Lucara generates strong quarterly cash flow, operating margins

Financial:

• EBITDA for the period was $66.8 million and year to date was $95.3 million.
• Net cash position of $122.7 million increased from $74 million at June 2015 following the Company’s first exceptional stone tender and regular tender during the quarter.
• Year to date costs at $29.44 per tonne ore processed remain well controlled and marginally below forecast. Plant optimization costs and sustaining capital costs are within forecast.
• Third quarter earnings per share of $0.12 (2014: $0.11 per share). Year to date earnings per share of $0.15 (2014: $0.17 per share).
• Dividend: cumulative dividend of CND 4 cents per share to be paid to shareholders on Decembers 17, 2015

Operational:

• Tonnes processed post plant optimization commissioning improved during the quarter. Tonnes milled in the third quarter were 11% higher than the previous quarter with 100,651 carats recovered during the period.
• Fourth quarter processing is expected to be focused on south lobe ore.

Exploration:

• Exploration sampling advancing with first ore to be processed from BK02 during the fourth quarter.

William Lamb, President and Chief Executive Officer commented “Karowe continued to deliver strong cash flows in Q3, underpinned by the sale of our large, high value diamonds and our disciplined approach to cost control and allocation of capital. Further, demand for our diamonds remains high and we anticipate continued, robust free cash flow to help deliver strong shareholder returns going forward. We have been pleased with the optimized plant performance through the quarter with production returning to design capacity levels. This is particularly important as production in the fourth quarter will focus on south lobe material. The commissioning of the bulk sample plant has resulted in us advancing on our exploration activities. We look forward to updating the market on these exciting developments”

FINANCIAL UPDATE

Revenues and operating margin: The Company achieved revenues of $90.9 million or $1,081 per carat in the third quarter of 2015. The Company’s third quarter operating margin was $951 per carat or 88%, which is largely due to the Company’s first exceptional stone tender in 2015, which achieved proceeds of $68.7 million from the sale of 1,674 carats.

Year to date revenue to September 30, 2015 was $158.6 million or $560 per carat achieving a 77% operating margin.

Net cash position: The Company’s third quarter cash ending balance was $122.7 million compared to $74 million at the end of June 2015. The increase in cash is due to the Company’s exceptional stone tender and regular tender during the quarter, which generated proceeds of $89.2 million. Revenue from sales were partially offset by operating costs and royalty payments, a quarterly tax payment of $6.2 million and capital expenditures of $7.8 million during the period.

Earnings per share: Earnings per share was $0.12 for the three month period ended September 30, 2015 and $0.15 for the nine month period ended September 30, 2015 ($0.11 and $0.17 earnings per share for the three and nine months to September 30, 2014 respectively).

Dividend Paid: The Company has declared a year-end dividend of CDN 2 cents per share for a cumulative dividend of CDN 4 cents per share in 2015. The dividend is expected to be paid on December 17, 2015 to holders of securities on the record of the Company’s common shares at the close of business on December 4, 2015 and represents a yield of 2.4% based on the share price of November 4^th.

Full press release: http://lucaradiamond.mwnewsroom.com/Files/90/90b2423e-06af-4943-99cb-fef41d7b3257.pdf