Africa Mining: Lucara’s FY17 profit dips 8% on lower sales

Lucara-DiamondSouthern Africa-focused miner Lucara Diamond Corp has reported an 8% drop in full-year profit as lower production and the sale of fewer special diamonds weighed on the bottom line.

The Vancouver-based miner, which operates its flagship Karowe mine, in Botswana, reported net income of $65.1-million, or $0.17 a share, for 2017, down from $70.7-million, or $0.19 a share, in 2016.

Lucara said revenue for 2017 fell 25% to $220.8-million, as the volume of rough stones sold fell 27% to 260 526 ct. The average realised price diamonds sold for rose 3% year-on-year to $847/ct, which was boosted by the sale of the 1 109 ct Lesedi la Rona, which was sold to Graff Diamonds for $53-million earlier in 2017.

In 2016, Lucara’s revenues were bolstered by selling the 813 ct Constellation diamond for $63.1-million.

The company reported an average price of $31 005/ct from selling 1 766 ct worth of special diamonds, which are classified as single diamonds larger than 10.8 ct. In 2016, exceptional diamonds were sold at an average price of $34 301/ct, from the sale of 2 624 ct.

Lucara reported full-year 2017 output of 249 767 ct, which was lower than expected, after the company’s mining contractor experienced reduced availability of mining equipment, which prompted the operation to shift to lower-grade stockpiles. Lucara said it had transitioned to a new processing contractor in the fourth quarter.

The company, which has an equity listing on the TSX, guided for another year of lower output and revenues. The Karowe operation is expected to produce between 270 000 ct and 290 000 ct of rough diamonds this year, resulting in a lowered revenue outlook of between $170-million and $200-million.

Further, the miner allocated a budget of up to $3-million to complete a prefeasibility study of the Karowe AK06 underground development, which is expected to be completed by the end of 2018.

Lucara’s TSX-listed equity fell as much as 6.38% on Wednesday, the day following the results release, to close at C$2.20 a share – 2c above the stock’s 52-week low range. The stock had crimped nearly 22% in value since the start of the year.


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