Lucapa Diamond Company
Lucapa Diamond Company
ACN 111 501 663
ACN 111 501 663
34 Bagot Road,
Subiaco WA 6008
34 Bagot Road,
Subiaco WA 6008
Tel: +61 8 9381 5995
Fax: +61 8 9380 9314
Tel: +61 8 9381 5995
Fax: +61 8 9380 9314
Email: general@lucapa.com.au
www.lucapa.com.au
www.lucapa.com.au
Email: general@lucapa.com.au
Lucapa Diamond Company Limited | Annual Report 2023 |
11
Lucapa Diamond Company Limited | Annual Report 2023 | 2023
at a
glance
100% Project
Attributable
100% Project
Rough Diamond Revenue
Carats Recovered
US$102.2m
US$48.4m
63,469
Polished Diamond Revenue
US$2.8m
US$1.6m
Price per Carat
US$2,458
Tonnes Processed
2.5m
Attributable
EBITDA
Loss after tax
US$23.4m
US$8.3m
US$9.1m
2
| Lucapa Diamond Company Limited | Annual Report 2023 Our
People
Lulo employees
by gender
95% Male
5% Female
Mothae employees
(incl contractors)
by gender
78% Male
22% Female
Largest
Recoveries
Lulo Diamond Project
235ct
November 2023
Mothae Kimberlite Mine
86ct
February 2023
Contents
Company Overview
Chairman’s Letter
2023 Group Highlights
Review of Operations
Lulo Alluvial Mine, Angola
Mothae Kimberlite Mine, Lesotho
Merlin Diamond Project, Australia
Lulo Kimberlite Exploration Joint Venture, Angola
Brooking Diamond Project, Australia
Orapa Area F Project, Botswana
Mineral Resources
Sales and Marketing
Corporate Governance Statement
Financial Report
Directors’ report
Consolidated financial statements
Notes to the consolidated financial statements
Director’s declaration
Independent auditor’s report
ASX additional information
Corporate directory
Definitions and abbreviations
04
06
07
08
10
12
14
16
18
18
20
22
24
34
36
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61
105
106
113
115
116
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Lucapa Diamond Company Limited | Annual Report 2023 | Lulo Exploration JV (39%)
Angola
Lulo Mine (40%)
Angola
Orapa Exploration (100%)
Botswana
Mothae Mine (70%)
Lesotho
Company Overview
Lucapa Diamond Company Limited is listed under the ticker LOM on the Australian Securities
Exchange (ASX). The company is a diamond miner and explorer with assets across Africa and
Australia. It has interests in two producing diamond mines in Angola (Lulo – 40%) and Lesotho
(Mothae – 70%). The large, high-value diamonds produced from these two niche mines attract
some of the highest prices per carat for rough diamonds globally.
The Lulo mine has been in commercial production since 2015, while
the Mothae mine commenced commercial production in 2019.
Lucapa acquired 100% of the Merlin Diamond Project in the Northern
Territory of Australia in 2021. The Merlin mineral lease and exploration
licence contain 13 previously discovered kimberlite pipes containing
a 4.4 million carat JORC 2012 compliant resource. There are also
numerous unresolved geophysical anomalies on the leases. The
Merlin mineral licence expires in 2047.
Lucapa and its project partners are also exploring for potential primary
source kimberlites or lamproites at the prolific Lulo concession in
Angola, the Brooking project in Australia and the Orapa Area F project
in Botswana.
4 | Lucapa Diamond Company Limited | Annual Report 2023
4
Lucapa has a cutting and polishing partnership with Safdico
International, a subsidiary of leading international high-end jeweller
Graff. Under the agreement, Safdico, can purchase up to 60 percent
of Lulo’s alluvial rough production as a preferred buyer and has an
agreement to buy 100 percent of Mothae’s rough production, both at
full market value. The mines then share in a significant portion of the
additional margins derived by the partnership from beyond the mine
gate.
Lucapa has its corporate offices in Perth, Western Australia. The
Board, management team and key stakeholders in Lucapa have deep
global diamond industry experience and networks through the value
chain from exploration to retail.
| Lucapa Diamond Company Limited | Annual Report 2023 Merlin Diamond Project (100%)
Australia
Brooking Exploration (80%)
Australia
Lucapa Head Office
Australia
Our Purpose
Lucapa produces natural diamonds
sustainably and cares for its people,
communities, and the countries in which
we operate.
Our Vision
Lucapa’s vision is to become a pre-
eminent mid-tier diamond company with
multiple assets, vertically integrating
through the supply chain, to bring greater
value to all stakeholders.
Our Values
Safety
We conduct operations
in a safe, responsible
and environmentally
conscious manner.
Integrity
We interact with all
stakeholders with
integrity, honesty,
transparency
and fairness.
Teamwork
We attract and employ
the best skillsets,
encourage teamwork,
diversity, and reward
performance.
Partnership
We partner with the
local communities and
governments in the
countries where we
operate, for mutual
benefit.
Lucapa Diamond Company Limited | Annual Report 2023 |
5
5
Lucapa Diamond Company Limited | Annual Report 2023 | Chairman’s
Letter
Dear Shareholders,
We have been operating in Angola for
around 15 years and in that time we have
experienced firsthand
road
towards the government’s efforts to
make the country a stable and attractive
environment for foreign investment.
long
the
We entered the country shortly after the
end of the civil war when others were not
so brave. So for a decade and a half we
have, with our partners, built an enviable
alluvial production. Lulo’s diamonds attract
the highest prices for alluvial diamonds
globally. Over the period, we have sold
almost half a billion US dollars’ worth of
Lulo diamonds.
