TIDM0QUI
RNS Number : 2028G
Lucara Diamond Corp
17 July 2023
July 16, 2023
LUCARA PROVIDES KAROWE UNDERGROUND EXPANSION PROJECT UPDATE
VANCOUVER, July 16, 2023 /CNW/ - (LUC - TSX, LUC - BSE, LUC -
Nasdaq Stockholm)
Lucara Diamond Corp. ("Lucara" or the "Company") provides an
update on the Karowe Underground Expansion project (the "UGP"). The
Karowe UGP is designed to access the highest value portion of the
Karowe orebody, extend mine life to at least 2040 and deliver
approximately $4 billion in additional revenues using conservative
diamond price assumptions which are un-escalated and exclude
exceptional stone revenues.
Management initiated an update to the UGP schedule and budget in
response to slower than planned ramp up to expected sinking rates,
and, to account for time incurred to date, as well as for
anticipated future grouting programs. Grouting programs took longer
than anticipated due to a combination of high-water volumes in the
sandstone lithologies between 870 and 752 metres above sea level in
depth (144 metres to 262 metres below the shaft collar) combined
with technical challenges associated with the transition to main
sinking. The updated schedule incorporates a 28% increase in the
duration of construction, extending the anticipated commencement of
production from the underground from H2 2026 to H1 2028. As a
result, the revised forecast of costs at completion is $683
million, a 25% increase to the May 2022 estimated capital cost of
$547 million.
The project remains technically and economically feasible,
however, the impact of actual and modelled delays changes the
revenue profile due to the use of lower-grade, stockpiled ore for
mill feed rather than high-grade ore from the underground as
previously planned. Sufficient surface stockpiles of South, Centre
and North Lobe kimberlite ore are available to maintain current,
un-interrupted mill feed to the plant for the duration of the
anticipated delay. The long-term outlook for diamond prices,
combined with the potential for exceptional stone recoveries and
the continued strong performance of the open pit could mitigate the
modelled impact on project cash flows due to the schedule
slippage.
Eira Thomas, CEO commented: "Lucara has made tremendous progress
on the Karowe underground expansion project, despite many
challenges over the last year as we transitioned into the main sink
phase of the underground development. Schedule delays due to longer
than anticipated grouting activity have impacted the project
timeline, however the grouting methodology selected has proven to
be effective in controlling water inflows. As we transition out of
the sandstones in early Q4 2023, we look forward to meeting planned
sinking rates. Despite these challenges, the project continues to
deliver strong economics paying back capital in under three years
and adding approximately $4 billion in revenues from an extended
mine life out to at least 2040, using conservative diamond price
assumptions. The project also comes at a time when the long-term
outlook for the diamond market is stronger than it has been for
many years representing an exciting growth opportunity for our
shareholders and stakeholders in Botswana."
Lucara's major shareholder remains supportive of the Karowe
asset and the long-term potential of the Karowe UGP. Adam Lundin
commented: " The Karowe underground mine expansion provides access
to the highest value portion of the orebody responsible for
delivering numerous record-breaking diamonds in respect of size and
value, including three diamonds in excess of 1,000 carats. The
project remains highly economic, despite the delays incurred, and
as Lucara's largest shareholder, we remain fully supportive of the
company."
HIGHLIGHTS:
-- While the existence of water-bearing sandstones layers was
anticipated, grouting within the regional Ntane and Mosolotane
sandstone aquifers has required significantly more volumes of
chemical grout. In addition, some remedial grouting in previously
dry portions of the sandstone horizons has been required in the
ventilation shaft. These factors account for most of the incurred
delays.
-- Planned grouting events to the base of the Mosolotane
sandstone/mudstone transition are expected to be completed early in
Q4 2023. After completion of the current sandstone layer being
grouted, one further grouting event is planned in the ventilation
shaft (currently 213 metres below collar). Two additional grouting
events are planned within the production shaft (currently 185
metres below collar). Thereafter, further grouting is not
anticipated to be required until sinking reaches the granite
basement lithologies in late 2024. Grouting in the granite
lithologies is expected to be localized, rather than formational in
nature. Total depth of the final shaft bottoms are 765 metres and
731 metres below surface for the production and ventilation shafts,
respectively.
-- The project has been operating with an excellent safety
record including 1,244 days and > 3.3 million hours Lost Time
Injury free and a Total Recordable Injury Frequency rate of
0.59.
-- The increase of $136 million in estimated capital to reach
project completion is predominantly related to increased schedule
duration and related labour costs (approximately 56% of total), and
grouting costs (approximately 20% of total capital increase) which
have been funded through contingency. The remaining cost increases
are related to Owner's costs, procurement, and indirect project
costs.
