Lucara Diamond Corp (TSX: LUC) Advances Diamond Production at Karowe Project in Botswana Using Large Diamond Recovery XRT Machines, Discovers Historic Gem

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on 2/4/2016
Lucara Diamond Corp (TSX: LUC), has discovered a way to improve their diamond recovery at the Karowe project located in Botswana, by using Large Diamond Recovery XRT machines and now has found a historic gem.

William Lamb, President and CEO of Lucara Diamond (TSX: LUC) took some time to update Metals News readers on the improved production they are experiencing at the Karowe project in Botswana. Installing Large Diamond Recovery XRT machines has led them to finding a diamond that is greater than 1000 carats in November.

Lamb provides the Lucara Diamond team with a great deal of experience in the mining sector. He has more than two decades of experience in mining and operations in Canada and Southern Africa. During his tenure, he has gotten experience in operational and project management of coal, chrome, diamonds and precious metals. Working with De Beers for thirteen years, Lamb focused on operational readiness, project development and heavy mineral concentration in areas such as Canada and South Africa. After joining Lucara in 2008, Lamb worked with the management team to acquire the AK6 asset, now known as the Karowe Mine. The mine is currently in production and is the source of a more than 1000 carat diamond that has been found.

The company is known to be a new diamond producer. They have just begun production at their newly constructed, state of the art, Karowe Mine in Botswana. The mine was fully commissioned in 2012 and offers large scale production with tonnage and has seen quite a few type IIA stones as a result of production.

Lamb explained that the mine has a history of finding exceptional stones the first 15 exceptional stones were offered in an exceptional stone tender in May 2013, the next in August 2013 and to date there have been eight exceptional stone tenders that showcased a total on 120 exceptional stones. These discoveries have culminated in the two massive stones that the mine has recently recovered.

The process of finding the stones included the use of new technology that could process the more complex ore from the south lobe. This material being harder and denser. Instead of trying to process the ore with traditional machinery, the ore was stockpiled while the plant optimization project was completed. He waited until he installed Large Diamond Recovery (“LDR”) XRT machines that were able to recover any large stones present in the south lobe material.

The patience that Lucara and his team showed led them to several enormous diamonds. Recently, a 1,111 carat gem that is 65mm x 56mm x 40mm has been recovered from the Lucara site. This gem is about the size of a tennis ball and was found just recently, with the help of the new technology in which the company invested.

This diamond is a gem of historic proportions. The last really large diamond was discovered more than 100 years ago, in 1905, in South Africa. It was a 3106 carat diamond, which now is used as part of the decorations on the British Crown.

Since the discovery of the diamond, Lucara has taken steps to ensure the quality. They are currently cleaning the diamond and will complete further evaluations of the gem once those are complete. An attempt will be made to price the gem, but knowing that it is of historic proportions, it will be difficult to provide a price based on market structures. The company is expecting that if it is sold, it will require a very high price and be used for a unique project that will benefit from a stone that is one of the rarest ever to be found.

Luckily, for the company, there are signs that costs for diamonds similar in size to the Lucara diamond will continue to strengthen over time. In addition to the value of the diamond, since the gem was found in November, the stock price for Lucara Diamond has risen more than 30%, which is good news to a sector that has seen a drop in diamond demand and an increase in supply.

The change in the diamond prices to the negative has not created any concerns with the overall African economy. Leaders in Botswana believe that the diamond price will go up and support those businesses who are working to stay in business until the market corrects itself.

The way that the south lobe material is processed is what made all of the difference in finding the historic diamond. In fact, the work done at Lucara took advantage of x-ray transmission technology to find the stone. They are the first company to use XRT in order to recover gems of this magnitude.

Using this technology, the company also recovered an 813 carat stone and a 374 carat gem during the same week using XRT. These diamonds may not be sold as part of the company’s regular tenders. The company is looking at all options available for sales, but using market figures, the 1,111 carat diamond found in November would be valued at over $60 million dollars.

In addition to the recovery of the historic diamond, the company has additional plans for 2016. The guidance this year states that the company believes they will make between $200 and $220 million dollars, and that doesn’t include the sale of two of the exceptional diamonds that were recovered recently. The company is expecting diamond sales to land between 340,000 and 380,000 carats during the year, with operating costs of between $33.5 and $36.5 per ton. Capital expenditures will range from $15 to $18 million dollars this year with the mega diamond recovery options.

The company does have a drilling and exploration budget of $3.7 million and $7 million dollars, respectively, as well as sustaining capital of up to $11 million that includes $1.5 million for mill refining machines and $1.5 million for a needed office relocation.

For more information on Lucara Diamond or to learn more about the recent 1000+ carat diamond that was recovered, visit http://www.lucaradiamond.com/.