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Lucara Increases Revenue Expectations in the Face of Price Increases

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Lucara Diamond Corp. has raised its annual revenue guidance because the company anticipates that the current strength in the market will continue throughout the year.

In a statement released last week, the miner predicted that revenue from its Karowe mine in Botswana would reach between $195 million and $225 million in 2022, an increase from the $185 million to $215 million it had previously predicted, according to the company. It was pointed out by Lucara that the new forecast does not include any earnings from the sale of exceptional stones, such as the 549-carat Sethunya diamond.

“The diamond market continued to gain momentum throughout the year,” said Lucara CEO Eira Thomas. “Higher diamond prices combined with solid operational performance at the mine...has delivered strong revenues for...2021. [This] demonstrates a full recovery from the challenges of the pandemic and reflects a much better outlook for 2022 and beyond as we continue to benefit from one of the strongest diamond markets we have seen in the better part of a decade.”

For the year 2021 as a whole, revenue increased by 84 percent to $230.1 million. The total number of carats sold increased by 2% to 381,681 carats, while the average price increased by 80% to $603 per carat.

The miner sold rough through regular tenders, on its Clara sales platform, and through a partnership with Belgian manufacturer HB Antwerp, which was signed in July 2020. That agreement covers all rough diamonds weighing more than 10.8 carats, which will be manufactured and sold as polished diamonds.

A record year for large stones was achieved by Lucara in 2018, with the discovery of 39 diamonds weighing more than 100 carats. There was a 1,174-carat stone of variable quality, a 470-carat light-brown diamond, and a 62.7-carat fancy pink diamond among those on display. The total amount of carats produced for the year decreased by 3% to 369,390 carats.

Because of Covid-19 restrictions, the miner reported a net income of $23.8 million, compared to a net loss of $26.3 million in 2020, when the market was experiencing difficulties.

The company's Clara sales platform, which matches buyers with available rough based on their polished requirements, saw a 168 percent increase in revenue to $28.7 million in the third quarter. According to the miner, prices increased steadily at each of the 21 sales that took place throughout the year. As of 2020, the number of buyers on the platform had increased to 88 from 75, and the company was maintaining a waiting list to manage supply and demand.

Mining company spent $86.3 million this year to convert Karowe to underground mining, which is expected to extend the mine's life to 2040.

Annual revenue increased by 37 percent to $57.9 million in the fourth quarter of 2016. In spite of a 2% decrease in sales volume, a 39 percent increase in the average price to $560 per carat more than compensated for the decrease in sales volume. A profit of $1.7 million was reported by Lucara for the three months ending December 31, compared to a loss of $3.9 million reported the previous year.

A further statement from the miner stated that it expects to produce and sell between 300,000 and 340,000 carats in 2022, depending on market conditions.

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