Recently Lucara diamond presented the Karowe underground expansion. 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) unit.
The underground expansion is expected to extend mine life to at least 2040 and is forecast to contribute approximately $4 billion in additional revenues using conservative diamond price assumptions which are un-escalated and exclude exceptional stone revenues.
An update to the Karowe UGP schedule and budget was announced. This update was initiated in response to slower than planned ramp up to expected sinking rates, and, to account for time incurred to date, as well as for anticipated future grouting programs.
Grouting programs took longer than anticipated due to a combination of high-water volumes in the sandstone lithologies between 870 and 752 metres above sea level in depth combined with technical challenges associated with the transition to main sinking.
The updated schedule incorporates a 28% increase in the duration of construction, extending the anticipated commencement of production from the underground from H2 2026 to H1 2028. The revised forecast of costs at completion is $683 million (including contingency), a 25% increase to the May 2022 estimated capital cost of $547 million.
The increase of $136.0 million in estimated capital to reach project completion is predominantly related to increased schedule duration and related labour costs (about 56% of the total), grouting costs (approximately 20% of the total capital increase), with the balance of the increase attributable to Owner’s costs, procurement, and indirect project costs. During the three months ended September 30, 2023, a total of $20.3 million was spent on the Karowe UGP development!
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