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| |  HIGHLIGHTS AK6 Diamond Project - Botswana
HIGHLIGHTS Mothae Diamond Project -- Lesotho
Annual Report (For the Five Month Period Ended Dec. 31, 2009) To our shareholders: In December 2009, the Company changed its financial year end from July 31 to December 31. As a result of the change, the Company had a five month transitional financial period ending December 31, 2009. This change was made to align the Company's reporting period with its subsidiaries. During the ensuing five months much progress was made towards the development of its Mothae diamond project in Lesotho and the AK6 diamond project in Botswana. Mothae is expected to achieve first diamond sales in 2010 with AK6 following the year after. Highlights of the five month period and subsequent events include: HIGHLIGHTS
Recent sales from all major producers highlight the continued strength in the rough diamond market. In the longer term, supply is expected to remain highly constrained. This coupled with the demand for quality stones underpins the strong diamond sector fundamentals. LOOKING FORWARD What sets Lucara apart from its competitors is our business strategy of seeking only quality, financially robust, hard-rock diamond mining and advanced exploration opportunities. Our focus will be on favourable jurisdictions in Africa. The other major aspect that sets us apart is the quality of our diamonds -- both of our diamond resources include Type IIa stones -- with less than 1% of all diamonds produced worldwide being of this exceptional quality. In Lucara's short history, we have acquired two large diamond projects which are now under development. The Mothae mine in Lesotho is undergoing pre-production testing and first commercial diamond sales are expected this year. Construction of the AK6 mine in Botswana is scheduled to commence in the fourth quarter of this year with diamond sales to begin in late 2011. Existing funds are expected to be sufficient to complete all currently planned expenditures on the Mothae Project and the AK6 Project for at least the next twelve months. Additional funding either through equity or debt will be required in the future to fund further development and construction of the projects. The board and management of Lucara would like to take this opportunity to thank its shareholders for their continued support. We look forward to an exciting year ahead. On behalf of the Board, William Lamb President and CEO April 27, 2010 Dear Shareholders The first quarter of 2010 has been an eventful period for Lucara. The overall management objective to create a mid-tier diamond company took a major step forward as we began development activities at Mothae and completed the acquisition of an interest in the very prospective AK6 Diamond Project from De Beers. The following operations update provides a summary of recent activities which have taken place in bringing the Company to its current position. AK6 Diamond Project - Botswana
Lucara Diamond Corp.'s mission is to build a leading African-focused mid-tier diamond production and development company. Values:
Sincerely, William Lamb President and Chief Operating Officer To our shareholders, On April 30, 2009, the Company signed an Arrangement Agreement with Motapa Diamonds Inc. ("Motapa") for the Company to acquire all of the outstanding shares of Motapa under the Business Corporations Act (BC). The transaction will bring significant benefits to each of the Company and Motapa and their respective shareholders. In particular, the transaction will provide the combined company with:
Project Update Lesotho -- Mothae Project The processing of the Phase II kimberlite material was completed in May 2009. This brought the total amount of material processed during Phases I & II to 100,000 tonnes. The Company has contributed a total of US$8.0M to the conceptual evaluation of the Mothae kimberlite and has earned a 65% interest in the property. Results from the processing of the Mothae material show the recovery of 8,886 diamonds, totaling 3,867.04 carats from 82,328 dry tonnes of material, at a calculated average sample grade of 4.70 carats per hundred tonnes. A total of 217 stones greater than 2 carats, 63 stones greater than 5 carats, 13 stones greater than 10 carats and 5 stones greater than 20 carats were recovered with the three largest diamonds being 24.6, 23.4 and 22.7 carats. A diamond valuation of the recovered stones is planned for June 2009. This valuation will be conducted by Galaxy Diamond Expertise out of Israel. The results of this valuation are expected to be available in August 2009. The following table summarizes the reported diamond results for all samples processed during the conceptual evaluation:
