In an update this week, the company said several technical challenges were behind the updated capital costs and production timelines, which had also impacted revenue forecasts over the period.
Karowe, situated near Letlhakane, has become world-famous for large diamond discoveries such as Lesedi la Rona, the Constellation, and Sewelo. The underground mine represents Karowe’s future and is expected to yield additional revenues of $4 billion (P52.4 billion) up to at least 2040.
“Grouting programmes took longer than anticipated due to a combination of high‐water volumes in the sandstone lithologies between 870 and 752 metres above sea level in depth, combined with technical challenges associated with the transition to main sinking,” officials stated. “The updated schedule incorporates a 28% increase in the duration of construction, extending the anticipated commencement of production from the underground from the second half of 2026 to the first half of 2028.”
Grouting involves the filling of underground voids and sealing water inflows to improve stability and support for operations, particularly those above the surface.
The total depth of the final shaft bottoms will be 765 metres and 731 metres below the surface for the production and ventilation shafts, respectively, officials said.
The technical challenges mean a longer-than-expected construction period, with the underground ore being reached in 2028 instead of 2026. Officials said while the project remained technically and economically feasible, the impact of the anticipated delays changed the revenue profile, as the ore being processed in the intervening years would be the lower-grade, stockpiled resource, rather than the high-grade expected underground.
Sufficient surface stockpiles are available to maintain current, un‐interrupted mill feed to the plant for the duration of the anticipated delay, while the long‐term outlook for diamond prices, combined with the potential for exceptional stone recoveries, and the continued strong performance of the open pit could mitigate the expected impact on cash flows.
“Despite these challenges, the project continues to deliver strong economics, paying back capital in under three years and adding approximately $4 billion in revenues from an extended mine life out to at least 2040, using conservative diamond price assumptions,” Lucara CEO, Eira Thomas said. “The project also comes at a time when the long‐term outlook for the diamond market is stronger than it has been for many years representing an exciting growth opportunity for our shareholders and stakeholders in Botswana.”
As at June 30, 2023, Lucara had spent $264.5 million (about P3.5 billion) on the underground project, with capital commitments of $369.7 million (P4.9 billion) having been made.
The remaining forecast to complete construction of the project as of June 30, 2023, is $419 million (P5.5 billion) including an unallocated contingency of $49.3 million (P646.3 million).
Lucara expects its revenues this year to reach $230 million (P3 billion).
