VANCOUVER Nov 6, 2019 (Thomson StreetEvents) -- Edited Transcript of Lucara Diamond Corp earnings conference call or presentation Tuesday, November 5, 2019 at 2:00:00pm GMT

Lucara Diamond Corp. - Founder, President, CEO & Director

* John P. Armstrong

Lucara Diamond Corp. - VP of Technical Services

* Zara E. Boldt

Lucara Diamond Corp. - CFO & Corporate Secretary

Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst

Good morning. My name is Pam, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Lucara Diamond Q3 2019 Results Conference Call. (Operators Instructions) Ms. Eira Thomas, please begin your conference.

Eira Margaret Thomas, Lucara Diamond Corp. - Founder, President, CEO & Director [2]

Yes. Yes, they do hear you. Please go ahead.

Eira Margaret Thomas, Lucara Diamond Corp. - Founder, President, CEO & Director [4]

Sorry, I had music in the background there. Okay. Let's start this again. Good day, everyone, and thank you for joining us for a combined call to discuss the results of our recently released underground feasibility study together with our Q3 results.

Joining me today, we have Zara Boldt, our CFO; Dr. John Armstrong, our Vice President of Technical Services; Ayesha Hira, our Vice President of Corporate Development and Strategy; and Gord Doerksen, Principal at JDS Energy and Mining and our feasibility study lead on the underground project.

Before we start, I would just like to remind everyone that all of the speakers on the call today will be making forward-looking statements. Please refer to the cautionary statements on Slide 2 of the webcast for more detail.

So addressing the big news first. Lucara is delighted to be reporting strong positive economic results from its recently completed bankable feasibility study, contemplating a 15-year expansion of its 100%-owned Karowe diamond mine in Botswana. Karowe, which has been in production since 2012, is a unique top-of-class diamond asset renowned for its consistent recovery of large, high-value, type IIA white diamonds and the only mine in history to ever recover 2 +1000 carat diamond. Over the past 7 years of open-pit mining, Karowe has mined and sold 2.6 million carats, generated $1.5 billion in revenues and has consistently delivered high operating margins, better than 60%.

Since 2014, Lucara has also paid out more than $270 million in dividends, well in excess of the total capital invested to build and upgrade our mine. With the completion of our 2019 bankable underground feasibility study, we could also confidently state that this is just the beginning. Resource work completed since November 2017 identified a much larger economic opportunity at depth than was previously envisaged driven by the increasing contribution of higher-grade, higher-value EM/PK(S) ore. Underground expansion would double the mine life outlined in the original 2010 feasibility study, deliver net after-tax cash flow of $1.22 billion and gross revenues of $5.25 billion. The underground alone will deliver close to $4 billion of those revenues.

It is also important to note that approximately $200 million in revenues generated from exceptional high-value diamonds like the Lesedi La Rona and the Constellation were not included in our economic analysis and represent a significant opportunity for revenue upside. We are highly confident of further large high-value stone recoveries, especially as we mine deeper and gain access to higher-grade, higher-value EM/PK(S) ore. We just can't predict exactly when they will come. Based on the recoveries to date, these exceptional diamonds could add upwards of $500 million in additional revenues over the proposed new life of mine.

Another key takeaway from this study is that the cost to expand our mine underground is affordable and can be largely funded out of cash flow and anticipate the short payback period of under 3 years. What's more? Operating margins remain healthy despite the application of conservative diamond pricing models that take into consideration the current difficult market environment. Lucara's short-term view is that the market is now stabilizing. Longer term, the fundamentals are expected to strengthen in line with supply shortfalls from mature depleting mines in Australia and Canada.

Our return to diamond prices observed in 2015 would nearly double the NPV of this project to $1.4 billion at a 5% discount.

Engagement with the Botswana government has been ongoing, and with the feasibility study complete, we are now in a position to file for a mining license extension to cover the remaining open pit and proposed underground mining operation. To this end, we will be meeting with the government in the near term to present the results of the study and finalize our plans for stakeholder engagement.

To take us through the results of the underground feasibility study in more detail including assumptions and key inputs, I would now like to turn the presentation over to Dr. John Armstrong.

