Lucapa Diamond (ASX: LOM) experienced a notable uptick in its shares, surging by almost 5% on Monday following the announcement of a substantial increase in resources at its Lulo mine in Angola.
According to the Australian miner, the volume of diamonds deemed economically feasible for extraction at Lulo witnessed a significant rise, reaching 228,000 carats as of December 31, marking a remarkable 48% increase from the previous year’s figure of 153,870 carats. This surge in resources, Lucapa highlighted, has the potential to extend the deposit’s production lifespan by an additional eight years.
The updated resource estimates stem from an independent assessment conducted by South Africa’s Z Star Mineral Resource Consultants, valuing the resources at $1,897 per carat. Notably, this represents a slight decrease of 5% from the valuation of $2,000 per carat recorded in December 2022, largely attributed to the decline in diamond prices observed throughout the previous year. Additionally, diamond grades experienced a marginal decrease to 4.55 carats per 10 cubic meters.
Lucapa’s operational performance also exhibited positive growth, with the recovery of 181,900 precious stones in 2023, marking a substantial 45% increase compared to the previous year. Moreover, the average rough size per stone rose to 1.26 carats, up from 1.23 carats in 2022.
This upswing in resources signifies the sixth consecutive year of growth for Lulo, reflecting the mine’s sustained development trajectory. To date, total production from Lulo has amounted to 200,000 carats, generating revenue of $426 million at an average price of $2,122 per carat.
Established in 2015, the Lulo mine holds the distinction of being recognized as the world’s highest dollar-per-carat alluvial diamonds operation.
Lucapa maintains a 40% interest in the Lulo mine, with the remaining stakes held by Angola’s national diamond company (Endiama) and Rosas & Petalas, a private entity.
Angola ranks as the fifth-largest diamond producer by value and sixth by volume globally. Over the years, the country’s diamond industry, which traces its origins back to Portuguese colonial rule a century ago, has witnessed a significant shift towards reduced governmental regulations in favor of greater private sector participation.
At the close of trading on Monday in Sydney, Lucapa’s shares stood at A$0.12, resulting in a market capitalization of A$33.25 million (approximately $22 million).