Now, with the latest JORC resource update,
we have potentially another eight or so
years of alluvial production at the Lulo
Mine. That, and the ongoing exploration for
the source of the high-value large diamonds
we keep recovering at Lulo, means Lucapa
is in Angola to stay.
As the fourth largest diamond producer
in the world, Angola has the potential to
become a world diamond powerhouse.
is confirmed by the recent rush
This
back into the country by some of the
world’s largest diamond producers, Rio
Tinto and Anglo American, owner of De
Beers. It has seen heightened activity in
greenfield diamond exploration in Angola,
at a time when global diamond exploration
investment is estimated to be at multi-
decade lows.
While our peers in the Angolan diamond
exploration space are beginning their
journey in country, Lucapa and our Angolan
partners, Endiama and Rosas & Petalas are
further down the road.
Our determination to find the primary
kimberlite source means we have one of
the most active kimberlite bulk sampling
programs underway, globally, amongst our
peers large and small.
6
Our determination to find the primary
kimberlite source means we have one of
the most active kimberlite bulk sampling
programs underway, globally, amongst our
peers large and small.
We have been methodically testing and
sampling dozens of kimberlite targets as
we move across the 3000 square kilometre
concession, an area twice the size of
Greater London.
In fact, the only large scale diamond mine
which is expected to commence commercial
production in this decade is the Luele Mine
in Angola. Phase 1 of that mine is forecast
to produce as much as 4-5 million carats.
All of this means that natural diamond
supply is forecast to drop to 115 million
carats by 2030, which will no doubt drive
up prices of natural diamonds. We firmly
believe that Angola, one of the world’s
most prolific and underexplored diamond
destinations in the world will move up the
world rankings very quickly for diamond
production.
Finally, as this is my final Chairmans’
letter to shareholders, I would like to
take this opportunity to thank our valued
shareholders as well as our teams and
partners in Angola, Lesotho, Botswana and
Australia.
With best wishes,
Miles Kennedy
Outgoing Chairman
We don’t have the financial resources
that our larger peers have, however, we
have some of the brightest and most
experienced diamond exploration teams in
the world who have had to battle against
major floods this wet season to execute
their strategy.
We know that when we find the holy grail it
will be worth it.
is that the
What we know for sure
production of natural diamonds is declining
and the exploration programs around
the world are not enough to make up the
expected shortfall. The diamond industry
needs a Lulo Kimberlite Mine in the future
to fill the supply gap which is coming.
Some of today’s legacy mines, Canada’s
Ekati, Diavik, Zimbabwe’s Murowa and
Russia’s Zarnitsa are expected to reach
depletion or finish conventional m ining
before the end of this decade.
While the other famous mines such
as Botswana’s Orapa and
Jwaneng
and South Africa’s Venetia have still
got multi-decade
remaining,
production
is going to decline rapidly
in the absence of large, new diamond
mines coming online.
lives
| Lucapa Diamond Company Limited | Annual Report 2023 2023 GROUP
highlights
Full year
revenues of
Full year attributable
revenues of
100% EBITDA
Attributable
EBITDA
Settled debt of
Repatriated
US$102.2m US$49.9m US$23.4m US$8.3m US$5.5m US$7.9m
at US$2,458/carat
(100% basis).
Now debt free.
in capital
loan repayments
and SML dividends.
Lulo Alluvial Mine, Angola
Mothae Kimberlite Mine, Lesotho
625,548m³
Gravel processed
30,585
Carats recovered
1,468,909
Tonnes of ore processed
32,884
Carats recovered
322
Special sized diamonds (+10.8 carats) recovered
219
Special sized diamonds (+10.8 carats) recovered
0.19
0.00
LTIFR per 200,000 hours worked
LTIFR per 200,000 hours worked
Merlin scoping
study pivoted
to low-cost, smaller
development option.
Groundwater
monitoring boreholes
installed at Merlin
Diamond Project.
Mothae plant
nameplate
Debt
free
exceeded by 30%, following
modifications.
expunged interest
bearing debt.
Upside
to Lulo Alluvial
Resource carats.
Bulk samples
processed
from Lulo Kimberlite
exploration.
15th Diamondiferous
Kimberlite
discovered at Lulo
Kimberlite exploration.
639 metres drilled
at Brooking.
7
Lucapa Diamond Company Limited | Annual Report 2023 | REVIEW OF operations
Lulo Mine, Angola
| Lucapa Diamond Company Limited | Annual Report 2023
88
| Lucapa Diamond Company Limited | Annual Report 2023 Lucapa is a diamond mining company listed on the ASX with activities spanning exploration,
production, rough sales and the downstream value-adding activities of cutting & polishing.
The board and management team have deep experience across all facets of the diamond industry.
Lucapa has stakes in two operating diamond mines, one near-term
development project and several exploration ventures.
Lucapa also has early-stage exploration projects in Botswana (Orapa
Area F) and Australia (Brooking and Merlin)
Lucapa’s flagship project is its 40% stake in the Lulo alluvial mine in
Angola (“SML”). It also has a 70% stake in the Mothae kimberlite mine
in the Kingdom of Lesotho (“Mothae”). In 2021, Lucapa completed
the 100% acquisition of a third project, Merlin, a near-development
project in the Northern Territory of Australia. Development options for
Merlin are currently being considered.
