VANCOUVER, March 31, 2020 /CNW/ - (LUC – TSX, LUC
– BSE, LUC – Nasdaq Stockholm)
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Lucara Diamond Corp. ("Lucara" or the "Company") announced today
that it has implemented a crisis management strategy in relation to
COVID-19, to protect the health and well-being of its employees in
Botswana and Canada. Lucara's 100% owned Karowe Diamond
Mine, situated in north central Botswana remains fully operational, under new
measures and guidelines implemented by the Government of
Botswana ("GRB") earlier this
week. These measures include increased travel restrictions,
reduced staffing and increased social distancing pertaining to all
aspects of its business. Employees who are able to work remotely
are doing so. As travel restrictions relating to COVID-19 are
expected to remain in place for an unknown period of time, the
Company's ability to complete tenders in Botswana may be impacted. As a temporary
measure, the Government of Botswana has granted Lucara permission to hold
diamond sales in Antwerp, Belgium
if required.
Lucara completed its first of four planned diamond tenders for
the year on March 5, and achieved
sales prices within 1% of forecast, however, diamond prices have
since deteriorated in response to weaker demand as COVID-19 has
continued to spread globally. Though Lucara's next quarterly
tender is not scheduled to take place until mid May 2020, the full impact of COVID-19 on Lucara's
operations and production outlook for 2020 remains highly
uncertain, and as a result, the Company has taken the decision to
suspend its 2020 guidance until further notice.
Key Operational Highlights to Date:
- Lucara began the year with a strong balance sheet - cash
positive, no debt, and an undrawn US$50mln working capital facility.
- Lucara is a low volume, high value diamond producer, with
70% of revenues generated from diamonds in excess of 10.8 carats.
Diamond tenders are held quarterly.
- Lucara's first quarterly diamond tender was completed
March 5 achieving sales results
within 1% of forecasted reserve prices; all proceeds from this
tender have been received.
- Clara, Lucara's web based digital sales platform for rough
diamonds, which sells diamonds under 10.8 carats in size remains
operational.
- Lucara has flexibility and optionality in its capital budget
for 2020. Spending on the underground project is scheduled to ramp
up in Q3 but Lucara has the ability to adjust the timing of these
expenditures as they are not currently committed.
Eira Thomas, Lucara's CEO stated: "Our main focus right now is
on the safety and wellbeing of our workforce and the local
communities in which we operate. The global diamond industry
is experiencing the widespread impacts of COVID-19 throughout the
value chain, manifested as fewer sales, weaker pricing and
production curtailments at several mines. Though the Karowe
diamond mine continues to operate according to plan, and the first
quarter 2020 sale achieved results within expectations, the full
impact of COVID-19 on our business remains
uncertain.
Lucara has worked swiftly to implement a crisis management plan
to protect our people and assets, and continues to monitor this
dynamic situation closely, day by day. Lucara began the year
with a strong balance sheet, cash on hand, no long-term debt and
flexibility in our 2020 capital spending program. Our
longer-term outlook for the diamond market remains positive, based
on improving supply-demand fundamentals that were beginning to
manifest in late 2019, prior to the COVID-19 crisis taking hold.
What's more, diamond sales are continuing through Clara, our
secure web based digital sales platform, which has the unique
advantage of providing customers with a forum to buy rough diamonds
without the requirement to travel.
In this challenging and volatile time, the quality of our assets
combined with the strength of our balance sheet and the fact that
Lucara is not carrying any long-term debt, helps to position the
Company to effectively manage the business through this crisis. We
would like to extend our sincere thanks to our employees,
shareholders, stakeholders and communities of interest for their
continued support, and, extend our best wishes for good
health".
The Karowe Diamond Mine
During the first quarter of 2020, the Karowe diamond mine
continued to operate safely and according to budget and plan.
As part of the Company's ongoing COVID-19 response plan, management
continues to analyze risks in relation to all aspects of our mining
and sales operations and, within our supply chains. At the
present time, we have not identified any immediate obstacles to the
continued, safe operations of our mine and the sales office but we
also acknowledge that the situation is extremely dynamic. Lucara
will strictly adhere to the government guidelines and exercise all
precautionary measures it needs to take to keep its employees safe
and healthy. These measures include, but are not restricted to,
working from home where possible, reduced overall staffing levels,
increased and appropriate social distancing, and, restrictions on
travel. To this end, Lucara's capital spending program for 2020 is
also being reviewed. The largest component of this year's
capital spend relates to a US$53mln
approved program for the Karowe underground expansion project, the
bulk of which is scheduled to be invested in the latter part of the
year. It is important to note that the underground program
and schedule for 2020 retains both optionality and flexibility as
the expenditures scheduled to be incurred are not committed, and,
can be adjusted as Lucara's cashflow projections and operational
capacity become more certain. Further guidance will be
provided in advance of the Q1 quarterly earnings call scheduled for
Friday, May 8, 2020.