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John P. Armstrong, Lucara Diamond Corp. - VP of Technical Services [5]

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Thank you, Eira. Good morning and good afternoon to everyone. I'm very pleased to provide this breakdown of the results of the study. So my plan is to run through the key findings of the study. And I think on the one slide you were looking at, we can see some of the key findings. Basically as part of the feasibility study, the resource model has been updated with conversion from inferred to indicated between 400 and 250 meters above sea level within the South lobe and an extension of the inferred classification from 250 meters above sea level to 66 meters above sea level, which is, again, against the previous model which had the base of the inferred at 250 meters above sea level and the kimberlite remains open below the 66 level.

I would say that overall, the mining method selection was data driven and the method chosen is long hole shrinkage, and we'll get into the details of that as the presentation proceeds, provides access to high-value, high-grade ore [earning] in the underground mine life. With the underground mine ramping up coincident with the depletion of the open-pit reserves and the proposed schedule does not require processing of stockpiles to mitigate against any production shortfalls during the transition from open pit to underground.

The payback period happens what we're mining in competent granted host material. And overall, we're going to maintain ore to the plants of 2.6 million to 2.7 million tonnes a year. And the combined open pit and underground scenario, as you see on the slide, provides a strong economic argument for proceeding.

I'd like to mention the technical team. Lucara engaged with JDS Mining and Energy (sic) [JDS Energy and Mining] to be the study lead under the direction of Gord as Eira indicated. JDS assembled a group of their own internal consultants and external consultants that is world class, extremely experienced, are subject matter experts with proven track record of project delivery and mine construction.

Right? In terms of the data elements, Eira did touch on this, but Lucara and Lucara Botswana have been engaged with the government of Botswana from the early stages of the study, and we've maintained that communication. As Eira indicated, we'll be sitting down with the government in the next few weeks to present the results of this feasibility study to initiate our stakeholder engagement and proceed with filing for a mining life extension to cover the remaining open pit and proposed underground mining operation. The projects in its conclusions have been very much data driven using historical data, operational data obtained from 7 years of mining, processing, diamond recovery and diamond sales from Karowe. And as indicated earlier, we have an extensive set of new information obtained over the course of the feasibility study.

Identified key focus areas of hydrogeology, geotechnical constraints of the kimberlite and host rocks have been addressed through this intensive set of work programs. The data collection started back in 2016, ran through the PEA process which was completed in 2017 and has been substantially updated and augmented by the feasibility study, and you can see and read some of the metrics on this particular slide. I won't run through all the details. And ultimately, the quality and abundance of data was deemed sufficient and suitable for the level of the study being presented.

I'll touch quickly on these next set of slides, which is the -- on the resource update. I mean the [space] underpins the whole decision to proceed with the feasibility study. We've updated the geological model. We've updated the resource model. This has resulted in the -- a new base of indicated resource sitting at 250 meters above sea level. Previously, that sat at 400 meters above sea level. So we've added 150 meters of indicated within the South lobe, and we pushed the inferred down to 66 meters above sea level.

The work has been supported by detailed core logging of geotechnical and delineation holes that were drilled as part of the 2018-'19 FS study, complemented by additional dry density, detailed petrography and microdiamond data, which is augmented by our previous work in 2018.

Now we can look at the Mineral Reserves Statements (sic) Mineral Reserve Statements for the remaining open pits and now classification of probable mineral reserves within the underground portion of the deposit, and this table is represented here also in the press release. And you can see the split between the open pit and underground reserves and the split between the dominant rock types. Within the underground, we have 33.5 million tonnes with just over 5 million carats available for the feasibility study as a probable mineral resource.

Now I'll touch on diamond pricing. A set of size frequency distribution and value models were generated for the EM/PK(S) and the M/PK(S) domains within the South lobe. These are the dominant rock types present within the South lobe. And based on data gained over the last 2 years or so, we've been able to develop these independent SFD and value models for both the E and the M/PK(S). The parcels used to model the SFDs are very robust. The M/PK(S) model is informed by approximately 410,000 carats or greater than a year's production. The EM/PK(s) model is informed by approximately 45,000 carats of targeted production and compared against a set of some 150,000 carats of daily EM/PK(S) production where I have SFD sizing data for that particular daily production.

The average price per carat models are a function of the size frequency distribution and value by size class. The value models for the EM/PK(S) and M/PK(S) have been adjusted in the plus 10.8 size category to reflect current weakness in the price achieved for large, high-quality rough to our tender sales. The average price proposed for the feasibility study are based on a view that, that portion of the market will see price improvement by 2025 but at levels that are still conservative against the market high and also against pricing used in 2018.

I'd just like to remind everyone looking at this particular histogram plot on the bottom that our achieved average prices that have -- over the last -- since 2014 represent a blend and are weighted by the proportions of carats recovered and sold from the various lobes, and you get an idea of what that looks like in terms of the pricing metrics on that histogram slide.

This next slide is a couple of schematics cross sections of the AK6 kimberlites. One of the most significant findings of the various resource upgrade drilling programs that have been running since 2016 has been the determination that the EM/PK(S) units became increasingly significant with respect to diamond content and volume at depth within the South lobe, especially below 400 meters above sea level. And now based on operational data produced -- based on operational data, we are confident that some of the world's largest gem-quality diamonds have been sourced from the EM/PK(S). What's also shown here on this diagram is the split between the indicated and inferred at the 250 meter above sea level. You can see in the shaded diagram on the left where we have the EM/PK(S) in purple becoming the dominant rock type as we get deeper in the resource. And you can see within the inferred, there's another unit now coming in called KIM-3, which has attributes more similar to the M than the EM/PK(s), sitting within the inferred category.

Next slide, please. Now we're going to talk about the underground mine design and the selection of long hole shrinkage as the preferred technique. Trade-off studies were completed that examined a variety of underground options including block caving, assisted block caving, sub-level cave, sub-level retreat. The AK6 kimberlite and the host rocks of the crew sequence present a very unique setting. Particularly at Karowe from surface, we have about 140 meters of the salt which overlie about 120 meters of sandstones locally with interbeds of red mudstone that are very poor quality and are water-bearing and followed by a mudstone domain and 140-meter package of carbonaceous shales with discontinuous coal seams.

So this package is about 400 meters of sedimentary sequence overlie basement granites. The kimberlite of the South lobe and the basement granites are a very good rock quality with UCSs of 130 to 150 MPa with sparse jointing. The remainder of the host rock package are of reasonable rock qualities. However, there is a substantial thickness of weaker material with UCSs of 30 to 40 MPa within the 140-meter sequence of carbonaceous shales, intercalated coal seams that lie on top of the basement granites.

Regional in situ horizontal stresses are low in the country rock, roughly half that of the vertical stress, while the pipe has elevated horizontal stresses as evidenced by the results of wireline overcoring in situ stress tests that were conducted as part of the geotechnical data program. The South kimberlite is much stronger than normal, and the in-depth test work, data analysis, including detailed core logging, geotechnical core logging, the in situ stress measurements, eliminate natural caving as an option and present a good opportunity for stoping. The mining method selected is referred to as long hole shrinkage, and the plan is to systematically drill and blast the kimberlite on a vertical retreat basis. Drilling and blasting will occur from a series of sub-level space of 100-meter vertical intervals, access via 2 vertical shafts and internal ramp system developed within the granite and also developed within the kimberlite itself to avoid lateral development within the weak carbonaceous shale sequence.

Long hole shrinkage, with this technique, a significant portion of the blasted muck is left in the stope during blasting and stoping or during the actual mining activity. That acts to assist and stabilizing the host rock, and we only extract the swell during this drill and blast phase.

We'll see a few schematics coming up of mucking will take place from a number of draw points on the 310 level or 310 meters above sea level, which will form the main extraction level. Once the column of South lobe is fully blasted, stope is drawn empty by mucking out of the draw points. Production rates are sufficient to maintain the 2.6 million to 2.7 million tonnes per annum of ore to the ore processing facility.

The underground portion of the mine alone will produce an average 392,000 carats a year, mining from the 700- to 310-meter above sea level elevations, with a 13-year production life after an initial 5.5 years of preproduction development and ramp up the full underground production. The resource economically favors long hole shrinkage over sub-level caving for its bottom-up approach. It take advantage of the higher-value kimberlite at depth, coupled with low operating costs and derisk the project with respect to geotechnical and hydrogeological issues of host rocks.

This next slide is an isometric diagram of the underground -- [Karowe's] underground workings. So we're going to walk through this in a series of steps. You can see the 2 vertical shafts. There's the production shaft and the ventilation shaft. And on the next slide, we're going to see some more details around the -- kind of the physicality of those particular items. I just want to reinforce the advantages of this method when we're looking at this isometric diagram. We get extraction of the highest-value rock first. We have low and delayed dilution. We have development and production of the underground, can occur while simultaneously with pit operations. So we'll be developing the mine at depth where we're still operating in the pit. We reduced the dewatering risk by how -- using grouted shafts and delay surface breakthrough into the open pit for 5 production years. We have minimal developments in poor ground and the development of the extraction level, which we'll discuss on the 310 level, is designed to manage natural caving should it occur. And we have the ability to rapidly increase the draw on the mucking rate once the resource is fully blasted.

We have flexibility, we have less risk, and we have the ability to mine below the 310 level within the indicated resource down to 250 and potentially beyond. The shafts that we sunk at the same time with the ventilation shaft dedicated as a heavy lift, providing access initially on the 680 level for the purpose of a drill level and establishment of a dewatering gallery. Water control and hydrogeological context of the deposit and host rocks are key elements of the mine plan. The 680-level dewatering gallery will provide the necessary infrastructure and access to dewater the overlying red mudstones in advance of open-pit mining in the preparation for underground mining and bridging of the crown pillar into the open-pit scheduled for 2029.

The main extraction level, 310 level, has a layer of more typical of caving mines with a total of 56 draw points, underground pressures and basically a normal layout for rock-handling systems underground. The place oriented 2 21-tonne skips for conveyance to surface. Total lateral developments of the proposed underground is approximately 16.3 kilometers on 8 levels with 2,800 meters of vertical development in shafts and then raises. Development of the extraction level and shaft design allow for deeper ore to be accessed below 310.

This series of summary tables with the main aspects of the design for the shafts, the levels, the extraction. We get 8 levels, 6 of which are accessed from the shaft, 2 of which are accessed by -- through internal ramping either up from the 320 level or down from the 680 level. The key takeaway here, I think, is to drive our attention to the extraction level design with 56 draw points from 5 panels that brings significant operational and extraction flexibility. The potential to increase production in the period post-2029 once the stope is fully blasted is there. The ore tonnes per meter of development at 2,000 tonnes a meter aligns with more lines of caving operations and sub-level-type operations. The powder factor and hole burden is aligned with the current open-pit operations. So basically, the drill and blast regime that we'll be using underground is almost identical to the same that we're using in the open pit at the present time. And we have blast studies that indicate that our comminution and our size distribution of the muck will be easily handled within those draw points.

This is a cross-sectional view, a bit of a cartoon for stope design and sequence. The pyramidal sequence is proposed for the drilling and blasting of the stopes at Karowe. The blasting sequence will create a dome-shaped back at the top of the blasted volume to maintain the stability of the back. Stopes will be blasted sequentially upward in 17.5-meter increments until a 30-meter sill pillar is left between the drill panel and the stope back. And that final 30-meter sill will then be blasted and terminate access to the drill panel of that location. Drilling will take place from sub-level spaced approximately 100 meters apart, using in-the-hole hammer rigs, and the idea is to drill downholes. The key points to take away from this diagram -- and basically, we will start at the extraction level; blast the drawbells; proceed up to the next level, the 380 level; and initiate blasting from the 480 level down and progress that stoping upward. Once we get into the domain of the pipe which has the carbonaceous shales and the sedimentary rocks as the country rock will leave a skin of kimberlite behind, which will provide additional support against dilution, and then we'll take this skin later in the mine life as we prepare to reach the crown pillar into the bottom of the open pit.

Drilling and blasting activity is proposed at a rate of around 21,000 tonnes per day with mucking of the swell of approximately 7,500 tonnes a day to draw down the stope to accommodate the blasting of the next 17.5-meter lifts. The bulk of the host rock is of good quality. And this, combined with the cylindrical shape of the ore body, prevents low risk for substantial waste entry, and the kimberlite skin will provide additional confining support against the host rock as does the broken muck before a final drawdown.

This particular slide now shows that we're going to get into some of the financial and resource aspects of the proposed underground operation. This is an illustration of available carats by rock type and level. I think what we can see is we're going to see this carry through to the next set of slides. As you can see that at the bottom level, so the 250 and the 300 level that the amount -- the volume of carats available is dominated by the EM/PK(S). And as you can see from the diamond pricing and the coarse nature of that size distribution, that is also the highest-value rock available within the column. And we'll see that, as I say, flow through the next set of slides.

The next set of slides also do address indicative and estimated volumes in tonnes and carats, costing and expense estimates. And I would refer you back to the cautionary statement at the beginning of the presentation while we go through these slides.

We're looking now at the indicative production schedule. And what this shows is basically the distribution of tonnes by rock type for the open pit and the -- basically, the crossover to underground tonnes in 2025. The key takeaway from this particular diagram is that when we look at the value of the material that's coming out of the underground, we see that the peak in [2030], 3 or 4 years of underground production, dominated by the EM/PK(S). And you can see that from that particular diagram. And then mid-underground mine life as the M/PK(S), not unexpectedly, becomes a more significant driver of the volume since this particular unit becomes more significant in the shallower portions of the South lobe that we see a decrease in the overall value. And we'll see -- later, we see a bit of a drop-off in the carats, but we're still maintaining in excess of 300,000 carats a year. And there's no expectation to see treatment of stockpiles during that transition from open pit to underground. We see the stockpiles come through in the last 3 years of the mine life where we process remaining working stockpiles and the life of mine stockpile.

This next slide shows some production metrics, which is basically showing carat production by year and by source. And we can see a boost in the carat and the influence of the EM/PK(S) and the ramp-up in the early period of the underground with production of approaching 500,000 carats a year and over 400,000 carats a year for a number of years in the early part of the underground mine life for a total recovered carats from the underground of 7.8 million, an average grade of 14 cpht and dragging in those stockpiles at the end of the mine life for processing.

Next slide, please. We'd like to now touch on preproduction CapEx, sits at USD 514 million. This is driven, obviously, by the mine development with shaft sinking costs running around $160 million of that and the remaining underground development sitting in around the same, $160-odd million. We will need additional power at Karowe to support the underground operation in terms of hoisting and ventilation. So we -- as part of the feasibility study -- and shown in the numbers for the feasibility study is a new 29-kilometer long, 132-kV power transmission line running from a new substation constructed by Botswana Power Corporation into the mine site, and that will provide sufficient power for the current requirements and the underground development. Work on this power line process is ongoing in parallel with the feasibility study. But again, I say all the costs for that power line are shown in the feasibility study economics.

Other infrastructure required to support the underground operation include various surface buildings and facilities adjacent to the 2 vertical shafts, a construction camp and expansion of coarse and fine tailings facilities. Based on understanding gain from the mining, milling and diamond recoveries from unweathered hard (inaudible) kimberlite over the last 4 years in conjunction with additional test work as part of the feasibility study. The current flow sheet is deemed suitable for processing of the underground sourced kimberlite and diamond recovery in line with the resource model.

Now we're going to run through some of the economics. I won't spend a lot of time on these slides. In the interest of time, everyone can read the numbers. The first one is the stand-alone underground scenario with the life of mine average price per carat of $725, 13 years of mining and milling of underground-only ore with a 20.8% internal rate of return at 16% post-tax IRR and less than a 3-year payback.

We're showing now on this particular slide the combined underground and open pit, laid out similar to the previous one. We have 7.84 million carats that could be recovered at an average price of $670 a carat. This is the combined open pit and stockpile scenario which were the end of the mine life with $1.2 billion post-tax cash flow; 56 million tonnes treated; $5.25 billion in gross revenue and an after-tax NPV of 5% of $718 million; and again, less than a 3-year payback; and average life of mine operating costs of just $28.43 a tonne ore processed.

This slide can be married with the previous pie diagram, showing the breakdown of the preproduction estimated capital. And we can also show here estimations on sustaining costs for both the underground and open-pit operations for the $514 million of preproduction cap and an estimation of $208 million of life of mine for sustaining and closure costs.

I think we'll emphasize here that the underground operation will continue. What's been established by the open pit is a high-margin producer with respect to operating cost per carat. And you can see the breakdown on the left-hand side of that -- or the right-hand side of the slide of the cost per carat from the various aspects of the operation, and again, with an over in excess of $500 a carat margin.