The Lulo alluvial mine in the Lunde Norte region of Angola is globally
renowned for recovering high-quality, large diamonds including
regular recoveries of +100 carat diamonds. In 2023, it recovered five
gem quality +100 carat diamonds, while in 2022 it recovered a total
of ten. The production from SML fetches the highest average price
per carat for any alluvial production globally. In 2023, SML produced
30,585 carats.
Mothae mine, in the Mokhotlong province in the Kingdom of Lesotho
attracts the second highest average price per carat in the world for
kimberlite production. In 2023, the mine produced a mix of quality
Type IIa and Type I diamonds from the open-pit operation, totalling
32,884 carats.
In 2023, the Merlin Feasibility Study was pivoted from a large-scale
development, to examine a smaller-scale, lower capital cost option,
commencing with the high-grade Gawain pipe.
The main exploration project for Lucapa is the advanced Lulo
Kimberlite Joint-venture exploration programme in Angola, tasked
with locating the primary source of the large, high-value alluvial
diamonds recovered by SML.
The key goals that Lucapa achieved, in line with its objectives in 2023
include:
• Exceeding Full Year Group production guidance;
• 9% higher processed volumes for the year at SML compared to
the previous year, following the recent investment in the new
processing plant and mining fleet;
• New annual records for tonnes mined (up 23% yoy), tonnes
processed (up 22% yoy) and $/ct achieved (up 12% yoy) at
Mothae, following on from the improvements made to Mothae’s
processing plant;
• 26 samples processed during the year, or one every fortnight, as
part of the Lulo Kimberlite Bulk Sampling Program;
• 6 diamondiferous kimberlites identified during the year by the
Lulo Kimberlite Bulk Sampling Program, taking the total to 15
for the project;
• Pivoting the Merlin Diamond Project Feasibility Study to focus on
a lower-cost, smaller-scale pathway to development;
• Advancing the exploration projects in Angola, Australia and
Botswana;
• Continuing to generate additional margins for both operations
from the cutting and polishing partnership with Safdico; and
• Improving the safety performance at both operations.
Lucapa Diamond Company Limited | Annual Report 2023 |
99
Lucapa Diamond Company Limited | Annual Report 2023 | REVIEW OF OPERATIONS
Lulo Alluvial Mine,
Angola
Lucapa
40%
Endiama 32%
Rosas and Petalas 28%
Conducted by Sociedade Mineira Do Lulo
Lulo Alluvial Mine (“Lulo”) had a solid performance in 2023 with further gains made in
production and operational efficiencies due to previous capital investment into plant and
equipment upgrades combined with those made during the year.
EBITDA on a 100% basis was US$23.6 million for 2023, compared
to US$35.2 million in 2022. Operating costs rose due to inflation,
increased fleet expenses and higher stripping ratios, but were kept
within target for the year. Some added costs were also the result of
boosted security deployed for equipment protection across the vast
site’s mining and exploration activities.
SML also gained an extra US$1.2 million in polished diamond revenue
through the cutting and polishing partnership with Safdico.
An updated JORC classified mineral resource for Lulo was published
by Lucapa in March 2024, estimating an inferred resource of 228,400
carats at a modelled value of US$1,897/carat as at 31 December 2023.
This is a 48 percent increase in resource carats and a 5 percent drop in
the price per carat as a reflection of the softening of diamond prices
over 2023. The volume of gravel in the resource update has been
increased by 90% to 5.02 million cubic metres, equivalent to 8 years
production at planned mining and processing capacities. This is the
6th consecutive year the Lulo alluvial resource carats have increased.
SML, the operator of Lulo, set new annual records for volumes
processed (625,548 cubic metres, a 9% increase on 2022) and mined
approximately 8.3 million cubic metres. This was a 33% increase on
2022 for the year, as mining moved between the lower-grade terrace
areas in the wet season at the start and the end of the year and
higher-grade leziria (floodplain) areas predominantly during the dry
season in the middle of year.
The investment in 2023, of a 95-tonne Cat 395 excavator and three
additional ADT’s resulted in noticeable gains in efficiencies of
overburden stripping.
A 21 percent drop in grade to 4.9 cphm3 from the 6.2 cphm3 achieved
in 2022, is linked to increased dilution as mining accessed deeper
deposits. Even with the increased volume processed, 14 percent fewer
carats were recovered during the year.
However, the 30,585 carats recovered, included three +100 carat
diamonds, a 150 carat, a 180 carat and a 123 carat stone recovered
in February, June and October respectively. Also, two +200 carat
diamonds, a 208 carat and a 235 carat stone were recovered in
October and November. This brought the total number of +100 carat
diamonds recovered at Lulo since operations began to 40.
The large stone recoveries combined with several fancy pink and fancy
yellow coloured diamonds meant that rough diamond revenue was
still in line with the previous year at US$77.3 million (US$79.6m in
2022) at an increased average price per carat of US$2,700 compared
with the US$2,449 achieved in 2022.
10 | Lucapa Diamond Company Limited | Annual Report 2023
10
| Lucapa Diamond Company Limited | Annual Report 2023 Five +100 carat diamonds were recovered with the largest being
235 carats.
