Lucara cuts revenue guidance as high value diamond sales fall

LUCARA Diamond Corp. said on Thursday revenue would be lower for its 2024 financial year than forecast owing to lower sales of high value diamonds, which comprise up to 70% of annual revenue, and a softening in the global diamond market.Commenting in a third quarter update, Lucara restated its 12-month revenue guidance to end-December to $160m to $180m compared to a previous forecast of $220m and $250m. No other guidance changes were made except to the outlay on the underground expansion of its Karowe mine.Lucara is spending $683m on Karowe, a mine in Botswana and the company’s only asset, with fully ramped up output due in 2028. Project expenditure of $80m was now expected  this year down from $100m previously.High value diamonds are classed as above 10.8 carats and are supplied to HB Group, an Antwerp-based manufacturer with which Lucara has a 10-year sales agreement (renewed this year). For the nine months, revenue from sales to HB Group was $80.6m which compares to $88.8m at the same period last year.These sales exclude exceptional recoveries for which Lucara’s Karowe mine is famed. The group said today it had received a provisional $20m, held as deferred sales, from HB Group for its 549-carat Sethunya stone recovered in 2020. In September, Lucara announced the recovery of a 1,094 carat diamond from Karowe which comes less than a month after the company announced the recovery of a 2,492 carat diamond – the largest since the 3,106 carat Cullinan diamond was discovered in 1905.William Lamb, CEO of Lucara said today that while the market for high quality gems was “robust”, smaller diamonds were under pressure owing to “weak Asian market and the increasing uptake of laboratory-grown diamonds”.He was encouraged, however, by G7 sanctions on Russian diamonds over a carat, effective March of this year. The sanctions, as part of the West’s economic response to Russia’s invasion of Ukraine, would provide “short-term support for diamond prices” as attention on diamond provenance increased.“Lucara, with its established operations producing exceptional Botswana diamonds, stands to benefit from this heightened focus on origin verification,” he said.Commenting on Karowe’s production outlook, Lamb said that a portion of mill feed would be stockpiled in order to bridge a potential shortfall of open pit feed from Karowe in about mid-2025. Ore feed from stockpiles will supply Karowe’s plant until 2027 just as high grade ore from the underground is expected.Lamb downplayed the risk of cash flow interruptions but added that other ‘mitigations’ to tackle the open pit to underground transition were being sought.“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,” said Lamb.The underground expansion at Karowe was initially planned to be completed before the open pit reserves were exhausted. But shaft sinking delays related to unforseen geological complexities, led to a capex and scheduling blow-out in 2023 that cost former CEO Eira Thomas her job.The post Lucara cuts revenue guidance as high value diamond sales fall appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com