Lucapa delivers strong Q2 & also expunged debt

Jul 20, 2023

Outgoing MD & CEO, Stephen Wetherall, commented: “After solid delivery and improvements in the first quarter, both mines consolidated those performances and delivered strong operational and financial results for the second Quarter.

The strong average prices our diamonds have attracted this Quarter and year to date have demonstrated the continued solid demand for high-value productions like Mothae and Lulo, against a backdrop where the mainstream commercial goods have experienced a little more than the usual cyclical softening in Q2.

Lucapa goes into the second half of the year with a strong balance sheet, having retired its project debt. Both mines are performing well and EBITDA positive and the Merlin feasibility study is nearing completion.”

According to the Q2 commentary, the percentage variances are also noted against the corresponding quarter in 2022. The mining operations performed extremely well during Q2 with a number of new records delivered by both SML (Lulo) and Mothae. On a combined basis, a record number of tonnes were delivered to the plants leading to a 16% increase in volumes processed in Q2.

Lulo record volumes mined and treated about 8,202 carats recovered, including third largest diamond to date – a 180 carat white Type IIa. Average rough diamond price up 45% QoQ to US$2,892. This quarter witnessed the First female ADT operator employed.

While Mothae also record volumes mined and treated about 8,075 carats recovered. Average rough diamond price up 60% QoQ to US$981 and that expunged ZAR100 million Industrial Development Corporation of South Africa debt.

The 5% reduction in carats recovered, mainly as a result of plant modifications at Mothae to improve the revenue/ hour, were offset by higher volumes processed. The number of Specials recovered in the Quarter was up 6% to 186. Across both mines, despite the anticipated lower grade, a 55% increase in the average rough price/ carat to US$1,883 resulted in revenues increasing 31% to US$28.6 million.

Record volumes processed and a slightly earlier Mothae export in Q2 were the main reasons for rough diamond inventories at Quarter end increasing 36% to 7,876 carats, on a combined basis. Excluding capitalised lease liabilities, Lucapa is now interest-bearing debt free, after repaying ~A$30 million in principal and interest over an 18 month period.

Mothae made a final payment to the Industrial Development Corporation of South Africa (IDC) for its project development loan and immediately post Quarter-end, Lucapa made its final payment to Equigold.

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