VANCOUVER, BC, Aug. 9, 2024 /CNW/ - (TSX:LUC) (BSE: LUC) (Nasdaq Stockholm: LUC) PDF Version  Lucara Diamond Corp. ("Lucara" or the "Company") today reports its results for the quarter ended June 30, 2024. All amounts are in U.S. dollars unless otherwise noted. Q2 2024 HIGHLIGHTS Karowe registered no lost time injuries during the three months ended June 30, 2024. As of June 30, 2024, the mine had operated for over three years without a lost time injury. The recovery of a 491-carat Type IIa diamond, a 225.6-carat Type IIa diamond, followed by the recovery of a 109-carat Type IIa diamond. A total of 76,387 carats of diamonds were sold, generating revenue of $41.3 million during the second quarter of 2024. Significant progress was made in shaft sinking in the ventilation and production shafts in Q2 2024 with the critical path ventilation shaft ahead of the July 2023 rebase schedule. At the end of Q2, the production and ventilation shafts had reached a depth of 557 metres below collar ("mbc") and 550 mbc respectively. A total of 92,419 carats were recovered during the quarter at a recovered grade of 12.9 carats per hundred tonnes ("cpht") of direct milled ore. A further 8,349 carats were recovered from processing of historic recovery tailings. The recovery of 206 Specials (defined as rough diamonds larger than 10.8 carats) equated to 6.9% by weight of the total recovered carats from Q2's ore processed which is in line with the Company's expectation. Operational highlights from the Karowe Mine included: Ore and waste mined of 0.7 million tonnes ("Mt") (Q2 2023: 0.7Mt) and 0.2 million tonnes (Q2 2023: 0.9Mt), respectively. 0.7 million tonnes of ore processed (Q2 2023: 0.7Mt). Financial highlights for Q2 2024 included: Operating margins of 67% were achieved (Q2 2023: 59%). A strong operating margin continues to be achieved due to robust pricing for the Company's larger stones and cost reduction initiatives assisted by a strong U.S. dollar. Operating cost per tonne processed(1) was $26.32, a decrease of 6% over the Q2 2023 cost per tonne processed of $27.97 and stayed relatively consistent with Q1 2024 of $26.00 cost per tonne. The continued impact of inflationary pressures, particularly labour, has been well managed by the operation. A strong U.S. dollar continues to offset a small increase in costs over the comparable period. Adjusted EBITDA(1) was $18.8 million (Q2 2023: $16.5 million), with the increase attributable to the increase in revenue and lower operating expenses. During Q2 2024, the Company invested $11.2 million into the Karowe Underground Project ("UGP"), excluding capitalized cash borrowing costs: During Q2 2024, the ventilation shaft sank 128 metres and commenced development of the 470-level station (at approximately 550 mbc). Production shaft activities included sinking a total of 104 metres, and the completion of three probe hole covers with no water being intersected. A total of 26 metres of lateral development on the 470-level together with the 470-level station development was completed. Cash position and liquidity as at June 30, 2024: Cash and cash equivalents of $21.9 million. Working capital (current assets less current liabilities excluding held for sale) of $21.7 million. $165.0 million drawn on the $190.0 million Project Facility ("Project Facility") for the Karowe UGP with $25.0 million drawn on the $30.0 million working capital facility ("WCF") and Cost Overrun Reserve Account ("CORA") balance of $37.5 million. (1) Operating cash cost per tonne processed and adjusted EBITDA are non-IFRS measures (See "Use of Non-IFRS Financial Performance Measures" in MD&A). William Lamb, President & CEO commented: "Lucara's performance this quarter reaffirms our position as a leader in the diamond industry. Our unwavering commitment to safety and operational excellence continues to drive our success, with both our open pit operations and underground construction progressing admirably. The Underground Expansion Project, in particular, is advancing well, with shaft sinking progress surpassing our expectations. In the face of a challenging diamond market, Lucara's unique production profile sets us apart. Our Karowe mine's consistent delivery of large, high-quality diamonds provides a natural hedge against market volatility. These exceptional stones, coupled with our innovative sales strategies, allow us to navigate current market conditions effectively. Looking ahead, I'm confident that Lucara is well-positioned for sustainable growth. Our expansion strategy and focus on operational efficiency provide us with the flexibility to adapt to market dynamics while continuing to deliver value. As we move forward, Lucara remains committed to setting new industry standards and capitalizing on the opportunities that lie ahead in the evolving diamond market." DIAMOND MARKET The long-term outlook for natural diamond prices remains positive due to improving supply and demand dynamics due to long-term reductions from major producing mines. However, the market for the smaller size stones remains soft as demand is impacted by a weak Asian market and laboratory-grown diamonds. Demand for larger stones over 10.8 carats remains robust, as reflected in the Company's sales. The G7 sanctions on Russian diamonds over one carat, effective