Lucara Diamond Corp, which owns and operates Karome Mine, has lowered its full-year forecast after a forced shift to lower-grade, lower quality ore, causing it to worry about a decrease in revenue.
Lucara Diamond Corp. reported a drop in revenue to $30.3 million for the first quarter of 2025, down from $39.5 million in the same period last year, primarily due to a decline in carats sold. The company sold 72,871 carats in Q1 2025 compared to 93,560 carats in Q1 2024.
The decrease, according to Lucara, was driven by the need to process lower-grade stockpile material after unusually heavy rainfall in January disrupted open-pit mining operations. The company also mined a higher proportion of lower-grade ore than the higher-grade material originally planned for the quarter.
Lucara said in its financials that lower-grade ore was mined due to a shift in the contact between the two kimberlites.ย
These factors resulted in the companyโs 2025 revenue guidance being revised to $150 โ $160 million.ย
The lower revenue outlook has led management to assess the company’s ability to continue as a going concern, with concerns raised about sufficient working capital, cash flow from operations, liquidity to meet obligations, and ongoing underground project development.
Based on this assessment, including the impact of revisions to revenue guidance for 2025, Lucara estimates that its working capital as at March 31, 2025, cash flow from operations, and other committed sources of liquidity will not be sufficient to meet its obligations, commitments, and planned expenditures.ย
โThese conditions cast significant doubt on the companyโs ability to continue as a going concern,โ Lucara said.
As the Project Facility and Working Capital Facility are fully drawn, Lucara said the underground project completion at Karowe Mine would require utilising working capital generated from existing mining operations, access to the Cost Overrun Reserve Account (CORA), and guarantees and securing additional financing.ย
Lucara said that after Q1 2025, the lenders approved a draw of up to $28.0 million from the CORA in exchange for the companyโs largest shareholder, Nemesia S.ร .r.l. agreeing to amend the terms of its shareholder standby undertaking to extend it until project completion.
Under the Project Facility terms, Nemesia provided a limited standby undertaking of up to $63.0 million.
Lucara said it continues to develop plans to raise additional debt or equity financing required for UGP completion, but cautioned that while it has previously been successful in raising debt and equity financing, future fundraising efforts may not succeed or may fall short of the required amounts.
Lucara’s president and CEO, William Lamb, has reminded shareholders that as the company navigates the transition from open pit to underground operations, 2026 and 2027 will present significant challenges, with production relying primarily on lower-value stockpile material.ย
โThis interim period will require careful management of resources and expectations until the underground project begins contributing to our production profile,โ he said.
โLucara remains focused on prudently managing this crucial transition phase while continuing our commitment to recovering high-quality diamonds, though we recognize the path ahead involves navigating considerable operational and financial adjustments before we can realize the full potential of our underground resources.โ
The underground development is expected to extend Karowe’s mine life beyond 2040.
In 2024, significant progress was made in shaft sinking and lateral development connecting the production and ventilation shafts, with the critical path ventilation shaft being ahead of the July 2023 rebase schedule.ย
In 2025, capital costs for the project are expected to be up to $115 million and will focus predominantly on shaft sinking activities to the final depth, equipping of the production shaft, and station development.ย
Surface works will focus on permanent winders being installed and cold commissioned.ย
Tendering of the underground lateral development contract, along with underground equipment purchases, is also expected to be completed in 2025, the company announced.