208ct | Oct 2023
235ct | Nov 2023
180ct | June 2023
150ct | Feb 2023
123ct | Oct 2023
Lucapa Diamond Company Limited | Annual Report 2023 |
11
11
Lucapa Diamond Company Limited | Annual Report 2023 | REVIEW OF OPERATIONS
Mothae Kimberlite
Mine, Lesotho
Lucapa
70%
Government of Lesotho 30%
Conducted by Mothae Diamonds Pty Ltd
There were significant performance improvements at Mothae following the plant and operational
changes made at the beginning of 2023. Modifications made to the plant flow sheet and upgrades
to the XRT (X-Ray Transmission) sorter eliminated the previous processing limitations related to
hard ore.
carat achieved for Mothae production for the full year was US$775,
12 percent higher than the previous year, however approximately 20
percent lower than guidance for 2023.
Mothae reported EBITDA of US$2.9 million in 2023 following a loss
of US$1.1 million in 2022. Although the operational performance
improved significantly at Mothae throughout the year, an impairment
charge was booked following the decrease in the value of diamond
recoveries in Q4 and the possible impact and uncertainty on future
cash flows.
Mothae gained an additional US$1.6 million in revenue from the
cutting and polishing partnership with Safdico for 2023, double of
what it gained in 2022. As per the partnership agreement, Safdico
purchased the run-of-mine production from Mothae for the year with
the mine being paid the full market value of the rough diamonds
upfront, sharing equally in the margins generated thereafter.
Following the modifications to Mothae’s plant, capacity increased to
exceed nameplate by 30 percent. A mobile crusher which reduced the
need for oversize blasting and rockbreaking, was also deployed in Q3
and had a positive impact on the plant throughput as it reduced the
amount of over-sized material delivered to the primary crusher.
Mothae set new annual records for tonnes mined and processed,
carats recovered and average price per carat. More than 2.34 million
tonnes of ore and waste was mined in 2023, up 23 percent from the
previous year, while 1,468,909 tonnes of ore was processed through
the plant, up 22 percent on 2022.
Mothae recovered 32,884 carats in 2023. This was an increase of 7
percent compared with 2022. Production included 219 Special sized
diamonds of +10.8 carats, 11 percent higher than the previous year.
The largest diamond recovered in 2023 weighed 86 carats and several
fancy pinks and yellow coloured diamonds were recovered.
Rough diamond revenue of US$24.9 million was 13% higher than the
previous year.
From Q1 to Q3, the value of stones recovered from Mothae was in
line with expectations. However, in Q4, the size and quality of
the diamonds declined as the
I stones
dominated recoveries. This in turn sent the average price per carat
achieved in Q4 lower to US$541 per carat from US$896 in Q3. The
average price per
lower-quality Type
12 | Lucapa Diamond Company Limited | Annual Report 2023
Mothae Mine, Lesotho
Lucapa Diamond Company Limited | Annual Report 2023 |
1313
Lucapa Diamond Company Limited | Annual Report 2023 | REVIEW OF OPERATIONS
Merlin Kimberlite
Project, Australia
Lucapa
100%
Conducted by Australian
Natural Diamonds Pty Ltd
In late 2021, Lucapa’s wholly owned subsidiary, Australian Natural Diamonds Pty Ltd completed
the A$8.5 million strategic acquisition of Merlin, which includes the 24km2 Mineral Lease, a 210km2
Exploration Licence encompassing the Mineral Lease and all existing equipment, infrastructure
and assets on the Mineral Lease and Exploration Licence.
The two tenements contain 13 previously discovered kimberlite pipes
with an existing 4.4 million carat JORC 2012 compliant indicated and
inferred mineral resource. Merlin also contains compelling exploration
potential with a significant number of unresolved anomalies in an
area where all previous kimberlite discoveries that have been tested
on the project have been found to be diamondiferous.
Several additional work programs were also advanced during the
year, including a sacred site clearance survey, an investigation into
a solar-gas hybrid power solution for the Merlin mine development,
to potentially use gas supplied from a well 20 kilometres
southwest of Merlin and in Q4, the installation of a groundwater
monitoring network of 17 boreholes.
The smaller scale study into the Merlin development is well advanced
as it uses some of the existing modelling and key workstreams
previously undertaken as part of the planned Feasibility Study.
There was major progress towards the Merlin Diamond Project
Feasibility Study in 2023, as many workstreams for the large-scale
development were completed. However, in the fourth quarter, it
was announced that the Feasibility Study would pivot to examine a
smaller scale, lower-cost pathway to development against declining
capital market conditions, increasing capital costs due to inflation
and a softening of diamond prices.
The smaller scale study will continue to be based on the use of an
innovative vertical pit mining method but with an in-wall haulage
design and will also incorporate existing onsite infrastructure and
equipment. This includes an alluvial diamond sampling plant which
was acquired in mid-2023 from Burgundy Diamonds and a scrubbing
and screening plant, which was ordered by the previous Merlin owners,
and was purchased by Lucapa in the third quarter. Both plants have
already been transported to the Merlin mine site.
14 | Lucapa Diamond Company Limited | Annual Report 2023
14
| Lucapa Diamond Company Limited | Annual Report 2023 Lucapa Diamond Company Limited | Annual Report 2023 |
1515
Lucapa Diamond Company Limited | Annual Report 2023 | KIMBERLITE EXPLORATION
Lulo Joint Venture,
Angola
Lucapa
39%
Endiama 51%
Rosas and Petalas 10%
Conducted by Project Lulo Joint Venture
The primary source exploration program at Lulo significantly ramped up in 2023 following
the commissioning of the dedicated kimberlite bulk sampling plant and the addition of new
earthmoving fleet and equipment in 2022.
