Lucara on course to convert Karowe Mine from open-cast to underground
By the end of last year, Lucara Diamond Corp had plunged over P180 million into converting Karowe Mine into an underground operation.
In an update accompanying the company’s financials released this week, the Canadian-based enterprise explained the amount covered various activities at the world-famous mine, located on the outskirts of Lethlakane.
These include site earthworks, geotechnical test pitting and drilling, and completion of two pilot holes at the shaft locations, a 746m hole for the ventilation shaft, and a 768m pit for the production shaft.
There was also some progress with regards to power line engineering and detailed shaft design and engineering.
With the open pit life of the mine forecast to come to an end in 2026, Lucara is making significant investments to prolong the mine’s existence through underground mining. This comes after the government of Botswana recently granted the company a 25-year extension to the Karowe Mining Licence until 2046.
The underground mining is anticipated to last until 2040, six years before Karowe’s Mining Licence expires.
The company has told shareholders it is currently exploring opportunities to arrange debt financing for the underground expansion for those amounts expected to exceed Lucara’s cash flow from operations during the construction period.
During a five-year development period, the underground expansion program is estimated to cost a whopping US$514 million (over P5 billion).
Meanwhile, during the last quarter of 2020, Lucara registered revenue of US$42.4 million (over P400 million) which the company President and CEO, Eira Thomas said was due to steps taken at the start of the pandemic.
These measures include a decision not to sell rough diamonds above 10.8 carats after the first quarter. Thomas noted this helped protect and support prices for large, high-value diamonds, which account for more than 70 percent of Lucara revenues.
“These efforts in conjunction with our transformational supply agreement with HB Antwerp executed in July, resulted in strong price recoveries by the fourth quarter, a trend which has continued into 2021,” revealed Thomas, whose mine is responsible for iconic stones such as Lesedi la Rona and Sewela.
She further pointed out that the recent recovery of two, high-value stones in excess of 300 carats highlights the ‘extraordinary nature’ of the Karowe resource and reinforces the rationale for underground expansion.
Despite the challenges faced by the diamond industry last year owing to the outbreak of the Covid-19 pandemic, Lucara is optimistic for 2021. The company notes the diamond sector began the year with a healthier supply-demand balance than it has had at any stage in the past five years.