Toronto-listed Lucara Diamond sold 101 422 ct during the quarter ended September 30, generating $51.2-million in revenue.

In August, the company recovered a 1 015 ct non-gem diamond and a 37.42 ct near-gem pink Type IIa diamond.

The 1 015 ct diamond is the ninth diamond over 1 000 ct from the Karowe diamond mine, in Botswana, and the third recovered this year.

Additionally, the company notes that the bottom of the production shaft was reached in July, a key development towards the completion of the underground project (UGP).

The company says it drew $10-million from the $63-million funding support provided by Lucara’s largest shareholder, Nemesia, and issued an unsecured debenture in connection with the drawdown.

The debenture matures on June 30, 2031.

The recovery of 224 special diamonds – defined as rough diamonds weighing more than 10.8 ct – equated to 9.1% by weight of the total carats recovered from direct ore feed in the third quarter of this year.

During the quarter, the company says it recovered eight diamonds weighing more than 100 ct each, including two stones that exceeded 1 000 ct.

A total of 97 651 ct were recovered in the third quarter – 95 302 ct were from direct ore feed from the openpit and stockpiles, at a recovered grade of 12.8 ct per hundred tonnes (cpht), and an additional 2 349 ct were recovered from processing historical recovery tailings.

Operational highlights from the Karowe mine included ore mined of 500 000 t and 700 000 t of ore processed.

Financial highlights for the quarter included operating margins of 57%, a 9% increase from operating margins of 48% in the third quarter of 2024.

The company says the increase in operating margins was driven by a 16% increase in revenue and a 5% decrease in operating expenses.

Operating cost per tonne processed was $25.65/t, a 6% decrease compared to the third quarter last year operating cost of $27.34/t.

Lucara notes that lower tonnes were mined this year compared with 2024 resulting in a reduction in certain operating costs, adding that the continued impact of inflationary pressures, particularly labour, has been well managed by the operation.

Operating cost per tonne processed is a non-International Financial Reporting Standards measure.

With regard to the company’s cash position and liquidity as at September 30, Lucara has reported a cash balance of $18-million.

The company says $190-million has been fully drawn from the project finance facility for the Karowe UGP along with $30-million fully drawn from the working capital facility.

The company also reports a working capital deficit – current assets less current liabilities – of $157.8-million owing  to the classification of the project facility as a current liability.

Lucara president and CEO William Lamb says operational performance at Karowe remained robust this quarter, supported by continued strong recoveries and steady progress on the UGP.

“Our ongoing recovery of large, high-value diamonds, including most recently the ninth stone exceeding 1 000 ct, reinforces Karowe’s reputation as one of the world’s most consistent sources of exceptional-quality gems,” he says.

Lamb adds that the Karowe UGP advanced during the quarter, with shaft sinking and equipping proceeding according to and in some areas exceeding plan.

Completion of shaft sinking at the production shaft marked a key milestone for the quarter, with lateral development activities ongoing to link the production and ventilation shafts, he says.

“Our teams continue to deliver these results safely and efficiently, maintaining our impressive safety record.

“As development advances toward first underground ore, we remain focused on safe execution and cost discipline. The work undertaken now lays the foundation for the long-term performance and value of the Karowe resource.”

DIAMOND MARKET

Lucara says the long-term outlook for natural diamond prices remains cautious as the market continues to navigate structural shifts. It notes that the prices of lab-grown diamonds have continued to decrease through this year, with production outweighing demand.

Global natural diamond production is forecast to decrease, following significant production guidance cuts by the major diamond producers.

In the near term, Lucara says premium-grade large natural diamonds are showing signs of potential stability, supported by limited global supply growth.

However, it notes that mid-range and lower-grade diamonds continue to face pricing pressure owing  to high inventories, cautious consumer sentiment, and the rapid rise in the purchasing of lab-grown diamonds.

KAROWE

Lucara explains that the UGP is designed to access the highest-value portion of the Karowe orebody, with initial underground carat production predominantly from the EM/PK(S)2 unit.

The company says it is currently reviewing the mining method for the UGP, along with the project’s cost estimates and schedule.

It notes that the UGP has progressed well, highlighted by reaching the bottom of the production shaft in late July and achieving 2 067 lost-time injury free days.

The ore extraction review has focused on further understanding the orebody geomechanics and modelling potential caving scenarios which affect ore extraction levels and extraction point designs to be included in an updated technical report.

The company has initiated detailed engineering of the lateral development portion of the UGP and is finalising an updated life-of-mine plan based on the results of the simulation work.

Lucara says the review of the mining method does not impact on the ongoing development of the UGP. The company continues to advance according to plan toward the lateral development phase of the project.

UGP development work continues with equipping the production shaft, commissioning of the shaft conveyances, progressing underground infrastructure development near the shafts and advancing the lateral development towards the kimberlite.

During the third quarter of this year, Lucara notes that the UGP achieved a twelve-month rolling total recordable injury frequency rate (TRIFR) of 1.37. The UGP to date TRIFR up to September 30 was 0.59.