A total of 26 samples were processed
as part of the kimberlite bulk sampling
program in 2023, which equates to one
sample every two weeks. In some cases,
more than one sample was taken from the
same kimberlite target to sample different
geological units.
Sample L164/03 yielded 33 diamonds for a
total of 28.29 carats at a calculated grade
of 2.23 cphm3. The average stone size from
this sample was 0.86 carats and there were
five diamonds which were greater than one
carat, with the largest being 2.38 carats.
Two earlier bulk samples taken from L164
at the end of 2022, totalled 41 diamonds
for 66.05 carats from 2,200m3 with the
two largest diamonds weighing 15.27 and
12.37 carats.
Other results from the 2023 bulk sampling
campaign are as follows:
SAMPLE
ID
VOLUME
TREATED
(M3)
NUMBER OF
DIAMONDS
CARATS
L056/01
902
L440/01
1,295
L204/01
1,406
L204/02
1,610
L204/03
1,702
13
8
19
2
6
7.85
4.16
5.24
0.12
4.19
In total, the primary source exploration
program identified 6 kimberlites as
diamondiferous during the year, taking the
total for the exploration program to 15.
Discovery and delineation drilling continued
throughout the year with 26 discovery
core holes (2,250m) drilled to confirm
the presence of new kimberlites, with 16
kimberlites confirmed from 21 geophysical
targets investigated and 39 delineation core
holes (1,211m) drilled to locate suitable sites
for bulk sampling in selected kimberlites.
Twenty-three high-priority kimberlite
targets have been identified t o d ate for
bulk sampling using a combination of
geological factors, including the presence
of high-interest diamond indicator minerals
highlighted through mineral chemistry
analysis.
Lucapa continued to progress the
negotiations with its Angolan partners to
secure a majority stake in the Project Lulo JV
with the new mineral investment contract
being drafted and progressing through the
final stages of review.
16
| Lucapa Diamond Company Limited | Annual Report 2023 Lulo Kimberlite Exploration, Angola
Lucapa Diamond Company Limited | Annual Report 2023 |
1717
Lucapa Diamond Company Limited | Annual Report 2023 | LAMPROITE EXPLORATION
Brooking Diamond,
Project, WA
Lucapa
80%
Leopold Diamond
Company 20%
Conducted by Brooking Diamonds Pty Ltd
An extensive exploration
program, consisting of auger
drilling and soil geochemistry
sampling, to define targets at
Brooking took place during July.
In total, 246 auger holes measuring 639 metres
were drilled across six targets.
The targets selected for testing during this
phase of exploration were Camerons Bore,
Leopold Road East, Katies Bore, East-West
Creek, North-East Creek and Santa Fe Dam.
Geochemical and heavy mineral samples were
sent for analysis and interpretation.
KIMBERLITE EXPLORATION
Orapa Area F Project,
Botswana
Lucapa
100%
Conducted by Lucapa Diamonds (Botswana) Pty Ltd
No field work was undertaken
at Orapa Area F during 2023.
However, a land-use permit was
obtained as part of preparations
for an exploration drilling program
to commence in the first quarter
of 2024.
The aim of the exploration program is to confirm
via drilling whether the identified targets at Orapa
are kimberlites.
18 | Lucapa Diamond Company Limited | Annual Report 2023
18
| Lucapa Diamond Company Limited | Annual Report 2023 Lulo Mine, Angola
Lucapa Diamond Company Limited | Annual Report 2023 |
1919
Lucapa Diamond Company Limited | Annual Report 2023 | Mineral
Resources
The updated Lulo Diamond Resource was independently estimated and reconciled on a depletion
and addition basis to 31 December 2023 by external consultants, Z Star Mineral Resource
Consultants (Pty) Ltd (“Z Star”) of Cape Town, South Africa.
MB 23E
MB 29
MB 04
MB 06
MB 10
MB 06
MB 19
MB 27
MB 550
MB 08
MB 25
MB 14
MB 28
MB 18
MB 46
MB 41
MB 212
MB 57
MB 304
MB 45
MB 116
MB 99
MB 129
MB 179
MB 137
MB 209
Lulo Concession
Alluvial Diamond Resource
as at 31st December 2023
Blocks included in Lulo Diamond Resource
Blocks being or to be assessed
01
0
kilometers
After accounting for mining depletion of
30,585 carats during the 2023 calendar year,
the extensive alluvial exploration activities
undertaken during the year increased the
Lulo Diamond Resource in-situ carats by
48 percent to 228,400 carats. This is the 6th
consecutive year the resource carats have
increased, despite the significant increase
in mining and processing capacities over
the last eight years.
The Mothae resource update is based solely
on depletion due to mining over 2023.
The Merlin resource estimate remains
unchanged from the previous year.
