Lucara’s Underground Expansion at Karowe Hits a Snag
The miner said this week that the project will cost $136 million more than expected and take about a year-and-a-half longer to complete.
The company provided an update on the project Sunday, stating there is more water underground than it anticipated, which has required additional grouting. (Grouting is used in the construction, development and operation of underground mines in order to keep groundwater from leaking into the mine.)
Lucara said the additional grouting is expected to delay the start of underground production by 18 months, pushing it from the second half of 2026 to the first half of 2028.
It also will increase the project’s cost by 25 percent, from $547 million estimated in May 2022 to $683 million.
Despite the delay and added costs, Lucara’s main shareholder, The Lundin Group, said in Sunday’s update that it remains supportive of the project and bullish on the future of the mine.
“The Karowe underground mine expansion provides access to the highest-value portion of the orebody responsible for delivering numerous record-breaking diamonds in respect of size and value, including three diamonds in excess of 1,000 carats,” said Adam Lundin, a director of Lucara.
Karowe produced the 1,109-carat “Lesedi La Rona” diamond in 2015—the tennis ball-sized stone Laurence Graff bought for $53 million—and the 1,758-carat “Sewelô” diamond, among other large and notable stones.
Lundin added, “The project remains highly economic, despite the delays incurred and as Lucara’s largest shareholder, we remain fully supportive of the company.”
Lucara announced its intention to go underground at Karowe in 2019.
When completed, the project will keep the mine running until at least 2040, essentially doubling its lifespan.
It is expected to result in $4 billion in additional revenue using “conservative” diamond price assumptions, the miner said.
Karowe opened in 2012, and the open-pit portion of the operation is expected to be mined out by 2026.
On Sunday, Lucara said it has sufficient stockpiles of kimberlite ore from the South, Centre and North lobes to maintain the current level of feed to the mine’s processing plant for the duration of the delay.
It added that the long-term outlook for diamond prices, combined with the mine’s potential for producing exceptional stones and the continued strong performance of the open pit, could mitigate the impact the delay is expected to have on cash flow.
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