TSX-listed Lucara Diamond Corporation, which operates the Karowe mine in Botswana, has seen its earnings more than doubled during the third quarter, due to increased revenue from the sale of large diamonds.
The company reported total revenue of $195 million and EBITDA of $126 million for the nine months to September 30, 2014 in its Q3 results. Lucara achieved revenue of $91.3 million during the period, including $24.8 million of proceeds from its June tender.
Subsequent to the end of the third quarter, the Company concluded its third exceptional stone tender in October for proceeds of $46.4 million or $30,129 per carat. Following this sale the Company’s full year-to-date proceeds were $241.4 million.
The company’s quarter-end cash balance was $133.1 million compared to a cash balance of $33.6 million in September 30, 2013 and $49.4 million of cash at the end of 2013, and its Scotiabank $50 million credit facility remains undrawn.
Karowe operating performance
Karowe’s performance was better than forecast during the period in terms of ore and waste mined and carats recovered. The plant optimization program is advancing to plan and Lucara has achieved a critical milestone in commissioning the large diamond recovery circuit during the third quarter. The company also celebrated the achievement of 1.0 million carats recovered during the quarter.
Adjusted Earnings per share
Adjusted earnings per share is $0.11 per share for the three month period ended September 30, 2014 (2013: earnings per share $0.04) and $0.19 per share for year to date September 30, 2014 (2013 earnings per share $0.11). The adjusted earnings per share removes the non-cash foreign exchange impact on an intercompany loan between Corporate and Karowe in order to present the current cash distributable on an earnings per share basis.
Lucara has also announced a special dividend of CA$ 0.04 per share to be paid on December 18, 2014 along with its CA$ 0.02 per share year-end dividend. The total dividend to be paid by the Company in 2014 is CA$ 0.08 per share (Total semi-annual dividend of CA$ 0.04 and special dividend of CA$ 0.04 per share) is equivalent to a dividend yield of 3.3% based on the TSX closing price on November 7, 2014.
Botswana Prospecting Licenses
Lucara was awarded two precious stone prospecting licenses within the Orapa Kimberlite field in close proximity to the Karowe Diamond mine during the period. The Company has ordered a bulk sampling plant and will commence work programs on the two prospecting licenses during 2015.
William Lamb, President and Chief Executive Officer commented “Lucara has continued to see strong demand for its diamonds with revenues boosted by our Exceptional and Large Diamonds, which have now contributed $136 million this year following our large stone tender in October. These revenues, as well as our focus on cost control, have resulted in strong operating cash flows.
“We are re-investing in the business to secure future revenues through our plant optimization and large diamond recovery project and the commencement of exploration programs on two precious stone prospecting licenses in the Orapa region in Botswana. The company has also declared a total dividend of CA$0.08 per share for 2014 after only our second full year of operation which balances our capital requirements for development and our aim to return income to our shareholders.”