A drilling program has also been completed on site. The drilling program was designed to support an initial estimate of global tonnes of kimberlite present to a depth of 200m and to provide geologic information needed to design a more detailed subsequent drilling program. In total, fifteen NQ core holes were drilled, accounting for 2452 meters of core. All core has been logged and the results provided to Mineral Service Canada, who are currently modeling the Mothae kimberlite pipe. In April 2009, the Company completed a conceptual study for the Mothae project. The objective of this study was to determine the mining, processing and infrastructure requirements in order to construct a mine at Mothae. Mineral Services Canada, a consulting group with over 30 years of experience, was retained to develop a resource model and JDS Mining and Energy was retained to develop reserve estimates and the mine design. ADP Projects (Pty) Ltd, a leading provider of modular processing facilities to the Southern African mining industry, managed the conceptual study and developed the proposed overall mine site layout, infrastructure requirements and process and recovery plant flowsheets. The information contained within the conceptual study report will be used to support the application for a mining license for Mothae. As of May 12, 2009, the Company officially took over as operator on the Mothae project site. The site, which is currently on care and maintenance pending the receipt of a mining license, is being managed by Paradigm Project Management. In June 2009, the Company along with its partner Motapa, will submit an application for a mining license at Mothae, as per the Lesotho Mining Act. It is expected that the mining license will be granted by year end 2009. On successful application for a mining license for Mothae, Management intends to continue to develop this highly prospective project and will continue to evaluate other opportunities in the diamond sector for possible acquisition. On behalf of the board, Lukas H. Lundin President and CEO June 24, 2009 To our shareholders, In March 2009, the Company signed a Letter of Intent with Motapa Diamonds Inc. (Motapa), whereby the Company will acquire all of the outstanding shares of Motapa. The transaction contemplates the Motapa shareholders holding 35% of the final company translating to an exchange ratio of 0.9055 Company shares for each Motapa share, based on the current number of shares outstanding. The Company and Motapa will complete, due-diligence and a definitive agreement on or before April 23, 2009 at which time regulatory approval and Motapa shareholder approval will be sought. The proposed transaction will bring significant benefits to each of the Company and Motapa and their respective shareholders. In particular, the transaction will provide the combined company with:
Based on the diamond recovery information from Phase I, the Company exercised its option to earn an additional 14% interest by contributing US$4.2 million to Phase II of the sampling program. By the end of January, 2009, the Company had contributed US$4.2M to the costs of Phase II and has earned a 65% interest in the Mothae project. Budget overruns for Phase II will be funded solely by Motapa with the Company becoming liable for its 65% interest in the project on completion of Phase II processing. The Company has completed processing four of the Phase II samples. Recovered grades continue to exceed original expectations. The following table summarizes the reported diamond results for three of the samples which have been completed: Phase II Sample Processing Data
From the above mentioned samples, a total of 102 stones larger than 2 carats, 33 stones larger than 5 carats and 4 stones larger than 20 carats have been recovered. Included in the plus 20 carat stones recovered was a broken Type IIa diamond from the C2C kimberlite phase. The largest fragments of this stone have been reassembled and demonstrate that the original stone exceeded 45 carats. The 3 largest stones recovered from Phase II processing have been 23.39, 22.71 and 22.63 carats. The Company's original identification of Mothae as a large, low-grade kimberlite suitable to bulk sample was premised on the potential for Mothae to produce Type IIa diamonds. The identification of a population of Type IIa stones in diamonds recovered from Mothae, and the recovery of the large, broken white Type IIa diamond is a major step forward for the project. The 23.4 carat type IIa diamond was recovered from the C kimberlite domain of the Mothae pipe. Based on current information, domain C appears to be the largest kimberlite domain within the Mothae pipe, making