulk and Temporary Power Update
Bulk and Temporary Power Update • Self Build agreement signed between Lucara and Botswana Power Corporation (BPC) • Transmission line route Way Leave approved and Biodiversity survey completed • Two substations and a 29 kilometre 132kV transmission line • Transmission line parallels existing 400kV l
Slide 34: Site Infrastructure
Site Infrastructure • Good progress during late 2020 and to end of Q2/21 Karowe Construction Camp, July 2021 • Phase 1 of construction camp complete (50% of 200 person camp) Phase 1 • Onsite electrical progressing well with ordering of transformers, design on MCC’s and distribution pillars • Waste w
Slide 35: Underground Surface Infrastructure
Underground Surface Infrastructure Shaft Pad Looking East, July 20, 2021 35
Slide 36: Underground Surface Infrastructure - Shaft Pad
Underground Surface Infrastructure - Shaft Pad Shaft Mucker training tower N Production Shaft service winder foundation Main Hoist House Production Shaft collar Ventilation shaft sinking stage winder Production Shaft Scott Derrick crane foundation Ventilation Shaft collar Steel Laydown area Ventilat
Slide 37: High Level Risks and Opportunities
Karowe Underground Expansion Project High Level Risks and Opportunities Sensitivity analyses were performed using diamond prices, mill head grade, CAPEX, and OPEX as variables. The value of each variable was changed +/- 20% independently while all other variables were held constant. The Project is m
Slide 38: Next Steps
Karowe Underground Expansion Project Next Steps • Q3 2021 – pre-sink mobilization and initiation of pre-sink in ventilation shaft • Temporary power genset establishment • Phase 2 of camp construction • Initiate sub-station construction and transmission line detailed engineering (bulk power supply) •
Slide 39: Contact
Contact Suite 502 1250 Homer St. Vancouver, BC V6B 2Y5 Tel: +1 604 674 0272 Email: info@lucaradiamond.com LucaraDiamond.com | LUC.TSX | LUC.XSTO | LUC.BSE