LUCARA ANNOUNCES Q1 2025 RESULTS

Canada NewsWire

VANCOUVER, BC, May 9, 2025

VANCOUVER, BC, May 9, 2025 /CNW/ - (TSX: LUC) (BSE: LUC) (Nasdaq FNGM: LUC)

Lucara Diamond Corp. ("Lucara" or the "Company") today reports its results for the quarter ended March 31, 2025. All amounts are in U.S. dollars unless otherwise noted. PDF Version.

Q1 2025 HIGHLIGHTS

   -- In Q1 2025, the Company's revenue decreased to $30.3 million compared to 
      $39.5 million in Q1 2024, primarily due to fewer carats sold (Q1 2025: 
      72,871 carats, Q1 2024: 93,560 carats), which resulted from having to 
      process lower-grade stockpile material because of unusually high January 
      rainfall affecting mining in the open pit; and from mining a higher 
      proportion of lower-grade M/PK$(S)$1 ore than planned higher-grade 
      EM/PK(S)2 ore. Lower grade M/PK(S) was mined due to a shift in the 
      contact between the two kimberlites. These factors resulted in the 
      Company's 2025 revenue guidance being revised to $150 -- $160 million. 
      This lower revenue outlook has led management to assess the Company's 
      ability to continue as a going concern, with concerns raised about 
      sufficient working capital, cash flow from operations, and liquidity to 
      meet obligations and ongoing UGP development. 
 
   -- Subsequent to Q1 2025, the lenders approved a draw of up to $28.0 million 
      from the Cost Overrun Reserve Account ("CORA") in exchange for the 
      Company's largest shareholder, Nemesia S.à.r.l. ("Nemesia"), 
      agreeing to amend the terms of its shareholder standby undertaking to 
      extend it until project completion. 
 
   -- During Q1 2025, the Company recovered six stones over 100 carats 
      including the recovery of a 1,476 carat non-gem diamond. The 1,476 carat 
      non-gem diamond was sold on tender for $1.11 million. 
 
   -- The recovery of 139 Specials (defined as rough diamonds larger than 10.8 
      carats) (Q1 2024: 160 Specials) equated to 5.6% (Q1 2024: 5.1%) by weight 
      of the total carats recovered from direct ore feed in Q1 2025. 
 
   -- Significant progress was made in the lateral development connecting the 
      two shafts. During Q1 2025, 230 metres ("m") of lateral development were 
      completed on the production shaft and 83 m were completed on the 
      ventilation shaft. At the end of Q1 2025, the production shaft had 
      reached 731 metres below surface ("mbs") out of a planned final depth of 
      770 mbs. The ventilation shaft reached 680 mbs out of a planned final 
      depth of 722 mbs. 
 
   -- A total of 93,716 carats were recovered in Q1 2025; 90,500 carats were 
      from direct ore feed from the pit and stockpiles, at a recovered grade of 
      13.4 carats per hundred tonnes ("cpht") and an additional 3,216 carats 
      were recovered from processing of historical recovery tailings. 
 
   -- Operational highlights from the Karowe Mine included: 
 
          -- Ore mined of 0.4 million tonnes ("Mt") (Q1 2024: 0.8Mt). Ore mined 
             in Q1 2025 was lower due to high rainfall in January which 
             temporarily reduced access to the scheduled ore blocks. 
 
          -- 0.7Mt of ore processed (Q1 2024: 0.7Mt). 
 
   -- Financial highlights for Q1 2025 included: 
 
          -- Operating margins of 54% were achieved, consistent with Q1 2024, 
             as both revenues and operating expenses decreased by 23%, 
             resulting in consistent margins between the quarters. 
 
          -- Operating cost per tonne processed was $23.41 per tonne, a 10% 
             decrease compared to the Q1 2024 cost per tonne processed of 
             $26.00 due to a lower volume of waste mined in Q1 2025. The 
             continued impact of inflationary pressures, particularly labour, 
             has been well managed by the operation. Operating cost per tonne 
             processed is a non-IFRS measure. 
 
   -- Cash position and liquidity as at March 31, 2025: 
 
          -- $18.7 million of cash and $18.0 million of working capital 
             (current assets less current liabilities). 
 
          -- $190.0 million has been fully drawn from the project finance 
             facility ("Project Facility") for the UGP, along with $30.0 
             million fully drawn from the working capital facility ("WCF"). 
 