Diamond Tender Completed March 5,
2020
Lucara completed its first diamond tender of the year on
March 5, selling all diamonds
recovered and prepared for sale during the period, and achieved an
overall result within 1% of expected reserve prices. Achieved
prices were in line with the pricing environment that prevailed in
early-mid 2019 and are consistent with our previously reported 2020
Outlook. These pricing assumptions be adjusted in the coming
weeks and months as the full impact of COVID-19 becomes better
understood. We experienced a solid turnout for the sale, with
a total of 104 companies attending in Gaborone and a participation rate of 80%. Our
smallest planned sale for the year, the Q1/20 tender sold 83,610
carats, including 37 single stones greater than 10.8 carats in
size. A total of 4 stones were sold for in excess of
US$1mln including 2 that sold for
more than US$2mln. All goods
prepared for sale were sold. Management is monitoring the
travel restrictions related to COVID-19 which may impact Lucara's
ability to complete tenders within Botswana for a period of time. As a
temporary measure, in response to the COVID-19 crisis, the
Government of Botswana has granted
Lucara permission to hold diamond sales in Antwerp, Belgium if required.
Clara Sales Continue
CLARA uses technology to create a more efficient,
transparent, global marketplace and provides greater connectivity
between the rough and polished diamond marketplaces remotely, from
any jurisdiction around the world. Never, we feel, has this
innovation been more relevant or more important. In this
current, unprecedented global lockdown, where personal travel is
restricted and diamond tenders and sights are being canceled or
postponed, CLARA remains operational, allowing purchases of
individual diamonds to continue, providing flexibility and
optionality to help businesses throughout the supply chain be more
effective at managing their purchases in response to the current,
dynamic business environment. A total of 6 sales have been
transacted on Clara in 2020, with 25 out of 32 total on-boarded
manufacturers participating, the highest participation rate to
date. A total of just over 1,800 carats and 821 diamonds have
been transacted. Though volumes are slightly lower than in
previous sales and may continue to fluctuate, reflective of the
more challenging business environment that has emerged, Clara
continues to attract strong interest and participation. We expect
this interest to continue and potentially grow as travel
restrictions persist, respective of the possibility that the
transportation of our diamonds may be subjected to delays or other
constraints in relation to the COVID-19 crisis.
On behalf of the Board,
Eira Thomas
President and Chief Executive Officer
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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.
ABOUT CLARA
Clara Diamond Solutions Limited Partnership (Clara), wholly
owned by Lucara Diamond Corp, is a secure, digital sales platform
that uses proprietary analytics together with cloud and blockchain
technologies to modernize the existing diamond supply chain,
driving efficiencies, unlocking value and ensuring diamond
provenance from mine to finger.
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 Lucara is obliged to make
public pursuant to the EU Market Abuse Regulation. This information
was submitted for publication, through the agency of the contact
person set out above, on March 31,
2020 at 1:45pm Pacific
Time.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain of the statements made and contained herein and
elsewhere constitute forward-looking statements as defined in
applicable securities laws. Generally, these forward-looking
statements can be identified by the use of forward-looking
terminology such as "expects", "anticipates", "believes",
"intends", "estimates", "potential", "possible" and similar
expressions, or statements that events, conditions or results
"will", "may", "could" or "should" occur or be achieved.
Forward-looking statements are based on the opinions and
estimates of management as of the date such statements are made,
and they are subject to a number of known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially
different from any future results, performance or achievement
expressed or implied by such forward-looking statements. The
Company believes that expectations reflected in this
forward-looking information are reasonable, but no assurance can be
given that these expectations will prove to be accurate and such
forward-looking information included herein should not be unduly
relied upon.
In particular, this release may contain forward looking
information pertaining to the following: the impact of the COVID-19
pandemic on the Company's operations, the Company's ability to
operate according to plan and budget, the Company's ability to
continue to operate Clara and participant's continued use of Clara,
statements relating to diamond prices, the Company's plans with
respect to the underground expansion and the timing and flexibility
thereon.
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 rapidly evolving
regulatory landscape and market conditions related to the COVID-19
pandemic, and the operational and travel bans that have been
imposed or may be expanded into regions impacting Lucara's
operations, 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.
SOURCE Lucara Diamond Corp.