This is -- the next slide depicts the operating costs for the underground, the unit cost per tonne milled, unit costs, dollar per carat and life of mine estimates. Then now we're showing the underground-only operating estimates. Again, for underground mining processing, G&A and the total number is reflected on this particular diagram.

This slide shows the open-pit underground post-tax cash flow. As I indicated, the estimated schedule maintains the mill throughput of 2.6 million to 2.7 million tonnes a year without a production dip. The main takeaway from this is the big capital spend that you can see in the early part mainly coming through in 2021 during the shaft-sinking period and then strong post-tax cash flows in the early years of the underground. This is the influence of the higher-grade, higher-value plus 400,000 carat production per annum that will come in the early years, dominated by the EM/PK(S). In terms of sensitivities, this is also presented in the press release. Obviously, the main sensitivity is diamond price.

And then I think we should talk a little bit about some of the project risks. Obviously, project execution, which involves procurement, labor financing, are key risks that we will have identified and we'll work very hard to mitigate against. The schedule in terms of dewatering and assuring no different production, the dewatering schedule is tight and requires us to get down to that 680-meter level to allow us the longest period of time possible for dewatering of the sandstones and the mudstones that we'll be mining through with the underground stoping and the open pit.

Opportunities. There are short-term opportunities with respect to the newly updated resource model in terms of pit optimization and scheduling, and this work is ongoing. Opportunities exist below the 310 level for additional ore access from the underground workings. There's a potential for increased production rates post-2029. The shafts at 2.7 million tonnes a year of conveyance are not at full capacity, so there's the ability for additional hoisting. And then we would look at increased mill throughput. We have resource potential in the North and Center lobes that will require drilling and work from underground. And obviously, the recovery of high-value stones will have positive impacts to project economics.

Looking at the indicative schedule is the timing. We can basically look at this, and I will speak to a little bit in the next steps. We can see from this particular schedule that 2020 is not extremely capital intensive. And that main expenses come through in the second half of the year as we prepare for shaft sinking, and then we can see that the early works with the camp construction and some of the other surface work and the power line coming in, in mid-2022 to align with finishing and completion of the shafts, fitting in the shafts and getting ready for the ramp-up of underground production through 2023-'24, ramping up to full capacity '25-'26.

With that, I would like to thank JDS and Gord for the excellent work that he and his team have done delivering this quality study in an extremely compressed time frame. So it's a, like I said, a very quality piece of work. It shows the way forward, I think, for Lucara and delivering a positive economic results and a very unique asset with some very unique geology and some very unique diamonds.

With that, I will pass the call back over to Eira.

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Eira Margaret Thomas, Lucara Diamond Corp. - Founder, President, CEO & Director [6]

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Thank you, John. To sum up, Lucara is highly encouraged by the results of the Karowe underground Feasibility study which has outlined a much larger economic opportunity than first envisaged and represents an exciting, world-class growth project for our company. A significant portion of the cost to expand our mine underground can be funded from cash flow, and the investment is expected to be paid back in under 3 years as we've mentioned numerous times.

The mining method is ideal for allowing us to exploit the highest value part of the ore body first. It is important to reiterate that the study has used conservative assumptions around diamond price, an important lever in the economic analysis. A return to diamond prices observed in 2015 would significantly reduce or even eliminate the requirement for external financing and would more than double the NPV at a 5% discount.

In the first half of 2020, as John has stated, the company will focus on detailed engineering and early procurement initiatives as financing options are explored. The anticipated capital requirements represent less than 10% of the initial CapEx estimate for the underground project overall, and the company anticipates funding these initial expenses from cash flow.

I, too, would like to thank Gordon and JDS. And I would like to now turn it over to Zara Boldt, our CFO, who is going to take us through a summary of our Q3 results.

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Zara E. Boldt, Lucara Diamond Corp. - CFO & Corporate Secretary [7]

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Thank you very much, Eira. Starting on Slide 31. We've got some highlights from our third quarter. Operating performance in the third quarter was strong, with mining and processing activities and our operating cost per tonne of ore processed at $31.06, all tracking well to guidance. Revenue in the current quarter was almost identical to total revenue in the same quarter last year despite the number -- higher number of carats sold. We sold 5 diamonds for more than $1 million each and 1 diamond for more than $2 million in the third quarter tender. The gem-quality blue and pink diamonds recovered in the third quarter will be sold in our December tender.