up approximately one third of the surface area. In February 2009, the Company commissioned an EVE X-ray and drier system for the audit processing of the grease belt tailings material. The processing of the audits is ongoing. Any diamonds recovered will result in an increase in the sample recovered grade. Phase II sample processing is scheduled for completion in the second quarter of calendar year 2009. During the last fiscal quarter, a drilling program was completed on site. The drilling program was designed to support an initial estimate of global tonnes of kimberlite present to a depth of 200m and to provide geologic information needed to design a more detailed subsequent drilling program. In total, 15 NQ core holes were drilled, accounting for 2,452 meters of core. All core has been logged and the results provided to Mineral Services Canada, who is currently modeling the Mothae kimberlite pipe. In November 2008, the Company initiated a conceptual study to determine the mining, processing and infrastructure requirements in order to build a mine at Mothae. Mineral Services Canada has been retained to develop a resource model and JDS Mining and Energy has been retained to develop reserve estimates and a mine design. ADP Projects (Pty) Ltd has been retained as manager of the conceptual study and will develop a proposed overall mine site layout, infrastructure requirements and process and recovery plant flowsheets. Good progress continues to be made on the conceptual study. To date a preliminary mine plan has been compiled based on assumed tonnages. These figures will be updated when the results of the drilling program have been incorporated into the resource model. Preliminary designs for the process plant and site facilities have been reviewed and are being sited on the overall project layout. The cost breakdown structure is currently being populated with capital and operating costs. The conceptual study is scheduled to be completed in the second quarter of calendar year 2009. Management intends to continue to develop the highly prospective Mothae Diamond Project under the existing option agreement or definitive agreement with Motapa Diamonds Inc. and will continue to evaluate other opportunities in the diamond sector for possible acquisition. On behalf of the board, Lukas H. Lundin President and CEO March 25, 2009 To our shareholders, Lucara has an option to acquire up to a 70% interest in the Mothae Diamond Project located in Lesotho, one of the most prolific diamond producing regions in the world. The Mothae project comprises a large, 24.7 square kilometre concession area located adjacent to and directly on trend with the world-famous Letseng diamond mine. Letseng is a high-value, large tonnage, lowgrade diamond mine operated by Gem Diamond Mining Company. Letseng has a reputation for producing very large, high quality Type IIA diamonds. The Mothae project hosts a large diamondiferous kimberlite pipe with an estimated surface extent of 8.8 hectares. Mothae's target model is similar to that of Letseng. Under the option agreement, the Company, through the current owner/operator Motapa, initiated the phase I processing of 30,000 tonnes of Mothae kimberlite material. During the 4th quarter of last year, the processing of the Phase I material was completed. The results show a total of 24,655 dry tonnes were processed from five distinct kimberlite phases of the Mothae ore body. This material yielded 3,160 stones weighing 1,204.45 carats resulting in an average grade of 4.89 carats per hundred tonnes (cpht). A total of 58 stones greater than 2 carats, and 13 stones greater than 5 carats were recovered with the three largest diamonds being 10.24, 8.65 and 8.51 carats. At the conclusion of Phase I, the company had earned a 51% interest in the Mothae project through it commitment of US$3.8M. Based on the diamond recovery information from Phase I, the Company exercised its option to earn an additional 14% interest by contributing US$4.2 million to Phase II of the sampling program. On completion of Phase II, the Company will hold a 65% interest in the Mothae project. Processing of the Phase II material commenced on the 22nd of August 2008 following the installation of a fines processing circuit in the bulk sample plant. In early October the Company recovered a 23.4 carat Type IIa diamond from the Phase 2 sampling program. The diamond is a white anhedral stone that has been confirmed as a Type IIa diamond using a frequency specific ultra-violet light Type IIa tester developed by the Swiss Gemological Institute. Type IIa diamonds typically have a coarse size distribution and can be present as very large stones. The presence of a population of Type IIa diamonds in any kimberlite greatly enhances its economic potential. The Company's original identification of Mothae as a large, low-grade kimberlite suitable to bulk sample was premised on the potential for Mothae to produce Type IIa diamonds. The identification of a population of Type IIa stones in diamonds recovered from Mothae, and the recovery of the 23.4 carat, white Type IIa diamond is a major step forward for the project. The 23.4 carat type IIa diamond was recovered from the C kimberlite domain of the Mothae pipe. Based on current information, domain C appears to be the largest kimberlite domain within the Mothae pipe, making up approximately one third of the surface area. As of the end of October, 2008, approximately 11,400 tonnes of phase II material had been processed and 340.81 carats in 545 stones recovered. Completion of phase II sample processing is anticipated in the second quarter of 2009. In November, 2008 the Company initiated a conceptual study to determine the mining, processing and infrastructure requirements in order to build a mine at Mothae. Mineral Services Canada of North Vancouver has been retained to develop a resource model and JDS Mining and Energy of Kelowna, British Columbia has been retained to develop reserve estimates and a mine design. ADP Projects (Pty) Ltd of Cape Town has been retained as manager of the conceptual study and will develop a proposed overall mine site layout, infrastructure requirements and process and recovery plant flowsheets. Management intends to continue to develop the highly prospective Mothae Diamond Project under the existing option agreement with Motapa Diamonds Inc. and will continue to evaluate other opportunities in the diamond sector for possible acquisition. On behalf of the board, Lukas H. Lundin President and CEO December 17, 2008 To our shareholders, Lucara has an option to acquire up to a 70% interest in the Mothae Diamond Project located in Lesotho, one of the most prolific diamond producing regions in the world. The Mothae project comprises a large, 24.7 square kilometre concession area located adjacent to and directly on trend with the world-famous Letseng diamond mine. Letseng is a high-value, large tonnage, lowgrade diamond mine operated by Gem Diamond Mining Company. Letseng has a reputation for producing very large, high quality type IIA diamonds. The Mothae project hosts a large diamondiferous kimberlite pipe with an estimated surface extent of 8.8 hectares. Mothae's target model is similar to that of Letseng. During the first half of the year, site establishment was completed including the construction of a bulk sample plant, accommodations, site offices and environmental protection facilities. Following the commissioning of the process plant in February 2008, a total of 24,655 dry tonnes were processed from five distinct kimberlite phases of the Mothae ore body. This material yielded 3,160 stones weighing 1,204.45 carats resulting in an overall grade of 4.98 carats per hundred tonnes (cpht). A total of 58 stones greater than 2 carats, and 13 stones greater than 5 carats were recovered with the three largest diamonds being 10.24, 8.65 and 8.51 carats. At the conclusion of Phase I, the company had earned a 51% interest in the Mothae project through it commitment of US$3.8M. Based on the diamond recovery information from Phase I, the Company exercised its option to earn an additional 14% interest by contributing US$4.2 million to Phase II of the sampling program. On completion of Phase II, the Company will hold a 65% interest in the Mothae project. Processing of the Phase II material commenced on the 22nd of August 2008 following the installation of a fines processing circuit to the bulk sample plant. In early October the Company recovered a 23.4 carat type IIa diamond from the Phase 2 sampling program. The diamond is a white anhedral stone that has been confirmed as a type IIa diamond using a frequency specific ultra-violet light type IIa tester developed by the Swiss Gemological Institute. Type IIa diamonds provide a high proportion of the world's highest value stones on account of their exceptional colour clarity, which is ascribed to having no detectable nitrogen within the diamond crystal structure. Type IIa diamonds also typically have a coarse size distribution and can be present as very large stones. The presence of a population of type IIa diamonds in any kimberlite greatly enhances its economic potential. Additional type IIa diamonds have been identified among the diamonds recovered during the audit of recovery tailings from Phase 1 of the Mothae bulk sample. The Company's original identification of Mothae as a large, low-grade kimberlite suitable to bulk sample was premised on the potential for Mothae to produce such diamonds. The identification of a population of type IIa stones in diamonds recovered from Mothae, and the recovery of the 23.4 carat, white type IIa diamond is a major step forward for the project. Phase 2 of the Mothae bulk sample program, in which up to 70,000 tonnes of kimberlite will be processed, commenced in mid-August. As of the end of October, 2008, approximately 11,400 tonnes of kimberlite have been processed and 340.81 carats in 545 stones have been recovered. The 23.4 carat type IIa diamond was recovered from the C kimberlite domain of the Mothae pipe. The volumetric extent of domain C is not well constrained. Based on current information, domain C appears to be the largest kimberlite domain within the Mothae pipe, making up approximately one third of the surface area. Planned maintenance and repair work on the process plant crushing circuit was completed in mid-October. A preliminary valuation of recovered diamonds is planned for December, 2008, and completion of Phase 2 sample processing is anticipated in March, 2009. In November, 2008 the Company initiated a conceptual study to determine the mining, processing and infrastructure requirements in order to build a mine at Mothae. Mineral Services Canada of North Vancouver has been retained to develop a resource model and JDS Mining and Energy of Kelowna, British Columbia has been retained to develop reserve estimates and a mine design. ADP Projects (Pty) Ltd of Cape Town has been retained as manager of the conceptual study and will develop a proposed overall mine site layout, infrastructure requirements and process and recovery plant flowsheets. Concurrently, an environmental assessment is being completed to support the application for a mining license. In April, 2008 the Company was pleased to appoint William Lamb as General Manager of the Company. Mr. Lamb has a Masters of Business Administration and brings to the Company over two decades of experience in the mining and mineral processing industry with particular expertise in the diamond sector. Before joining Lucara, Mr. Lamb was the Process Plant Manager for De Beers Canada where he held senior level responsibilities, including the management of process plant operation of the Victor Diamond Mine in Northern Ontario. In July, 2008 the Company's shares were listed on the TSX Venture Exchange and concurrently delisted from the CNQ Exchange. Lucara recently completed a Cdn $5 million private placement for ongoing Option agreement commitments on the Mothae project and general working capital purposes. Management intends to aggressively explore and develop the highly prospective Mothae Diamond Project and continue to evaluate other opportunities in the diamond sector for possible acquisition. On behalf of the board, Lukas H. Lundin President and CEO November 3, 2008 To our shareholders, Lucara Diamond Corp. is pleased to present this report to shareholders on the activities of the Company during the third quarter period ended April 30, 2008. Mothae Diamond Project, Lesotho Lucara has an option to acquire up to a 70% interest in the Mothae Diamond Project located in Lesotho, one of the most prolific diamond producing regions in the world. The Mothae project comprises a large, 24.7 square kilometre concession area located adjacent to and directly on trend with the world-famous Letseng diamond mine. Letseng is a high-value, large tonnage, lowgrade diamond mine operated by Gem Diamond Mining Company. Letseng has a reputation for producing very large, high quality type IIA diamonds. The Mothae project hosts a large diamondiferous kimberlite pipe with an estimated surface extent of 8.8 hectares. Sample processing and diamond recovery at the Mothae project commenced during the quarter. First phase samples totaling 30,000 tonnes are being processed to provide an initial assessment of diamond size distribution and the potential for the Mothae kimberlite to demonstrate a similar model to that of the nearby Letseng diamond mine. Continued sample processing at Mothae of up to an additional 70,000 tonnes will be processed to more accurately assess diamond value if warranted by results of the first phase sampling program. By the end of the quarter, the Company had processed six samples totaling approximately 16,300 tonnes. Encouraging results have been received from the program with 480 diamonds recovered to date. Total weight of the diamonds is 234.7 carats with seventeen diamonds weighing greater than two carats. The three largest stones are 10.24 cts, 8.65 cts, and 7.60 cts. A detailed evaluation of the diamonds will be commence upon completion of the first phase sample processing program. Kimberlite