-- As at June 30, 2023, capital expenditures of $264.5 million
had been incurred and capital commitments of $369.7 million had
been made.
-- The remaining forecast to complete construction of the
project as of June 30, 2023 is $419 million including unallocated
contingency of $49.3 million (12%).
-- Karowe Open Pit and Processing units continue to perform to
budget expectations and the planned ore feed for the remainder of
2023 has transitioned to a South Lobe dominant mill feed. As a
result, the recovery of large high value +100 carats diamonds
sourced from the M/PK(S) and EM/PK(S) units is in line with
resource expectations and previous half-year recoveries.
Qualified Persons
This press release has been reviewed and approved by Dr. John
Armstrong, Ph.D. P.Geol., Vice-President, Technical Services of the
Company and a "Qualified Person" for the purposes of National
Instrument 43-101 and Mr. Gord Doerksen P.Eng. of JDS Energy and
Mining Inc. an Independent Qualified Person under National
Instrument 43-101.
Eira Thomas
President and Chief Executive Officer
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For further information, please contact:
Investor Relations & Communications
+1 604 674 0272| info@lucaradiamond.com
Sweden Robert Eriksson, Investor Relations & Public
Relations
+46 701 112615 | reriksson@rive6.ch
UK Public Relations Charles Vivian / Jos Simson, Tavistock
+44 778 855 4035 | lucara@tavistock.co.uk
ABOUT LUCARA
Lucara is a leading independent producer of large exceptional
quality Type IIa diamonds from its 100% owned Karowe Mine in
Botswana and owns a 100% interest in Clara Diamond Solutions, a
secure, digital sales platform positioned to modernize the existing
diamond supply chain and ensure diamond provenance from mine to
finger. The Company has an experienced board and management team
with extensive diamond development and operations expertise. The
Company operates transparently and in accordance with international
best practices in the areas of sustainability, health and safety,
environment, and community relations.
The information in this release is accurate at the time of
distribution but may be superseded or qualified by subsequent news
releases.
This information is information that the Company is obliged to
make public pursuant to the EU Market Abuse Regulation. The
information was submitted for publication, through the agency of
the contact persons set out, at 10:00pm Pacific Time on July 16,
2023.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain of the statements made herein contain certain
"forward-looking information" and "forward-looking statements" as
defined in applicable securities laws. Generally, any statements
that express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives, assumptions
or future events or performance and often (but not always) using
forward-looking terminology such as "expects", "is expected",
"anticipates", "believes", "plans", "projects", "estimates",
"budgets", "scheduled", "forecasts", "assumes", "intends",
"strategy", "goals", "objectives", "potential", "possible" or
variations thereof or stating that certain actions, events,
conditions or results "may", "could", "would", "should", "might" or
"will" be taken, occur or be achieved, or the negative of any of
these terms and similar expressions) are not statements of
historical fact and may be forward-looking statements.
In particular, forward-looking information and forward-looking
statements may include, but are not limited to, information or
statements with respect to the mine life of the Karowe Mine,
anticipated revenues from the Karowe UGP, diamond prices, timing of
revenues from the UGP and exiting stockpiles, the timing, scope and
cost of additional grouting events, total forecasted capital
expenditures for the UGP, and the anticipated schedule to complete
the UGP.
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 information as a result of the inherent uncertainty
in developing underground projects and those factors discussed in
or referred to under the heading "Risks and Uncertainties" in the
Company's most recent Annual Information Form available at
http://www.sedar.com, as well as changes in general business and
economic conditions, changes in interest and foreign currency
rates, the supply and demand for, deliveries of and the level and
volatility of prices of rough diamonds, costs of power and diesel,
acts of foreign governments and the outcome of legal proceedings,
inaccurate geological and recoverability assumptions (including
with respect to the size, grade and recoverability of mineral
reserves and resources), and unanticipated operational difficulties
(including failure of plant, equipment or processes to operate in
accordance with specifications or expectations, cost escalations,
unavailability of materials and equipment, government action or
delays in the receipt of government approvals, industrial
disturbances or other job actions, adverse weather conditions, and
unanticipated events relating to health safety and environmental
matters).
Accordingly, readers are cautioned not to place undue reliance
on these forward-looking statements which speak only as of the date
the statements were made, and the Company does not assume any
obligations to update or revise them to reflect new events or
circumstances, except as required by law.
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END
UPDGPUCWMUPWUCM
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July 17, 2023 02:00 ET (06:00 GMT)
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