Lucara Raises Revenue Outlook Amid Price Surge

RAPAPORT… Lucara Diamond Corp. has increased its annual revenue guidance as it expects the current strength in the market to continue throughout the year.

The miner anticipates revenue from its Karowe mine in Botswana will reach between $195 million and $225 million in 2022, compared to the $185 million to $215 million it previously predicted, it said last week. The new forecast does not include any earnings from the sale of exceptional stones or from the 549-carat Sethunya diamond, Lucara noted.

“The diamond market continued to gain momentum throughout the year,” said Lucara CEO Eira Thomas. “Higher diamond prices combined with solid operational performance at the mine…has delivered strong revenues for…2021. [This] demonstrates a full recovery from the challenges of the pandemic and reflects a much better outlook for 2022 and beyond as we continue to benefit from one of the strongest diamond markets we have seen in the better part of a decade.”

Revenue grew 84% to $230.1 million for 2021 as a whole. Sales volume rose 2% to 381,681 carats, while the average price soared 80% to $603 per carat.

The miner sold rough at regular tenders, on its Clara sales platform, and through a partnership it signed in July 2020 with Belgium-based manufacturer HB Antwerp. That deal covers all rough over 10.8 carats, which will be manufactured and sold as polished.

Lucara had a record year for large stones, recovering 39 diamonds weighing more than 100 carats. Those included a 1,174-carat stone of variable quality, a 470-carat, light-brown diamond and a 62.7-carat fancy pink. Production for the year slipped 3% to 369,390 carats.

The miner reported net income of $23.8 million, versus a net loss of $26.3 million in 2020, when Covid-19 restrictions presented challenges in the market.

Revenue from Lucara’s Clara sales platform, which matches buyers with available rough based on their polished needs, surged 168% to $28.7 million. Prices at the 21 sales held during the year advanced steadily at each subsequent event, the miner said. The number of buyers on the platform increased to 88 from 75 in 2020, with the company maintaining a waiting list to manage supply and demand.

During the year, the miner spent $86.3 million to expand Karowe to underground mining, which is due to extend the mine’s life until 2040.

Revenue for the fourth quarter climbed 37% year on year to $57.9 million. A 39% jump in the average price to $560 per carat offset a 2% drop in sales volume to 103,501 carats. Lucara reported a profit of $1.7 million for the three months ending December 31, compared to a loss of $3.9 million the previous year.

The miner expects to produce and sell between 300,000 and 340,000 carats in 2022, it added.

Image: The Karowe mine. (Lucara Diamond Corp.)