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Karowe Mine lowers production target

STAFF WRITER
Karowe Mine target to produce a maximum of 285,000 carats in 2017
Lucara Diamond Company has lowered its production outlook for 2017 after its mining contractor encountered problems with availability of equipment in the second quarter.

Announcing its second quarter financials, Lucara said production from Karowe is now expected to be between 265,000 and 285,000 carats, compared to the initial target of 290,000 to 310,000.

Sales volumes forecast were also reduced to between 260,000 and 275,000 against a 290,000 to 310,000 target.

“The company’s mining contractor, Aveng Moolmans experienced equipment availability issues during the beginning of the quarter that resulted in lower than planned ore and waste mined.

“Processing volumes were largely on forecast as the lower volume of ore mined was replaced with stockpile ore, largely from the south lobe,” said Lucara. Aveng Moolmans is a new contractor at Karowe after Lucara terminated its contract with Eqstra late last year.

Lucara however said it is maintaining its revenue guidance at $200 to $220 million due to the more than planned high value south lobe ore being processed.

William Lamb, president and chief executive officer said sales in the first half achieved extremely strong prices and with focus on cost control.

“The Karowe Mine continues to deliver strong operating margins. We have worked with our new mine contractor to improve performance during the second and third quarters, and our mining department is now achieving our productivity targets. Our focus on the process plant is to complete the capital projects, further enhancing diamond recovery by the end of the third quarter this year. This will place the Karowe Mine in an even stronger position to maximise value from the recovery and sale of diamonds from the high value south lobe,” said Lamb.

The company also said an underground study at Karowe has commenced with the firm, Royal Haskoning DHV being appointed to lead the work.

The company continues to forecast tonnes

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processed at between 2.4-2.7 million tonnes.

Lucara’s two capital projects to enhance diamond recovery are expected to enhance diamond recovery and maintain design throughput. Both projects remain on schedule and on forecast for a spend of between $33-$35 million during 2017 for a total project spend of between $15-$18 million and up to $30 million respectively.

Meanwhile Lamb has told Reuters that Lucara is considering forming a partnership to sell the Lesedi La Rona if it still does not have a deal in the next six to eight weeks.

Lucara, which failed to sell the world’s largest uncut stone at Sotheby’s auction house in June 2016, continues to receive offers, Lamb said on a conference call with analysts on Friday.

The Vancouver-based miner is mulling “one or two” options for an outright sale, but such bids have failed to meet financial scrutiny in the past, Lamb noted.

“If that doesn’t pan out ... within the next six to eight weeks we will most fully look to enter into a partnership,” Lamb said. “I think we’ve got to. It’s been almost two years since we recovered the stone and the market is, I think, chomping at the bit, waiting to see what the outcome from that is going to be.”

Lucara’s board regularly discusses how best to capitalise on the diamond, Lamb said.

In July, Reuters reported that Lucara would need a partner in order to cut and sell the rough diamond, second in size only to the 3,106.75 carat Cullinan, which was cut into 105 diamonds, including several British Crown Jewels.

The diamond was discovered at Karowe Mine in November 2015 and is said to be 2.5 to three billion years old.



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