Lucara Diamond Corp. recently announced revenues of $38.1 million during Q3 resulting in year to date revenues of $229.4 million or $850 per carat. (all dollar amounts are in US Dollars unless otherwise indicated).

Financial:

• Revenue for Q3 2016 was $38.1 million or $332 per carat (Q3 2015: $90.9 million). Year to date revenue was $229.4 million or $850 per carat (year to date 2015: $158.6 million; $560 per carat).


• Q3 EBITDA was $12.4 million (Q3 2015 was $66.8 million). YTD EBITDA was $152.9 million (YTD 2015: $95.3 million), with an EBITDA margin of 67%.


• The Company reported a net loss of $3.8 million during Q3 (Q3 2015: net income of $44.2 million). YTD net income was $59.5 million (YTD 2015: net income of $58.9 million).


• Cash position of $49.7 million (Q3 2015: $122.7 million and FY 2015 $134.8 million).


• YTD costs at $25.0 per tonne ore processed continue to be well controlled. Karowe's cost guidance has been decreased from $29.0-$31.0 per tonne processed to $25.0-$28.0 per tonne processed.


• Q3 EPS was a loss of $0.01 (Q3 2015: $0.12 earnings per share). YTD EPS was $0.16 (YTD Q3: $0.15 earnings per share).


• Dividends of CA$ 0.465 per share or CA$ 177 million (US$137 million in dividends) were paid in Q3.

Operational: Karowe Mine

• Ore mined in Q3 2016 was 0.7 million tonnes and waste was 3.1 million tonnes. The process plant has performed well during Q3 with tonnes processed being 19.5% ahead of forecast for the quarter.


• The project to increase the top size of diamonds recoverable by the existing Large Diamond Recovery was successfully implemented in early September 2016 on time and on budget. The Mega Diamond Recovery project is on schedule and currently with detailed design stage at 80% complete.

Exploration:

• In Q3 2016, the Company completed sampling of an additional 5000 tonnes of kimberlite from the BK02 kimberlite. Processing of the second BK02 sample was 28% at the end of Q3 2016


• A drill program commenced at AK11 during Q3 with plans to advance drill programs at BK02, AK13, and AK14 kimberlites during Q4 2016.


• The Company's drilling program to test the AK06 kimberlite at depths below 400m was 55% complete and the drilling portion of the program is forecast to be complete by Q4 2016.

Management:

• Paul Day, Lucara's Chief Operating Officer will be leaving the Company effective November 8, 2016.

William Lamb, President and Chief Executive Officer commented "Lucara is committed to rewarding our shareholders with our dividend policy, having paid a total of $185 million since we started to pay dividends in 2014. These payments now exceed the total amount of shareholder equity ever raised by the Company. We are pleased with our Q3 and year to date revenue and now look forward to the fourth quarter with high quality production for our second exceptional tender of the year and a further regular tender in December. Cost discipline during Q3 remained strong and we continued to advance our capital projects for large diamond recovery as well as our exploration and drilling programs to expand our resource base."

FINANCIAL UPDATE

Cash flows and operating margins: The Company achieved revenue of $38.1 million (Q3 2015: $90.9 million) or $332 per carat yielding a 55% operating margin. This revenue includes $8.3 million of proceeds received in the third quarter from the Company's June tender. Revenue in Q3 is lower than the prior year as revenue reported in Q3 2015 included two sales including an exceptional stone tender compared to a single regular tender during the current quarter. For the nine months ended September 30, 2016 ('year to date') revenue is $229 million (2015: $159 million) with operating margins of 83% (2015: 77%).

Karowe's operating cash cost update: Karowe's operating, year to date, cash cost is $25.0 per tonne processed (2015: $29.0 per tonne processed). Costs remain well controlled. Karowe's operating cash costs guidance was been decreased for the year from between $29.0 to $31.0 per tonne of ore processed to $25.0 to $28.0 per tonne ore processed. The reduction in cost guidance is due to power and general cost savings and an increase in tonnes processed. The Company's processed tonnes continue to exceed forecast and this level of productivity has resulted in more ore processed across the Company's operating cost base.

Net Income: The Company reported a net loss of $3.8 million in Q3 compared to net income of $44.2 million in the prior year. This is due to the Company having two sales in the prior year including an exceptional stone tender compared to a single sale in the current year. The Company also reported a foreign exchange loss in Q3 compared to a foreign exchange gain on translation of its US dollar cash in the prior year as the pula has appreciated in the current year.

Net cash position: The Company's Q3 cash balance was $49.7 million (Q3 2015: $122.7 million and FY 2015 $134.8 million). The decrease in cash during the period is primarily due to the Company's special and regular dividend payment to its shareholders of $136.6 million. The Company's $50 million credit facility remains undrawn

Earnings per share: The Company recorded a $0.01 loss per share during the quarter (Q3 2015: $0.12 earnings per share) and $0.16 earnings per share year to date. The loss during the period is largely due to the cyclical nature of the Company's sales and a foreign exchange loss during the quarter. The Company had one sale this quarter which will be followed by two sales in Q4 including the Company's second exceptional stone sale in 2016. Based on the company's full year forecast revenue and profitability the Company has maintained its full year tax rate of 42% and applied this to the Q3 earnings. A non-cash foreign exchange loss of $7.6 million is reported in Q3 primarily due to the translation of the Company's US dollar cash balance due to the impact of the appreciating Pula during the year (September 30, 2016 USD/Pula 10.6) compared to year end 2015 USD/Pula of 11.2, a 5.6% depreciation.

Dividend: During the quarter, the Company paid $137 million in dividends comprising a special dividend of CA$0.45 per share and its regular quarterly dividend of CA$0.015 cents per share on September 15, 2016. Following the payment of this special dividend the Company has paid $185 million in dividends back to its shareholders, equivalent to approximately 20% of total revenues generated, since the commencement of its dividend policy in 2014. Effective today's date, November 8, 2016, the Company is declaring its fourth quarter dividend of CA$0.015 per share. The dividend is expected to be paid on December 15, 2016 to holders of securities on the record of the Company's common shares at the close of business on December 2, 2016.