March 2024, have caused some trade delays. New regulations require these diamonds to be processed through the Antwerp World Diamond Centre for origin verification. The Company views this as short-term support for diamond prices, as the emphasis on stone provenance increases. Lucara, with its established operations producing exceptional Botswana diamonds, stands to benefit from this heightened focus on origin verification. Sales of laboratory-grown diamonds increased steadily through 2023 and into 2024 with many smaller retail outlets increasingly adopting these diamonds as a product. In Q2 2024, De Beers announced it will cease creating synthetic diamonds and direct its efforts to sell natural diamonds. This is in conjunction with several major brands confirming that they would not market laboratory-grown diamonds. The overall long-term impact will support the natural diamond market as the Company expects to see bifurcation between the natural and laboratory-grown diamond market in the medium term. The longer-term market fundamentals for natural diamonds remains positive, as demand is expected to outstrip future supply, which has been declining globally over the past few years. KAROWE UNDERGROUND PROJECT UPDATE The Karowe UGP is designed to access the highest value portion of the Karowe orebody, with initial underground carat production predominantly from the highest value eastern magmatic/pyroclastic kimberlite (south) ("EM/PK(S)") unit. The Karowe UGP is expected to extend mine life to 2040. An update to the Karowe UGP schedule and budget was announced on July 16, 2023 (link to news release). The anticipated commencement of production from the underground is H1 2028. The revised forecast of costs at completion is $683.0 million (including contingency). As at June 30, 2024, capital expenditures of $336.3 million had been incurred and further capital commitments of $69.7 million had been made.  With the 2023 update, the Karowe Mine production and cash flow models were updated for the revised project schedule and cost estimate. Open pit mining will continue until mid-2025 and provide mill feed during this time. Stockpiled material (North, Centre, South Lobe) from working stocks and life of mine stockpiles will provide uninterrupted mill feed until late 2026 when Karowe UGP development ore will begin to offset stockpiles with high-grade ore from the underground production feed planned for H1 2028. The long-term outlook for diamond prices, combined with the potential for exceptional stone recoveries and the continued strong performance of the open pit could mitigate the modelled impact on project cash flows due to the changes in schedule. The Company continues to explore opportunities to further mitigate the modelled impact. During Q2 2024, the UGP achieved a twelve-month rolling Total Recordable Injury Frequency Rate of 0.65. Project to date Total Recordable Injury Frequency Rate at June 30, 2024 was 0.56.  A total of $11.2 million was spent on the Karowe UGP development in Q2 2024 for the following surface infrastructure and ongoing shaft sinking activities: The ventilation shaft Q2 2024 development: Reached a depth of 550 metres below collar out of a planned final depth of 731 metres. Commenced 470-level station development. The production shaft Q2 2024 development: Reached a depth of 557 metres below collar, out of a planned final depth of 765 metres. The 470-level station and development excavation at the production shaft was completed. Related infrastructure Q2 2024 development: Construction of the permanent bulk air coolers at the production shaft continued during Q2 and was completed in July 2024. Detailed engineering and fabrication of the permanent people and materials winder continued during the quarter, representing the last major component for the permanent winders. Preparation of tender documents for the underground lateral development work. Tenders for this contract are expected to be received in September 2024. Mining engineering advanced with a focus on supporting shaft sinking, underground infrastructure engineering and finalizing drilling level plans. The capital cost expenditure for the UGP in 2024 is expected to be up to $100 million – see "2024 Outlook" below. Activities planned for the Karowe UGP in Q3 2024 include the following: Production shaft sinking to 310-level. Complete station and commence lateral development at the 470-level for the ventilation shaft. Procurement of underground equipment, including an additional Load Haul Dump (LHD) vehicle for the production shaft station development. Major components of the underground crusher and dewatering pumps will be delivered to site. Continuation of detailed design and engineering of the underground mine infrastructure, draw bells and underground layout. Finalise engineering of the permanent people and materials winder. Commencement of people and materials winder earthworks and civils. FINANCIAL HIGHLIGHTS – Q2 2024 Three months ended June 30, Six months endedJune 30, In millions of U.S. dollars, except carats 2024 2023 2024 2023 Revenues $ 41.3 38.6 $ 80.8 79.9 Operating expenses (13.7) (13.9) (32.0) (30.8) Net income from continuing operations for the period 11.9 6.1 5.0 7.9 Net loss from discontinued operations for the period (0.6) (1.1) (1.5) (2.0)