Lucapa improves core-earnings guidance as diamond industry recovers

Lucapa Diamond has reported a significant upgrade to its 2021 full year attributable guidance, which sees its full-year EBITDA increase by about 45% to between A$26 million and A$28 million following solid operational performances from both the Lulo and Mothae mines.
The company had previously expected an EBITDA of between to A$17 million and A$ 21 million this year.
Company managing director Stephen Wetherall said they set ambitious 2021 operational and financial targets for both mining operations as the diamond industry began to emerge from the pandemic. 
“With nine months now behind us, we are extremely pleased to provide revised full-year guidance that sees an uplift of approximately 45% in our EBITDA guidance to A$26 – 28 million,” he said recently.
“The forecast record financial performance at Lulo this year, is expected to accelerate returns to Lulo shareholders and the capital loan repayments to Lucapa, which in turn we expect to utilise in reducing the corporate debt levels.”
Lucapa is now expecting diamond production of 35,000 to 37,200 carats compared to between 40,400 and 42,600 carats as previously guided.
The reduction in guidance is primarily due to a revision to the Lulo mining plan and the decision to source a higher proportion of gravels from lower grade, higher-value Lulo mining blocks (such as Mining Block 46), as well as Mothae experiencing delays in its expansion ramp up.
The forecast lower carats have been offset by the higher achieved and forecast diamond prices, it said.
A weighted average rough diamond price of between $1,242 and $1,312 per carat is expected this year compared to the previous $957 to $1,034 per carat.
The increase in guidance is mainly due to the prevailing strong market demand, rough supply constraints following the pandemic as well as large and fancy pink diamond recoveries resultant from the revision of the Lulo mine plan.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished