Lucara Diamond Corp. ("Lucara" or the "Company") today reports its results for the quarter ended March 31, 2022. View PDF version.

Q1 2022 HIGHLIGHTS:

Revenue in Q1 2022 increased by 28% to $68.2 million from $53.1 million in Q1 2021 a reflection of strong rough and polished diamond market fundamentals into the first quarter.
The combination of a strong diamond market, combined with the sale of several higher value rough diamonds in Q1 2022 generated an average price per carat (excluding top-up payments) of $690 for Karowe diamonds sold during the quarter (Q1 2021: $480 per carat).
A total of 186 Specials (single diamonds in excess of 10.8 carats) were recovered, representing 6.9% weight percent Specials (Q1 2021: 6.8%).
Sales volumes transacted on Clara during Q1 2022 totalled $7.0 million, a 17% increase from the $6.0 million in sales volume transacted in Q1 2021. A third-party producer will commence a series of trial sales beginning in Q2 of 2022.
A total project investment of $31.1 million into the Karowe UGP during Q1 2022 focused on shaft pre-sinking activities and construction of a new 29km 132kV transmission line.
Eira Thomas, President & CEO commented: "Lucara begins the year on a positive trajectory, having fully financed and significantly de-risked our growth plans for the underground expansion in 2021 and delivered another strong quarter of operating and financial results in Q1, reflecting solid performance at the mine combined with continued buoyancy in diamond prices. Preparation for main shaft sinking is well underway and anticipated to begin in Q2. Our multi-channel approach to sales through tenders, Clara and HB continues to mature, creating alignment along the value chain, delivering efficiencies and higher margins. Despite current geo-political challenges, Lucara remains optimistic about diamond prices as natural rough diamond supply constraints continue to manifest globally."

REVIEW FOR THE QUARTER ENDED MARCH 31, 2022

Operational highlights from the Karowe Mine for the three months ended March 31, 2022 included:
Mined 0.8 million tonnes (Q1 2021: 1.0) and 0.5 million (Q1 2021: 0.8) of ore and waste, respectively.
Processed 0.7 million tonnes of ore (Q1 2021: 0.7) and recovered 83,917 carats (Q1 2021: 80,014 carats), achieving a recovered grade of 12.6 carats per hundred tonnes (Q1 2021: 11.9 cpht).
A total of 10 diamonds greater than 100 carats were recovered during the quarter.
Total Recordable Injury Frequency Rate ("TRIFR") of 0.23 in Q1 2022 reflects one medical treatment case reported (Q1 2021: zero).
Financial highlights for the three months ended March 31, 2022 included:
Revenues from the sale of 80,295 carats recovered from the Karowe Mine were $67.2 million (Q1 2021: $53.0 million from the sale of 91,734 carats from Karowe). The sales agreement with HB Trading BV ("HB") accounted for 66% (Q1 2021: 72%) of total revenues recognized in the quarter.
Operating cash costs of $29.30 per tonne processed(1) (Q1 2021: $29.24 per tonne processed) remained consistent with the comparative period. Q1 2022 costs are inclusive of the impact of higher power, labour and insurance costs, partially offset by a comparatively stronger U.S. Dollar.
Adjusted EBITDA(1) of $36.0 million increased by 62% from $22.2 million for the same period in 2021, attributed primarily to higher revenues.
Net income for the quarter increased to $19.0 million ($0.04 basic earnings per share) from $3.4 million ($0.01 basic earnings per share) in Q1 2021.
(1) Operating cash cost per tonne processed and adjusted EBITDA are non-IFRS measures (See "Use of Non-IFRS Financial Performance Measures").

Cash position and liquidity:
As at March 31, 2022, the Company had cash and cash equivalents of $39.1 million.
The Company drew an additional $20.0 million from the $170.0 million project loan facility in the quarter for a total drawn amount of $45.0 million.
Strong cash flow from operations allowed for a reduction to the outstanding balance on the working capital facility, from $23.0 to $12.0 million as at March 31, 2022.
DIAMOND SALES

Consistent with the Company's approach through 2021, diamond sales continued to be held through a combination of regular tenders, and the Clara platform, for diamonds less than 10.8 carats, and through HB under the sales agreement for those gem and near-gem diamonds greater than 10.8 carats which are to be manufactured and sold as polished. All other diamonds are sold in quarterly tenders. The Company recognized revenue of $68.2 million in the first quarter of 2022 from the sale of 80,295 carats from Karowe. This amount included top-up payments of $11.7 million as well as $1.0 million from the sale of third-party goods on the Clara platform. In comparison, the Company achieved revenues of $53.1 million from sales of 91,760 carats in the first quarter of 2021 which included top-up payments of $9.1 million as well as $0.1 million in revenue from third-party goods sold through the Clara platform.

The exceptionally strong performance throughout 2021 was driven by higher diamond prices which were reflective of the impact of strong demand for both rough and polished diamonds, combined with supply constraints in certain size classes. This strength continued into Q1 2022. Beginning in Q2 2020, all +10.8 carat diamonds mined from Karowe were delivered to HB pursuant to the terms of the diamond sales agreement described below.

HB SALES AGREEMENT FOR +10.8 CARAT DIAMOND PRODUCTION FROM KAROWE

Karowe's large, high value diamonds have historically accounted for approximately 60% to 70% of Lucara's annual revenues. In 2020, Lucara announced a partnership agreement with HB, entering into a definitive sales agreement for diamonds recovered that exceed +10.8 carats from the Company's 100% owned Karowe Diamond mine in Botswana. This agreement was subsequently amended and extended to December 31, 2022. The mechanisms of the agreement result in complete transparency within the value chain and create important alignment between the producer and the manufacturer for the first time.

Under the amended sales agreement, +10.8 carat gem and near gem diamonds from the Karowe Mine of qualities that can directly enter the manufacturing stream are being sold to HB at prices based on the estimated polished outcome of each diamond. The estimated polished value is determined through state-of-the-art scanning and planning technology, with an adjusted amount payable on actual achieved polished sales, less a fee and the cost of manufacturing. Following the extension of the HB Agreement in 2021, all +10.8 carat non-gem quality diamonds and all diamonds less than 10.8 carats in weight which did not meet the criteria for sale on Clara are being sold as rough through the quarterly tender. In the agreement extension, payment terms were amended to better reflect the timing of mine production and the manufacturing process. This unique pricing mechanism delivers regular cash flow for this important segment of our production profile.

For the three months ended March 31, 2022, the Company recorded revenue of $45.2 million from the HB agreement (inclusive of top-up payments of $11.7 million), as compared to revenue of $38.0 million in Q1 2021 (inclusive of top-up payments of $9.1 million). In Q1 2021, all +10.8 carat stones were sold through HB. Beginning in April 2021 when the HB agreement was extended, any +10.8 carat stones not earmarked for manufacturing by HB were sold through the Company's quarterly tender process. The increase in revenue in Q1 2022 is attributed to higher prices achieved, despite lower sale volumes. This reflects a significant improvement in diamond market fundamentals between the two comparative quarters. Due to natural variability in the quality profile of the +10.8ct production in any production period or fiscal quarter, the recorded revenue and associated top ups will fluctuate. This is expected and reflects a combination of current diamond market prices as well as variability in the quality of Karowe's production profile in any given period.

As a result of the sales agreement with HB, the Company also participated in polished diamond price increases during Q1 2022 as rough diamonds sold to HB in previous quarters were polished and sold. In Q1 2022, top-up payments of $11.7 million (Q1 2021: $9.1 million) were included in revenue for the quarter. At March 31, 2022 a number of higher value and more technically complex stones that take longer to manufacture had not fully completed the manufacturing and sales process. These stones were delivered to HB in 2021 and Q1 2022. As these stones finish the manufacturing process and are sold, the Company's may record additional revenue in the form of "top-up" payments from these sales.

CLARA SALES PLATFORM

Clara, Lucara's 100% owned proprietary, secure, web-based digital sales platform, continues to gain scale and interest. Interest in Clara continues to grow as the benefits of purchasing rough diamonds in an innovative way become evident. In Q1 2022, three sales (Q1 2021: six sales) took place with a total sales volume transacted of $7.0 million, a 17% increase from the $6.0 million transacted in Q1 2021, reflecting a strong upward price trend observed on Clara during Q1 2022. The number of buyers on the platform increased to 92 at March 31, 2022 with the Company maintaining a waiting list to manage supply and demand.

While most of the stones transacted through the platform are supplied from the Karowe Mine, secondary market stones continued to be offered for sale through the platform with good results. Additional supply is required to meet existing demand and drive the platform's growth and the Company expects to commence a series of trial sales on the Clara platform with a third-party producer in Q2 2022. The Company intends to continue to seek additional supply in 2022, both from third-party producers and the secondary market.

KAROWE UNDERGROUND EXPANSION UPDATE

The Karowe UGP is expected to extend the mine life to at least 2040, with underground carat production predominantly from the highest value EM/PK(S) unit and is forecast to contribute approximately $4 billion in additional revenues, using conservative diamond prices. The Karowe UGP has an estimated $534 million capital cost and a five-year construction period. Mine ramp up is expected in Q1 2026 with full production from the UGP expected in H2 2026. The Company is financing the Karowe UGP through a combination of cash flow from operations and project debt.

During the three months ended March 31, 2022, a total of $31.1 million was spent on the Karowe UGP development, primarily in relation to engineering, procurement of long lead items and ongoing construction activities, including:

Pre-sink activities for both the production and ventilation shafts continued with a focus on the setup and transition to main sinking.
Placement of the ventilation shaft main sinking stage into the shaft column along with placement of the ventilation shaft headgear over the shaft collar.
Assembly of the production shaft main sink stage with outfitting planned for Q2 in preparation for its installation in the shaft column, while pre-assembly of the production shaft headgear steel continued.
Cold commissioning of the ventilation shaft kibble winder was completed, with progress on the ventilation shaft stage winder in preparation for winder rope-ups in April, while installation of the production shaft stage winder commenced.
Completed construction of all 88 tower foundations for the 29 km 132kV transmission line bulk power upgrade and commenced construction at both Letlhakane and Karowe substations.
Activities for the UGP in the upcoming quarters of 2022 are expected to include the following:

Execution of the main sinking contract for the production and ventilation shafts
Completion of the steel headgear structure for the production and ventilation shafts.
Commissioning of the four main sinking winders.
Commencement of main sinking for the production and ventilation shafts.
Continuation of detailed design and engineering of the underground mine infrastructure and layout.
Commissioning of the 29 km 132kV bulk power supply powerline by December 2022.
DIAMOND MARKET

A strong rebound in diamond jewelry demand, combined with growing global natural rough diamond supply constraints, contributed to a healthy recovery in diamond prices in 2021. This price strength continued into the first quarter of 2022 where increases were observed across most sizes, qualities and colors of diamonds.

Current pricing trends have been impacted by uncertainty triggered by geopolitical events, including the conflict in Ukraine and the COVID-19 pandemic, however, we continue to observe healthy market fundamentals overall, and our longer-term outlook remains positive for diamond prices. The diamond price impact of sanctions on Russian diamond supply, which accounts for a significant portion of global reserves, cannot be predicted at this time.

The benefits of the committed sales agreement with HB continued to be realized during the first quarter of 2022 as the Company participated in polished diamond price increases during Q1 2022 for diamonds delivered in previous quarters. The integrated approach, using state of the art scanning and planning technology has further enhanced the final achieved polished outcome for very large (+50 carat polished) and high value diamonds, a critical production segment for the Company.

QUARTERLY FINANCIAL HIGHLIGHTS

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LUCARA REPORTS VOTING RESULTS FROM ANNUAL MEETING.
Lucara Diamond Corp. ("Lucara" or the "Company") held its Annual General and Special Meeting of shareholders in Vancouver, British Columbia today. Shareholders voted as follows on the matters before the meeting: View PDF version.

Board Members
Shareholders elected the following 7 board members with shareholders represented at the meeting voting in favour of individual directors as follows:

Director Votes For % Votes For Votes Withheld % Votes Withheld

Paul Conibear 214,103,414 97.05% 6,501,423 2.95%

David Dicaire 219,605,131 99.55% 999,706 0.45%

Marie Inkster 220,016,073 99.73% 588,764 0.27%

Adam Lundin 199,587,635 90.47% 21,017,202 9.53%

Catherine McLeod-Seltzer 215,615,450 97.74% 4,989,387 2.26%

Peter J. O'Callaghan 213,389,302 96.73% 7,215,535 3.27%

Eira Thomas 214,539,917 97.25% 6,064,920 2.75%

Appointment of Auditors
Shareholders re-appointed PricewaterhouseCoopers LLP as Lucara's auditors with 95.22% of shareholders voting in favour.

Ordinary Resolutions to Share Unit Plan Amendments
Shareholders passed an ordinary resolution to approve certain amendments to the share units plans with 70.22% in favour. The renewal of the Company's Corporation's share unit plan which has been amended to increase the maximum share reservation and to approve the unallocated awards under the Share Unit Plan was approved with 70.21%.

Advisory Resolution on Executive Compensation
Management's approach to executive compensation, also disclosed in Lucara's management proxy circular dated March 23, 2022 was approved with 97.10% of shares represented at the meeting voting in favour.

Following the meeting, the Board of Directors selected Mr. Paul Conibear to serve as Chairman of the Board. Mr. Conibear was originally elected to Lucara's Board in 2007 and had previously served as the Company's Lead Director.

On behalf of the Board,

Eira Thomas
President and Chief Executive Officer