LUCARA Diamond Corporation said revenue from diamond sales, excluding exceptional stones will be as much as $225m at the upper end of its estimates in its 2022 financial year compared to a previous upper end estimate of $215m.
The improvement was owing to “the recent and expected strength in the rough and polished diamond markets”. In its 2021 financial year, Lucara generated $230m as a result of a rebound from 2020 when Covid restricted sales in the sector. The average price per carat achieved by Lucara was $603/carat, an 80% year-on-year improvement.
Lucara mines the Karowe mine in Botswana which is renowned for large discoveries, the latest of which is the 549 carat Sethunye diamond to be marketed by Louis Vuitton and HB Antwerp, Lucara’s partner for high value stones.
Lucara said last week that it had decided to delay the sale of Sethunye given the strong sales performance in the firm’s 2021 financial year and the fact that prices for exceptional stones had not performed as well as smaller goods.
High value diamonds were “… somewhat of an outlier to this trend” [of robust lower value diamond sales] as a result of significant volumes of goods in this category sold by other companies as deep discounts during the Covid pandemic.
Based on the far improved revenue performance, Lucara reported adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $102.5m, a five-fold increase over 2021’s EBITDA. Net income for the year was $23.8m equal to $0.06 cents/share.
The company spent $86.3m on the underground expansion of Karowe which is expected to generate $4bn in revenue for Lucara over the remaining life of mine. About $110m would be spent this year. The project’s capital cost has been estimated at $534m.
Eira Thomas, CEO of Lucara Diamond said the outlook was for “one of the strongest diamond markets we have seen in the better part of a decade”.
This echoes a statement from Petra Diamond which said last week there had been a critical structural positive change in the diamond market owing to diminishing new reserves and depletion of stocks in the mid-stream.