          -- CORA balance of $50.5 million. 
 
______________________________ 
(1) M/PK(S): Magmatic/Pyroclastic Kimberlite (South) 
(2) EM/PK(S): Eastern Magmatic/Pyroclastic Kimberlite 
 (South) 
 

William Lamb, President & CEO commented: "The Karowe Diamond Mine continues to demonstrate its potential with the recovery of our seventh 1,000+ carat diamond. While production in the quarter was impacted by higher-than-normal rainfall, we maintained a consistent recovery of Specials, reinforcing Lucara's expertise in this challenging operational environment.

The underground project at Karowe is progressing, with advancements in shaft connecting lateral development during the quarter. Surface infrastructure construction progressed as planned. We anticipate reaching shaft bottom in the coming months, though we remain mindful of the complexity inherent in such major development projects.

As we navigate the transition from open pit to underground operations, shareholders are reminded that 2026 and 2027 will present significant challenges, with production relying primarily on lower-value stockpile material. This interim period will require careful management of resources and expectations until the underground project begins contributing to our production profile.

Lucara remains focused on prudently managing this crucial transition phase while continuing our commitment to recovering high-quality diamonds, though we recognize the path ahead involves navigating considerable operational and financial adjustments before we can realize the full potential of our underground resources."

GOING CONCERN

Management has assessed the Company's ability to continue as a going concern for at least twelve months from March 31, 2025. Based on this assessment, including the impact of revisions to revenue guidance for 2025, the Company estimates that its working capital as at March 31, 2025, cash flow from operations, and other committed sources of liquidity will not be sufficient to meet its obligations, commitments, and planned expenditures. These conditions cast significant doubt on the Company's ability to continue as a going concern.

As the Project Facility and WCF are fully drawn, UGP completion will require utilizing working capital generated from existing mining operations, access to the CORA and guarantees and securing additional financing. Under the terms of the Project Facility, Nemesia provided a limited standby undertaking of up to $63.0 million. The standby undertaking consists of two components: i) $28.0 million component is for the undertaking to support the requirement to fill the CORA to $61.7 million by June 30, 2025 and; ii) $35.0 million component is for a funding shortfall guarantee in support for the UGP completion. On April 3, 2025, the lenders approved the Company to draw up to $28.0 million from the CORA to fund the UGP construction in exchange for Nemesia amending the terms of its shareholder standby undertaking, including extending this undertaking until project completion. The Company continues to develop plans to raise additional debt or equity financing required for UGP completion. While the Company has previously been successful in raising debt and equity financing, future fundraising efforts may not succeed or may fall short of the required amounts.

DIAMOND MARKET

The long-term outlook for natural diamond prices remains cautious as the market continues to navigate structural shifts. While earlier price corrections, particularly in smaller sizes, were driven by subdued demand and increased supply, the market showed signs of improvement in March. Smaller goods have stabilized in pricing partially due to influences on supply. Global natural diamond production is forecasted to decrease, following significant production guidance cuts by both Alrosa and De Beers. Stronger demand for rough diamonds has been observed in 2025, fueled by rising competition and a shift in preferences. The cautious recovery may be supported by increasing demand for larger diamonds due to reduction in global production.

Prices of laboratory-grown diamonds have continued to decrease in 2025 with production outweighing demand. Although De Beers and Alrosa's recent price adjustments have yet to affect demand, they may result in market responsiveness and price stability. As the industry moves into the second quarter of 2025, the return of strategic buying behaviour and disciplined inventory management suggests potential for a healthier diamond market ahead.

KAROWE UNDERGROUND PROJECT UPDATE

The UGP is designed to access the highest value portion of the Karowe orebody, with initial underground carat production predominantly from the EM/PK(S) unit. The UGP has the potential to extend the mine life to beyond 2040.

An update to the Karowe UGP schedule and budget was announced on July 16, 2023 (link to news release). The anticipated commencement of production from the underground is H1 2028. The revised forecast of costs at completion is $683.4 million (including contingency). At March 31, 2025, capital expenditures of $380.0 million had been incurred and further capital commitments of $77.9 million had been made.

(MORE TO FOLLOW) Dow Jones Newswires

May 09, 2025 21:00 ET (01:00 GMT)