Slide 1: Q1 2018 Results Presentation
Drafting notes – May 4, 2018 for Q1 results presentation: • Need to review all font types, colour and size for consistency throughout presentation (same applies to tables within) – Segoe UI? Calibri? • Consider which slide formats to use as background (see 7-9 and 18) – diamonds vs. operational them
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 volumes; forecasted
Slide 3: Q1 2018 Highlights
Q1 2018 Highlights 100% owned Karowe Mine in Botswana • No lost time injuries in Q1 (2.9 million man hours since last LTI); Lost Time Injury Frequency Rate of of 0.06 • Overall performance with respect to ore mined, processed and carats recovered was within forecast for Q1 2018. • 218 specials (sing
Slide 4: Safety, Health, Environment & Community Relations
Safety, Health, Environment & Community Relations Safety: • All leading and lagging indicators trending favourably, LTIFR of 0.06 and 2.9 million hours since last LTI Health: • Employee wellness now being tracked; focused on building awareness Environment: • In compliance with all legal statutes; no
Slide 5: Karowe Resource Continues to Deliver…
Karowe Resource Continues to Deliver… Karowe Quarterly Specials Count Karowe Cumulative Weight % Specials 250 218 203 Number of Specials (>10.8ct) 200 175 177 165 169 150 143 123 113 108 100 50 0 Q 4 1 5 Q 1 16 Q 2 1 6 Q 3 1 6 Q 4 1 6 Q 1 17 Q 2 17 Q 3 17 Q 4 17 Q 1 18 Production Quarter Produc on Q
Slide 6: Diamond Market
Diamond Market • 2018 began with a sense of cautious optimism, bolstered by a reasonably strong US holiday season and healthy demand from China • Positive outcome at the Hong Kong diamond and jewelry show in February 2018 • Markets appear stable, manufacturers achieving better margins • Diamond prod
Slide 7: 2018 Lucara Diamond Sales
2018 Lucara Diamond Sales Q1 Sales • 63,317 carats sold for proceeds of $25.4 million at an average price of $401 per carat, 4 single diamonds > $1 million/each • 113 companies attended the tender with 93 placing a bid • 43 companies won, one or more parcels 2018 Forecast • Forecast sales remain in
Slide 8: Sales Strategy 2018: Exceptional vs. Regular Stone Tenders
Sales Strategy 2018 Exceptional Stone Tenders (“EST’s”) vs. Regular Stone Tenders (“RST’s”) 8
Slide 9: Karowe Diamond Production
Karowe Diamond Production • Coarse size frequency distribution (SFD) that includes the regular recovery of diamonds greater than 10.8 carats in size, referred to as “specials.” • Specials from Karowe are consistently high value and gem quality • South Lobe production rates of 270,000 to 290,000 cara
Slide 10: Diamond Sales Tenders
Diamond Sales Tenders • Historically, Lucara has held both Regular Stone Tenders (RST’s) and Exceptional Stone Tenders (EST’s) with: • RST’s representing most of Lucara’s run of mine production, held around 4 times per annum • EST’s for rare diamonds, selected on a range of criteria including weight
Slide 11: 2018 Lucara Diamond Sales
2018 Lucara Diamond Sales $/CT CONTRIBUTION TO OVERALL AVERAGE PRICE * REGULAR/EXCEPTIONAL TENDERS REGULAR $/CT EXCEPTIONAL $/CT 700 600 $251 $210 500 $329 $261 400 $ ct $165 300 200 $434 $401 $397 $315 $332 $254 $247 100 0 2012 2013 2014 2015 2016 2017 2018** *Excluding Constellation and Lesedi La
Slide 12: Future Diamond Sales Strategy
Future Diamond Sales Strategy • Lucara intends to move towards a blended tender process, whereby a greater number of exceptional stones will be sold as part of RST’s • A blended tender process decreases the inventory time for large, high value diamonds and will generate a smoother, more predictable
Slide 13: Q1 2018 Financial Highlights
