Operating expenses and net income (loss), quarter over quarter, vary in relation to the level of activities undertaken by the Company during the financial quarters reported. These activities include the volumes and timing of diamond sales, the net price realized in such sales, cost of goods sold, corporate development initiatives and net exploration expenditures incurred.
LIQUIDITY AND CAPITAL RESOURCES
As at June 30, 2013, the Company had cash and cash equivalents of $28.5 million compared to cash and cash equivalents of $13.3 million at December 31, 2012.
Cash generated from operating activities before working capital movements for the six month period ended June 30, 2013 was an inflow of $44.3 million. These proceeds were partially offset by the Company's $8.3 million debenture payments at the end of March and June as well as repayment of the outstanding balance of the Company's revolving credit facility of $4.5 million. In addition, the Company incurred capital expenditures of $3.9 million, which includes payment of $2.2 million for project retentions during the period, which had been accrued. The project has been completed at a total expenditure marginally below $120 million.
In April 2012 the Company signed a definitive agreement with the Bank of Nova Scotia for a $25 million revolving term credit facility with a maturity date of March 26, 2014, which may be extended if both parties agree.
The facility contains financial and non-financial covenants customary for a facility of this size and nature. As at June 30, 2013, the Company is in compliance with all financial and non-financial covenants. The applicable interest rate of any loan under the facility will be determined by the Company's leverage ratio at any given time. The Company has provided security on the two year facility by way of a charge over the Company's Karowe assets and a guarantee by the Company's subsidiaries, which hold the Karowe assets. As at June 30, 2013 the full amount under this facility was available.
The Company has entered into a series forward exchange contracts to fix the rate at which future anticipated cash flows in U.S. dollars are exchanged in Botswana Pula. Such contracts include forward sales of U.S. dollars from July to December 2013 at an average rate of Botswana Pula 7.9749 per $1.00, in the aggregate amount of $32.5 million.
FUTURE PLANS AND OUTLOOK
Boteti Karowe Mine, Botswana
Karowe is projected to process 2.5 million tonnes of ore and to sell 420,000 carats of diamond in 2013.
The Company anticipates holding three further regular run-of-mine diamonds and at least one sale of large and exceptional diamonds during the remainder of the year. The September sale is expected to be approximately 78,000 carats with the two sales in the fourth quarter averaging 53,000 carats of diamond each and there will be client viewings conducted in both Gaborone and Antwerp.
Karowe's operating cash costs are expected to be in the order of $23 per tonne treated, in-line with previous guidance. Capital expenditures for 2013, excluding any final project retention payments are expected to be approximately $5m, which is line with previous guidance.
Mothae Diamond Project, Lesotho
The Mothae project will remain on temporary care and maintenance pending a decision regarding potential development options for the project.
Lucara is a well positioned new diamond producer. The Company has an experienced board and management team with extensive diamond development and operations expertise. The Company's two key assets are the Karowe Mine in Botswana and the Mothae Project in Lesotho. The 100% owned Karowe Mine is in the production. The 75% owned Mothae Project has completed its trial mining program.
Most Popular Stories
- NSA Defends Global Cellphone Tracking Legality
- Top Websites for U.S. Hispanics
- Ad Counts Rise in 2013 for Hispanic Magazines
- Networks Vie for U.S. Hispanic TV Viewers
- Saab Gets Back into the Game; U.S. Auto Sales Soar
- Apple Activates Customer-Tracking iBeacon
- A Biography of Jonathan Ive, Apple's Creative Chief
- Dell Offers Undisclosed Number of Employee Buyouts
- 2013 Tech Gift Guide: iPad Mini Still Hot; Chromecast a Great Low-Cost Option
- Apple Wants Samsung to Pay $22M for Patent Dispute Legal Bills