Mineral Resource and Reserve Estimates

Karowe Diamond Mine
Botswana
     NI 43-101 Independent Technical Report
Effective Date: 31 December 2013
Report Date: Revision 01 4 February 2014

Mineral Resources

An updated Mineral Resource estimate was prepared by Mineral Services Canada Ltd (MSC) and published by Lucara on 18th December 2013. The updated Mineral Resource estimate makes very minor changes to the grade and volume estimates contained in the previous Mineral Resource estimate. However, the diamond revenue model is substantially improved, and is based on actual production sales figures from 2012 and 2013. The key reason behind the improved revenue model is that the occurrence of very large diamonds suspected from the earlier work, have been confirmed during mining, and the value of these stones can now be included in the Mineral Resource estimate for the mine.

The Mineral Resource statement is presented in Table 1-2.

Table 1-2
Mineral Resource Statement


Statement of the estimated remaining Mineral Resource Statement in the AK6 kimberlite deposit as of the 21st October, 2013. SP = Stockpile. LOM = Life of Mine. Volume, tonnes and carats are reported in millions (M)
  1. Based on a recoverable grade model (1.25mm bottom cut off size)
  2. Diamond price is based on diamonds recoverable with current Karowe plant process and November 2013 Price Book
  3. Effective Date October 21, 2013
  4. Mineral Resources are reported inclusive of Mineral Reserves
  5. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability
Mineral Reserves

Mineral Reserve estimation is based on the updated Indicated Mineral Resource estimate. Inferred Resources have not been used to estimate Mineral Reserves. The Resource to Reserve conversion was performed by Lucara by conducting an open pit optimisation, using Whittle Four-X software. The outputs of this process include a mining schedule on which to base plant capacity, waste rock quantities, peak capacities and mining fleet parameters. It should be noted that the Whittle optimisation is ongoing and consideration is being given by Lucara to revise the mining schedule by not mining a portion of the North Lobe, portions of which may be sub-economic at depth due to dilution.

A trade-off study on the capital cost, plant efficiencies and size-revenue curve, indicated that the optimum bottom size cut-off for the project is 1.25 mm, and this is currently the bottom screen size cut-off in the Karowe plant. Mineral Reserves were estimated for the AK6 pipe, and active stockpile materials.

In addition to defining the optimal pit shell, a double revenue pit shell was defined during the Feasibility Study in 2010. Double revenue sensitivity is performed to anticipate upswings in the future diamond market, providing a guide as to where the surface infrastructure, waste rock dumps, primary crusher, workshops etc. should be positioned in order to avoid the possibility of any future need for relocation. The location of surface infrastructure has been determined with consideration of the double revenue optimal pit shell.

There are no specific grade control programs. Generally all kimberlitic material within the optimal pit is considered to be economic, and will either be processed directly or stockpiled for possible future processing. Material from the pipe contact is stockpiled into a low grade stockpile for possible future processing. Portions of the pipe have been modelled as being diluted in the geological model, based on core drilling data. However, some diluted portions of the pipe have not been mapped. Mining recovery of 97% and dilution of 4.5% were applied in the optimisation to better simulate the physical operation. Plant recovery was set at 100%. Operating costs used in the Whittle optimisation are based on current contracts for outsourced mining and ore processing. Inter-ramp slope angles were derived from geotechnical work. These angles have been flattened by six degrees in basalt and nine degrees in kimberlite and sandstones to make allowance for haul roads.

The Mineral Reserve Statement is presented in Table 1-3.

Table 1-3
Mineral Reserve Statement


Statement of the estimated remaining Mineral Reserve in the AK6 kimberlite Life of Mine optimal pit as of the 26th December, 2013. LOM SP - Life of Mine Stockpile.
  1. Based on the updated Mineral Resource estimate (1.25mm bottom cut off size)
  2. Diamond price is based on diamonds recoverable with current Karowe plant process and November 2013 Price Book
  3. Rounding has been applied
  4. Dilution of 4.5% and Mining Recovery of 97% applied
  5. Mineral Reserve excludes loose stocks in pit and low grade stockpiles