Q1 2018 Financial Highlights (all amounts in USD unless otherwise noted) • Revenue of $25.4 million or $401 per carat (Q1 2017: $26.1 million or $405 per carat) • Operating costs of $17.1 million (excluding depletion and amortization) as compared to $16.7 million for Q1 2017 • Operating cash cost(1)
Slide 14: Q1 2018 Karowe Operations
Q1 2018 Karowe Operations Production Q1 2017 Q1 2018 Ore processed (tonnes) 598,934 599,407 Ore mined (tonnes) 131,380 630,242 Carats recovered (carats) 65,241 75,698 Plant feed grade (cpht) 10.9 12.6 Waste mined (tonnes) 587,177 3,991,648 Revenues & Operating Margins Q1 2017 Q1 2018 Revenue ($ mill
Slide 15: Key Performance Indicators – Q1 2018
Key Performance Indicators – Q1 2018 Revenue EBITDA (millions) (millions) $26.1 $25.4 $4.9 Net Loss $1.4 (millions) Q1 2017 Q1 2018 Q1 2017 Q1 2018 Q1 2017 Q1 2018 $(1.5) Total Sales US$ per tonne processed (average dollar per carat) $43.04 $405 $401 $(7.0) $19.86 Earnings per share Q1 2017 Q1 2018
Slide 16: Resource Upgrade & Exploration
Resource Upgrade & Exploration • Updates to the geological model, based on the 2016 and 2017 drilling programs, interpret a larger volume of the Eastern magmatic/pyroclastic kimberlite (“EM/PK(S)”) unit at depth than in the original model 320 m Base elev LOM Pit • Size frequency and diamond analysis
Slide 17: Building on Positive Preliminary Economic Assessment (PEA)
Building on Positive Preliminary Economic Assessment (PEA) Next Steps toward PFS and FS Understanding Risk • Completion of mineral resource update – Q2 2018 • Initiation of feasibility level geotechnical and hydrogeological studies with accompanying drill programs – Drilling underway • Mine design,
Slide 18: Lucara’s next generation growth project
Lucara’s next generation growth project 18
Slide 19: Summary of Clara Acquisition
Summary of Clara Acquisition • Clara is an affordable, potentially high value growth opportunity for Lucara that is compatible with our core diamond mining business • All share transaction; low dilution (3.7%) and no impact to dividend • 13.1 million shares up front • Contingent payments of 13.4 mil
Slide 20: Why?
Why? • Current supply chain is static, inefficient, and inflexible; uses an entrenched system that hasn’t changed in over 100 years, and is ripe for disruption • Recent technological advances make disruption possible and inevitable • Value is being lost across the entire diamond pipeline; producers
Slide 21: Benefits to Lucara
Benefits to Lucara Clara is an affordable, potentially high value, near term growth platform, compatible with the Company’s core diamond mining business Supports Lucara’s reputation as an industry- leader in the adoption of new technology. Non-cash transaction with no expected impact on the divi
Slide 22: 2018 Guidance
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Slide 23: 2018 Outlook
2018 Outlook (all amounts in USD) Diamond revenue ($ million) 170 – 200 Diamond sales (thousand carats) 270 – 290 Diamonds recovered (thousand carats) 270 – 290 Ore tonnes mined (million) 2.5 – 2.8 Waste tonnes mined (million) 13.0 – 16.0 Ore tonnes processed (million) 2.4 – 2.7 Operating cash costs
Slide 24: Capital Structure
Capital Structure Lucara is a publicly listed company trading under the symbol “LUC” TSX NASDAQ Sweden BSE (Botswana) Issued shares 395,719,334 Fully diluted shares 402,499,474 Insider Holdings 21% on a fully diluted basis Debt NIL Cash on hand US$ 43.6 million (Q1 2018) $50 million Credit Facility
Slide 25: Contact Information
Contact Information Suite 2000 885 West Georgia St. Vancouver, BC V6C 3E8 Tel: 604 689 7872 Fax: 604 689 4250 info@lucaradiamond.com lucaradiamond.com 25