We completed 5 sales through Clara in the quarter, and the total value transacted on the platform doubled to USD 2.4 million. Our customer base has also grown significantly with 27 participants on the platform as of September 30, and it's now over 30 participants at the present time.

You will have noted our decision to suspend the payment of the quarterly dividend, effective immediately. With the results of a positive feasibility study for development of an underground mine at Karowe now in hand, our Board of Directors determined that the suspension of the dividend would be in the best interest of the company and its shareholders. We are of the view that the best use of our available cash is directed to early works, including detailed engineering, procurement initiatives and project financing. The anticipated capital requirements in 2020 represent less than 10% of the preproduction CapEx estimate, and we do expect that our cash flow next year will be sufficient to support that work while we arrange external financing to supplement the expected contribution of our cash flow from operations to develop the underground.

We anticipate that our external financing requirements could be met with some form of debt financing. At this time, we are not contemplating an equity issuance. We will provide further guidance as this progresses.

Moving to Slide 32. We look at our financial highlights for the 9 months ended September 30, 2019. Similar to our third quarter results, our revenue of USD 136.5 million on a year-to-date basis is almost identical to the same period last year. Consistent with the last few quarters, we continue to recover smaller, lower-value diamonds. While still profitable, the smaller goods do impact the average price per carat sold. And you can see that impact in the decrease from $564 to $436 per carat sold in the chart at the bottom left.

Our net income to date is $4 million or $0.01 per share. Consistent with previous quarters this year, our net income has been significantly impacted by depletion and amortization expense of $38.1 million. In the third quarter, we recorded a 24% increase in our quarterly operating expense as compared to Q3 2018. This increase results from a combination of several things, including an increase in the average cost per tonne mined, lower volumes of total tonnes mined, an increase in total tonnes processed and anticipated increases in certain consumables and labor expense. Despite this increase, our year-to-date cost per tonne processed at USD 31.06 is trending to the lower end of our guidance.

Our adjusted EBITDA is about 10% less than our 2018 comparative at USD 50.2 million, with the main driver of this difference, the increase in operating expenses. Cash flow per share from operations was $0.08 per share in the current 9-month period as compared to $0.09 per share in 2018.

Moving to Slide 33. We have our operational highlights presented on a year-to-date basis. The results are fairly consistent with our operational performance during the first half of this year, and we've spoken previously about the differences when compared to the same period last year.

Moving to Slide 34. We have our 2019 outlook. We have revised our 2019 guidance for revenue, narrowing our range to between $170 million and $180 million for the year. We have also narrowed our guidance for carats recovered and sold, estimating that we should be between 400,000 and 425,000 carats for those ranges due to consistently higher recoveries mainly in the smaller size classes. We've also narrowed our waste mining guidance to be between 6.5 million and 7.5 million tonnes this year. Finally, we expect our cost per tonne mined to be at the lower end of our revised guidance of USD 32 to USD 34 per tonne processed.

Moving to Slide 35. We've got our capital structure. As of September 30, we had cash of $4.8 million, nothing drawn on the working capital facility but $50 million available. Despite the current downturn in the diamond market, we are generating enough cash to operate our business, develop the Clara platform and to have been a steady dividend payer. The feasibility study has outlined strong economics, and we are confident that our external financing requirement will be modest with attractive financing options available to supplement the expected contribution of our cash flow from operations to fund the underground project.

With that, we have concluded the formal portion of the presentation, and we'll now open the floor for questions.

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Questions and Answers

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Operator [1]

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[Operators Instructions) Your first question comes from Edward Sterck, BMO.

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Edward Christopher Sterck, BMO Capital Markets Equity Research - Analyst [2]

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Just wanted to ask perhaps a bit of a detailed question on the blasting phase. So that -- presumably, that is all happening upfront before you start drawing ore. And I just wanted to ask whether the cost of the blasting is included in the capital cost. And then if not, just to -- I guess that -- the cash -- online cash costs are going to be higher during that blasting phase and before the serious drawdown of the rock pile commences.

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John P. Armstrong, Lucara Diamond Corp. - VP of Technical Services [3]

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Edited Transcript of LUC.TO earnings conference call or presentation 5-Nov-19 2:00pm GMT - Yahoo Finance

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