from the F and G phases of the Mothae pipe have shown the best diamond potential to date and work is in progress to extract the remainder of the planned 30,000 tonne sample from these two phases. The diamond recovery process at Mothae involves separating heavy mineral concentrate into various size fractions and then passing this material over a continuous grease belt recovery system. All tailings from the grease belt are retained on site in a secure area. Hand sorting of a limited number of audit samples of grease belt tailings has demonstrated that a number of diamonds are not being recovered in this process. As a result, all grease belt tailings will be reprocessed using an alternative technique in order to complete the recovery process and more reliably establish diamond grades. In addition, during the quarter, the Lesotho Ministry of Natural Resources approved a one year extension, to June 2009, for the Mothae Prospecting License. Corporate The Company has received conditional approval from the TSX-Venture exchange and it is anticipated that conditions for listing will be satisfied in the third calendar quarter of 2008. Late in the quarter, the Company was pleased to announce the appointment of William Lamb as General Manager of the Company. Mr. Lamb has a Masters of Business Administration and brings to the Company over two decades of experience in the mining and mineral processing industry with particular expertise in the diamond sector. Before joining Lucara, Mr. Lamb was the Process Plant Manager for De Beers Canada where he held senior level responsibilities at the Victor Diamond Mine in Northern Ontario. Management intends to aggressively explore and develop the highly prospective Mothae Diamond Project and continues to evaluate other opportunities in the diamond sector for possible acquisition. On behalf of the board, Lukas H. Lundin President and CEO June 5, 2008 To our shareholders, Lucara Diamond Corp. is pleased to present this report to shareholders on the activities of the Company during the second quarter period ended January 31, 2008. Mothae Diamond Project, Lesotho Lucara has an option to acquire up to a 70% interest in the Mothae Diamond Project located in Lesotho, one of the most prolific diamond producing regions in the world. The Mothae project comprises a large, 24.7 square kilometre concession area located adjacent to and directly on trend with the world-famous Letseng diamond mine. Letseng is a high-value, large tonnage, low-grade diamond mine operated by Gem Diamond Mining Company. Letseng has a reputation for producing very large, high quality type IIA diamonds. The Mothae project hosts a large diamondiferous kimberlite pipe with an estimated surface extent of 8.8 hectares. Sample processing and diamond recovery has commenced at the Mothae project. A first phase 30,000 tonne sample will be processed to provide an initial assessment of diamond size distribution and the potential for the Mothae kimberlite to demonstrate a similar model to that of the nearby Letseng diamond mine. Full commissioning of the kimberlite processing and diamond recovery plant was completed during the week of February 22, 2008 and sample processing commenced on February 25, 2008. The initial 30,000 tonnes of kimberlite is being processed in a series of 5,000 to 10,000 tonne samples taken from various kimberlite phases within the Mothae pipe. The material is being processed through a dense media separation (DMS) plant which operates at a nominal 30 tonnes per hour. The process plant is designed to recover diamonds in various size fractions ranging from +2 mm to -18 mm. Heavy mineral concentrate produced by the DMS plant is passed through a continuous grease belt for diamond recovery, with the exception of the very coarse fraction (+12mm) which will be hand sorted. The current operating schedule plans for the initial 30,000 tonne sample to be completed by September, 2008. Lucara expects to earn its 51 interest prior to mid-calendar year. Continued sample processing at Mothae of up to an additional 70,000 tonnes will be processed to more accurately assess diamond value if warranted by results of the first phase sampling program. Management intends to aggressively explore and develop the highly prospective Mothae Diamond Project and continue to evaluate other opportunities in the diamond sector for possible acquisition. Corporate To more fully reflect the new direction and growth of the Company, an application has been made for listing on the TSX Venture Exchange. On Behalf of the Board Lukas H. Lundin President and CEO March 6, 2008 | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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