LULO JORC CLASSIFIED INFERRED ALLUVIAL DIAMOND RESOURCE – 31 DECEMBER 2023
DATE
AREA (M²)
DILUTED
VOLUME (M³)
CARATS/
STONE
STONES
CARATS
DILUTED
GRADE (CPHM³)
MODELLED
DIAMOND VALUE*
(US$/ CARAT)
31 Dec 23
4,780,000
5,020,000
31 Dec 22
2,700,000
2,640,000
1.26
1.23
181,900
228,400
125,460
153,870
4.55
5.82
1,897
2,000
Notes:
i. m2 = square metres; m3 = cubic metres; cphm3 = carats per 100 cubic metres
ii. Diluted volumes have been estimated based on historical mining production data to better reflect recoverable volumes and grades
iii. Bottom cut off screen size: effective 1.5mm
iv. Table contains rounded figures
* Special stones are not excluded in the modelling stage, either in terms of size or assortment
20
| Lucapa Diamond Company Limited | Annual Report 2023 MOTHAE JORC CLASSIFIED DIAMOND RESOURCE - 31 DECEMBER 2023
LUCAPA 70% ATTRIBUTABLE
RESOURCE
CLASSIFICATION
DATE
TONNES (MT)
GRADE (CPHT)
CARATS
(MILLION)
MODELLED VALUE
(US$/ CARAT)
Indicated
Inferred
TOTAL
Indicated
Inferred
TOTAL
Notes:
(i) Table contains rounded figures
31-Dec-23
30-Dec-22
5.73
39.11
44.84
8.05
39.27
47.32
3.1
2.4
2.5
3.1
2.4
2.6
0.18
0.96
1.13
0.25
0.96
1.21
627
602
606
635
601
608
(ii) The grade and average modelled value estimates are quoted at a 3mm BCOS but with incidental diamond recoveries in the +9 and +11 DTC sieves included
(iii) The update is solely based on resource depletion due to mining between 31 Dec 2022 and 31 Dec 2023.
(iv) The Indicated Resource contains material to 75m below pit bottom (at 30 Sep 2020) in the South Lobe only. The Inferred Resource contains the remaining material to 300m below surface in the
South, Neck and North lobes
(v) The tonnes and grades are quoted as dry tonnes and dry grades
(vi) Unclassified kimberlite exists from a depth of 300m to 500m below surface
(vii) This resource was first published 15th October 2020
MERLIN JORC CLASSIFIED DIAMOND RESOURCE – 31 DECEMBER 2023
LUCAPA 100% ATTRIBUTABLE
DATE
TONNES (MT)
GRADE (CPHT)
CARATS (MILLION)
31-Dec-23
13.4
14.4
27.8
17
15
16
2.28
2.07
4.35
RESOURCE
CLASSIFICATION
Indicated
Inferred
TOTAL
Notes:
(i) Mineral Resource reported in Lucapa’s ASX announcement “Acquisition of Merlin Diamond Project and A$23M Capital Raising” on 24 May 2021.
No changes to the resource have been made since.
(ii) Mineral Resource grades based on previous mining operations recovery using a +0.95mm slotted bottom screen and +5DTC cut-off;
(iii) Insufficient grade data available to determine +5DTC cut-off grade for Tristram and Bedevere pipes therefore full-cut-off grades are used;
(iv) Rounding of tonnage and carats may result in computational inaccuracies.
Information included in this announcement that relates to exploration results and resource estimates is based on and fairly represents information
and supporting documentation prepared and compiled by Richard Price MAusIMM who is a Member of the Australasian Institute of Mining
and Metallurgy. Mr Price is an employee of Lucapa Diamond Company Limited. Mr Price has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in
the 2012 Edition of the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves. Mr Price consents to the inclusion
in the announcement of the matters based on this information in the form and context in which it appears.
Information included in this report that relates to the stone frequency, grade and size frequency valuation and validation in the Lulo Diamond
Resource estimate is based on, and fairly represents, information and supporting documentation prepared and compiled by Sean Duggan
(Pri.Sci.Nat 400035/01) and David Bush (Pri.Sci.Nat 400071/00).
Messers. Duggan and Bush are directors and employees of Z Star Mineral Resource Consultants (Pty) Ltd, of Cape Town, South Africa. Both hold
qualifications and experience such that both qualify as members of a Recognised Overseas Professional Organisation (ROPO) under relevant
ASX listing rules. Messers. Duggan and Bush both have sufficient experience which is relevant to the style of mineralisation and type of deposit
under consideration and to the activity which they are undertaking to each qualify as a Competent Person as defined in the 2012 Edition of the
Joint Ore Reserves Committee (JORC) Code. Messers. Duggan and Bush both consent to the inclusion in the announcement of the matters based on
this information in the form and context in which it appears.
21
Lucapa Diamond Company Limited | Annual Report 2023 | SALES AND marketing
22 | Lucapa Diamond Company Limited | Annual Report 2023
22
| Lucapa Diamond Company Limited | Annual Report 2023 The diamonds produced at Lulo and Mothae are marketed in a number of ways.
Rough diamonds are sold via tender, run-of-mine sales and also through a cutting and polishing
partnership which sees the operations share in the upside of the polished diamonds.
Lulo Diamond Sales
Mothae Diamond Sales
Eight run-of-mine sales were concluded by SML during the year,
along with three special stone tenders organised by Sodiam. The first
exceptional stone tender, featuring four Lulo diamonds was held in
the second quarter of the year, and achieved US$26,936 per carat for
a total of US$10.7 million.
Two tenders were held in the fourth quarter. The October tender
attracted US$15.7 million or US$29, 401 per carat for 7 Lulo diamonds.
The other tender, held in December achieved US$17 million or
US$28,000 per carat for four Lulo diamonds, three of which were over
100 carats each.
The partnership with high-end diamantaire Safdico International, a
subsidiary of renowned fine jeweller Graff, continues to reap benefits
for both the mines from beyond the mine gate.
Safdico, as a preferred buyer of SML, is eligible to purchase up to 60%
of Lulo’s annual rough production from SML, as is permitted under
Angola’s diamond marketing regulations.
The cutting & polishing activities performed to expectations in
2023 on the parcels that were bought by the partnership, with Lulo
receiving an additional US$1.2 million in margins.
Diamond Market
Diamond cutting and polishing partners Safdico has a committed
buying and selling agreement with Mothae where the entire diamond
production is sold into a cutting and polishing partnership.
Mothae is paid up front for the rough market value of the diamonds,
with both companies sharing in the margins generated by the cutting
and polishing of the diamonds.
Eleven diamond sales were held by Mothae during 2023 with total
revenues of US$24.9 million achieved at an average annual diamond
price of US$775 per carat.
In the first half of the year, Mothae goods attracted US$940 per carat
on average, however in the second half of the year, the lower quality
of diamonds recovered in Q4 and the fall in the rough diamond market
during H2, impacted the average price per carat for the year.
The cutting and polishing activities performed well in 2023, with
Mothae receiving an additional US$1.6 million in margins, double the
US$0.8 million gained in 2022.
Diamond prices in the second half of 2023 were impacted by tightening economic conditions imposed by central banks, India temporarily
suspending rough diamond imports for two months in Q4 and a surge in inflation which affected discretionary spending.
The overall diamond price index began to trend upwards towards the end of 2023 coinciding with two major events in the global diamond trade.
The first was the reinstatment of rough diamond imports to Indian diamond manufacturers after the two-month suspension from October
to December, which had the effect of easing oversupply and stabilising prices.
The second newsworthy event to occur was the European Union’s decision to phase in restrictions on Russian diamond imports in 2024, which
provided some clarification and certainty moving into the new year after several months of speculation.
23
Lucapa Diamond Company Limited | Annual Report 2023 | CORPORATE
GOVERNANCE
statemen
t
Lulo Mine, Angola
24 | Lucapa Diamond Company Limited | Annual Report 2023
24
| Lucapa Diamond Company Limited | Annual Report 2023 In fulfilling its obligations and responsibilities to its various stakeholders, the Board of Lucapa is
a strong advocate of good corporate governance.
The Board has adopted corporate governance policies and practices
consistent with the ASX Corporate Governance Council’s “Corporate
Governance Principles and Recommendations” (“Recommendations”)
where considered appropriate for a Company of Lucapa’s size and
complexity.
Lucapa has implemented the ASX Corporate Governance Council’s
Fourth Edition Corporate Principles
(“Fourth Edition”) and
Recommendations. Accordingly, this Corporate Governance Statement
has been prepared on the basis of disclosure under the Fourth Edition
of these principles. Details of the Company’s compliance with these
principles are summarised in the Appendix 4G announced to the ASX
in conjunction with the Annual Report.
This statement describes how Lucapa has addressed the Council’s
guidelines and eight corporate governance principles and where
the Company’s corporate governance practices depart from the
Recommendations, the Company discloses the reason for adoption of
its own practices on an “if not, why not” basis.
Given the size, complexity and development nature of the Group
and the cost of strict compliance with all the Recommendations,
the Board has adopted a range of modified procedures and practices
which it considers appropriate to enable it to meet the principles of
good corporate governance. At the end of this statement is a checklist
setting out the Recommendations with which the Company does or
does not comply. The information in this statement is current as at
18 April 2024.
Background
Lucapa has a highly experienced and well credentialed Board and
management team, with a proven history of developing diamond
projects successfully, quickly and cost effectively in a corporately
responsible manner.
Lucapa recognises the importance of its people in building a strong
and successful organisation. To achieve this, Lucapa has focused on
developing the right culture across the organisation, which is strongly
based on a vision, mission and values communicated in our teams in
Australia and Africa to ensure they know what is expected of them,
both operationally and behaviourally, and are recognised for their
good work.
Vision
Lucapa’s vision is to become a pre-eminent mid-tier diamond
company with multiple assets, vertically integrating through the
supply chain, to bring greater value to all stakeholders.
Mission
Lucapa’s mission is to explore and grow our production of niche high-
value diamonds in a safe, responsible, innovative and profitable
manner for the benefit of all stakeholders.
Values
Integrity
We interact with all stakeholders with integrity, honesty, transparency
and fairness.
Safety
We conduct operations in a safe, responsible and environmentally
conscious manner.
Teamwork
We attract and employ the best skillsets, encourage teamwork,
diversity and reward performance.
Partnership
We work with the local communities in which we operate for common
benefit.
The Board is targeting the highest standards of corporate governance
to continue their track record of delivering this value.
The following governance-related documents can be found on the
Company’s website at www.lucapa.com.au under the section marked
“Investors” / “Company Information” / “Corporate Governance”.
Charters
• Board
Board
• Code of Conduct
• Policy and Procedure for Selection and (Re)Appointment of Directors
• Policy on Assessing the Independence of Directors
• Securities Trading Policy
• Risk Management Policy
• Procedure for the Selection, Appointment and Rotation of External
Auditor
• Policy on Continuous Disclosure
• Shareholder Communication Policy
• Diversity Policy
• Whistle Blower Policy
• Anti-Bribery and Corruption Policy
• Anti-Slavery Policy
25
Lucapa Diamond Company Limited | Annual Report 2023 | Principle 1
Lay solid foundations for
management and oversight
The main function of the Board is to lead and oversee the management
and strategic direction of the Group. The Board regularly measures
the performance of management in implementation of the strategy
through regular Board meetings.
Lucapa has adopted a formal Board charter delineating the roles,
responsibilities, practices and expectations of the Board collectively,
the individual Directors and management.
The Board of Lucapa ensures that each member understands their
roles and responsibilities and ensures regular meetings so as to
retain full and effective control of the Company.