A total of $22.7-million was spent on the UGP in the third quarter of this year, primarily on advancing production shaft sinking, developing the 310-level to interconnect shafts, and 285-level station development, which included significant concrete work, pump installations, and other station civil works.

Expenditures also related to completing key electrical and power installations at the 355-level and 470-level, as well as ongoing lateral development and surface infrastructure activities.

In terms of ventilation shaft third quarter developments, the company has completed 184.5 m of lateral development at the 310-level and is advancing the 310-level lateral development toward holing into the production shaft.

Moreover, regarding production shaft developments, Lucara says it has begun stage modifications and equipping stage assembly, adding that it has completed 7.8 m of lateral development.

In terms of related infrastructure developments for the quarter, the company notes that it has continued adjudication and review of underground lateral development tender documents.

The company has also completed the man and material (M&M) winder installations, including rack and cable installations in the M&M winder building.

It notes that it has also completed fencing of evaporator pond and pipeline installation, adding that it has advanced mining engineering, focusing on underground infrastructure and finalising drilling level plans.

Activities planned for the UGP in the fourth quarter of this year include the ventilation shaft where the company says it will complete the 310-level station development and 310-level lateral development connecting to the production shaft; as well as complete blasting of ore pass to the 285-level.

In terms of the ventilation shaft, the company also aims to complete 310-level to 285-level tip construction; as well as installation and commissioning of substation; complete sinking to 285-level and hole with production shaft; and continue 310-level and 285-level lateral development.

In terms of the production shaft, the company aims to complete stage modification for shaft equipping; continue with shaft equipping and complete loading pocket structure steel installation; installation of shaft bottom spillage and deflection wall; and complete station steel construction at the 285-level and 310-level.

DIAMOND SALES

Lucara points out that diamonds from Karowe are sold through three sales channels, namely through a diamond sales agreement with HB Trading BV, through quarterly tenders, and on the Clara sales platform.

For the three months ended September 30, the company says it recognised revenue of $38-million from HB, compared to $27.8-million for the same period in 2024.

Revenue from HB accounted for 74% of total revenue recognised in the third quarter of this year, up from 63% in the third quarter of 2024.

This revenue includes “top-up” and “top-down” payments, which are made to the company when the final polished diamond sales price differs from the estimated initial polished value.

HB revenue increased in the third quarter of this year, owing to a higher volume of carats sold. As of September 30, the company had $29.4-million in current trade receivables from HB.

For the three months ended September 30, tender sales totalled $11.2-million, compared with $14.6-million in the third quarter of 2024, while Clara sales totalled $2-million consistent with $1.9 million in the third quarter of 2024.

Overall, a lower volume of carats was sold through both the Clara platform and tender compared to the third quarter of 2024.

Tender sales had lower average dollar-per- carat sales values compared to 2024 while Clara’s average dollar-per-carat increased compared to the third quarter of 2024.

OUTLOOK

In the first quarter of this year, Lucara revised its guidance for diamond revenue, diamond sales, and diamonds recovered from the 2025 guidance news release dated December 3, 2024.

The company says no changes have been made to the 2025 guidance in the third quarter of this year.

During the quarter, the company says it mined and will continue to mine for the remainder of the year a higher proportion of M/PK(S)4 ore and less higher-grade EM/PK(S) ore than initially planned, owing to a difference in the location of the contact between the two kimberlites when compared to the geologic model used to set the initial 2025 guidance.

The company explains that this results in lower EM/PK(S) milled tonnes which have historically produced higher volumes of larger, higher quality diamonds and decreases expected revenue for the remaining life of the open pit.

The revised 2025 revenue guidance excludes the sale of the 2 488 ct Motswedi.

In 2025, the company says it expects to mine between 1.8-million and 2.2-million ore tonnes including waste. Mined ore will be processed in combination with stockpiled material this year.

The company says the assumptions for carats recovered and sold as well as the number of ore tonnes processed are consistent with achieved plant performance in recent years.

Stockpiled material (North, Centre, South Lobe) from working stockpiles and life-of-mine stockpiles will provide mill feed until 2027 when UGP development ore is scheduled to start offsetting stockpiles with high-grade ore from the UGP.

The company says full-scale underground production is planned for the first half of 2028.

This year, Lucara says capital costs for the UGP are expected to be up to $95-million, revised downward during the second quarter from the previous guidance of up to $115-million.

The company notes that the deferral of capital expenditures reflects strategic cash flow management and does not impact the ongoing operations or planned development activities of the UGP.

The company says expenditures this year will focus predominantly on shaft sinking activities to final depth, equipping of the production shaft and station development.

Surface works will focus on permanent winders being installed and cold commissioned. Tendering of the underground lateral development contract along with underground equipment purchases are also expected to be completed this year.

Lucara adds that sustaining capital is expected to be up to $13-million with a focus on the replacement and refurbishment of key asset components, in addition to expansion of the tailings storage facility and pit steepening activities which could extend the mine's ability to extract South Lobe material from the openpit into early 2026.