Lucara beats revenue target as Karowe shines
Boitshepo Majube | Tuesday April 8, 2014 11:21
In its 2013 year ending financial statement, Lucara stated that the Karowe 2013 year-end target of 440,000 carats recovered was also surpassed.
The company plans holding eight diamond tenders and two exceptional stone tenders during 2014. “The timing of these tenders will be based on Karowe’s production profile as well as commercial decisions to maximise diamond revenue,” the company directors said.
Lucara stated that Karowe mine geological resource update completed during the quarter, demonstrated superior value through continued presence of exceptional stones within the centre and south lobes.
Karowe is forecast to process 2.2 to 2.4 million tonnes of ore and to produce and sell 400,000 to 420,000 diamond carats in 2014, and its revenue is forecasted between $150 - $160 million.
Directors of Lucara Diamond Corporation, state that the frequency of special stones (+10.8 carats) recovered during the quarter was significant with 190 stones recovered with an average size of over 26 carats. “This included five stones of over 100 carats and a single 281 carat stone.”
It further states that the recovery of specials during 2013 far exceeded expectations with 732 specials recovered with a total weight of over 18,000 carats equating to 4 percent of annual production. “Included in this were 17 stones over 100 carats and 4 stones over 200 carats,” it stated. They say the company continued to achieve strong cash operating earnings of $39.0 million during the quarter and $118.6 million for the year resulting in a year-end cash balance of $49.4 million. “Management expects to use the existing cash resources to finance Karowe’s plant upgrade capital expenditure during 2014,” said Lucara directors, further noting that at year-end the company was debt free with the $25 million Scotiabank credit facility being un-drawn.
Lucara says full year sales of 438,717 carats achieved proceeds of $180.5 million, or $411 per carat. It achieved a full year cash-operating margin of $311 per carat based on operating expenses of $100 per carat. “Full year operating cost per tonne milled was $18 compared to budget of $23 per tonne.”
Attention to cost control and the revenues from exceptional stone tenders have resulted in the company achieving a full year earnings before deducting interest and other financial charges, income taxes, depreciation and amortisation of $102.9 million in its first full year of operations.
Furthermore, the company stated that currency fluctuations might impact the Company’s financial performance. Diamonds are sold in US dollar with a majority of the Company’s costs and expenses being incurred in Botswana Pula, South African Rand, Lesotho Loti, Canadian and US dollar currencies.
“As a consequence, fluctuations in exchange rates may have a significant effect on the cash flows and operating results of the Company in either a positive or negative direction.” It further stated that in order to mitigate foreign exchange fluctuations the company has hedged a proportion of its Botswana pula costs for the 2014 financial year.