Lucara Looking to Double Life of Botswana’s Karowe Mine

Vancouver, Canada—Lucara Diamond Corp. plans to move forward with an underground expansion of Karowe, the Botswana mine that’s made headlines for producing some of the biggest rough diamonds in history.

The Vancouver, Canada-based mining company said Tuesday results of a recent feasibility study were positive, indicating an underground expansion would extend the life of the mine to 2040 and generate “significant” revenue and cash flow.

The original design for Karowe from 2010 had the open pit being mined out by 2025, so the underground expansion would double the mine’s life.

In a news release, Lucara President and CEO Eira Thomas said the feasibility study “has outlined a much larger economic opportunity than first envisaged in the 2017 PEA (preliminary economic assessment).”

She added that the expansion, which has an estimated pre-production cost of $514 million, is expected to pay for itself in less than three years, as the underground will give the mining company access to the highest-value part of the orebody first and generate more than $5.25 billion in gross revenue.

Both Thomas and Zara Boldt, Lucara’s chief financial officer, are bullish on diamond prices going forward as supply continues to dwindle.

“Diamond deposits are rare and getting rarer,” Thomas said in the release. “In this context, we are extending a mine that is in a class of its own, having produced 15 diamonds in excess of 300 carats, including two greater than 1,000 carats in just seven years of production.”

Lucara recovered the 1,109-carat diamond later named “Lesedi La Rona” in November 2015 and found a 1,758-carat diamond at the mine this past July. That stone, called Sewelô or “rare find,” is said to be of “near-gem of variable quality.”

Graff Diamonds paid $53 million for Lesedi La Rona, and another huge diamond from Karowe, the 813-carat “Constellation,” went for $63.1 million, the most ever paid for a rough diamond.

Lucara said in the first half of 2020, it will move forward with detailed engineering and early procurement initiatives for the underground expansion.

It said the money needed to begin the expansion next year represents less than 10 percent of the pre-production capex estimate and can be funded out of its anticipated cash flow. In the meantime, it will be looking for financing options for the bulk of the project.