Lucara Diamond Corp has announced its first Exceptional Stone Tender of 2014. The tender will comprise 20 individual diamonds with a combined weight of 1,191.71 carats and client viewings will take place in both Gaborone (March 25-28) and Antwerp (April 2-10) with the tender closing on April 10.
The company says that in addition to the Exceptional Stone Tenders, regular tenders will be conducted throughout the year and that it intends to sell up to 420 000 carats a year from its Karowe Mine in Letlhakeng.
Last week, the company’s board of directors approved the issuance, from time to time, of a special dividend based on revenues generated from Exceptional Stone Tenders, subject to the company’s overall financial position and other factors existing at the time under consideration.
“The Board intends to declare in May its first semi-annual dividend of $0.02 per share for payment in June,” Lucara said in a statement.
In its latest independent technical report that was put together by a panel of Qualified Persons, the company says that the occurrence of large high value stones adds to the robust economic viability of the Karowe Mine, since high value stone tend to be less negatively affected by downturns in the diamond market relative to smaller stones.
“Karowe Mine produces a relatively large number of exceptionally large and valuable stones (often Type IIa stones of greater than 10.8 ct or fancy coloured stones such as blue or pink diamonds), and these stones tend to occupy a specific niche in the overall diamond market,” the report says.
The company unearthed a US$22.9 million gem diamond in the last quarter of 2013 at its Karowe mine in Letlhakeng. In all, the company held three exceptional stone tenders achieving revenues of $72.1 million – 2971 carats at US$24 290 per carat.
“At year end the Company was well positioned for 2014 with a significant diamond inventory of approximately 67,000 carats of diamond, including a selection of exceptional stones totalling over 1,000 carats. The Company expects to hold its first Exceptional Stone Tender of 2014, early in the second quarter,” Lucara says.
The Botswana government levies a royalty of 10 percent on the actual sales of diamonds. Lucara plans to hold eight diamond tenders and two exceptional stone tenders in 2014 and in its 2013 report says that the timing of these tenders will be based on Karowe’s production profile as well as commercial decisions to maximise diamond revenue.
The Karowe mine is forecast to process 2.2-2.4 million tonnes of ore and to produce and sell 400,000 to 420,000 carats of diamond in 2014. Revenue is forecast between $150 – $160 million.
Ore mined is forecast between 3.0 ÔÇô 3.5 million tonnes and waste mined is expected to be between 10.0ÔÇô 11.0 million tonnes. Karowe’s operating cash costs are expected to be between $31-$33 per tonne ore treated.
The 2013 report says that while the operating environments in Botswana and Lesotho are considered favourable compared to those in other developing countries, there are still political risks.
“These risks include, but are not limited to terrorism, hostage taking, military repression, expropriation, extreme fluctuations in currency exchange rates, high rates of inflation and labour unrest. Changes in mining or investment policies or shifts in political attitudes in these countries may also adversely affect the Company’s business.
In addition, there may be greater exposure to a risk of corruption and bribery (including possible prosecution under the federal Corruption of Foreign Public Officials Act).
Also, in the event of a dispute arising in foreign operations, the Company may be subject to the exclusive jurisdiction of foreign courts and may be hindered or prevented from enforcing its rights,” the company says.