Role of the Board
The Board responsibilities are as follows:
• Setting
the strategic aims of Lucapa and overseeing
management’s performance within that framework;
• Making sure that the necessary resources (financial and human)
are available to the Group and management to meet its strategic
objectives;
Election of Directors
The Board is responsible for overseeing the selection process of new
Directors, and undertakes appropriate checks before appointing a
new Director, or putting forward a candidate for election as a Director.
All relevant information is provided in the Notice of Meeting seeking
the election or re-election of a Director including:
• Biographical details including qualifications and experience;
• Other directorships and material interests;
• Term of office;
• Statement by the Board on the independence of the Director;
• Statement by the Board as to whether it supports the election or
re-election; and
• Any other material information.
Terms of appointment
Non-executive Directors
To facilitate a clear understanding of roles and responsibilities all
non-executive Directors have signed a letter of appointment. This
letter of appointment includes acknowledgement of:
• Director responsibilities under the Corporations Act, Listing Rules,
the Company’s Constitution and other applicable laws;
• Corporate governance processes and Group policies;
• Board and Board sub-committee
(if applicable) meeting
obligations;
• Conflicts and confidentiality procedures;
• Overseeing and measuring management’s performance
in
• Securities trading and required disclosures;
delivering the Company’s strategic objectives;
• Access to independent advice and employees;
• Selecting and appointing a Managing Director with the
appropriate experience and skills to help the Group in the pursuit
of its strategic objectives;
• Controlling and approving financial and compliance reporting,
capital structures and material contracts;
• Ensuring that a sound system of risk management and internal
controls is in place;
• Confidentiality obligations;
• Directors fees;
• Expenses reimbursement;
• Directors and officers insurance arrangements;
• Other directorships and time commitments; and
• Board performance review.
• Setting the Company’s vision, core values and standards;
Managing Director
• Undertaking regular review of the corporate governance policies
to ensure adherence to the ASX Corporate Governance Council
principles;
• Ensuring that the Company’s obligations to shareholders are
understood and met;
• Ensuring the health, safety and well-being of employees in
conjunction with management, developing, overseeing and
reviewing the effectiveness of the Group’s occupational health
and safety systems to assure the well-being of all employees;
• Ensuring an adequate system is in place for the proper delegation
of duties for the effective day to day running of the Group without
the Board losing sight of the direction that the Group is taking;
• Ensuring the Company values diversity in all aspects of its
business.
Delegation to management
Other than matters specifically reserved for the Board, responsibility
for the operation and administration of the Company has been
delegated to the Managing Director. This responsibility is subject to
an approved delegation of authority which is reviewed regularly.
Internal control processes are designed to allow management to
operate within the parameters approved by the Board and the
Managing Director cannot commit the Group to additional activities
or obligations in excess of these delegated authorities without
specific approval of the Board.
26
The Managing Director has a signed services agreement. For further
information refer to the Remuneration Report.
Role of Company Secretary
The Company Secretary is accountable to the Board for:
• Advising the Board and committees on corporate governance
matters;
• The completion and distribution of Board and committee papers;
• Completion of Board and committee minutes; and
• The facilitation of Director induction processes and ongoing
professional development of Directors.
• All Directors have access to the Company Secretary who has a
direct reporting line to the Chairman.
Diversity
The Board values diversity in all aspects of its business and is
committed to creating a working environment that recognises and
utilises the contribution of its employees. The purpose of this is to
provide diversity and equality relating to all employment matters.
The Group’s policy is to recruit and manage on the basis of experience,
ability and qualification for the position and performance, irrespective
of gender, age, marital status, sexuality, nationality, race/ cultural
background, religious or political opinions, family responsibilities or
disability.
| Lucapa Diamond Company Limited | Annual Report 2023 The Group’s objective is to improve gender diversity at all levels of its business on a year-on-year basis whilst recognising that it operates in very
competitive labour markets in remote locations, with strong cultural sensitivities, where positions are sometimes difficult to fill. There is periodic
reporting at the Group’s operations to measure the gender mix within various levels of the organisation. The Group is committed to continually
assessing and proactively monitoring these diversity trends and advocates that every candidate suitably qualified for a position has an equal
opportunity of appointment regardless of gender, age, ethnicity or cultural background.
The Group opposes all forms of unlawful and unfair discrimination. The Board comprised three Directors as at 31 December 2023, all of whom were
male. The Board has determined that the composition of the current Board Directors have an appropriate range of qualifications and expertise in the
industries and the jurisdictions in which the Group operates, can understand and competently deal with current and emerging business matters and
can effectively assess the performance of management.
The Board is aware that many studies suggest that greater gender diversity at Board and management level creates a positive force for driving
corporate performance as qualified and committed directors with different backgrounds, experiences and knowledge will likely enhance corporate
performance. In Q4/2023, the Company announced that it was seeking to identify additional suitable independent non-executive candidates to
join the Board and a significant number of applicants were considered regardless of gender, age, ethnicity or cultural background. In April 2024,
two independent non-executive directors were appointed to the Board and one non-executive director stepped down. The Board now comprises
four Directors, all of whom are male. The Board remains focused on resolving the gender imbalance by continuing to identify a pipeline of suitably
qualified candidates with careful consideration of those who strengthen the Board skills matrix. The Company continues to support the Australian
Institute of Company Director’s Board diversity initiatives and will continue to evolve its Board in alignment with the Company’s needs and diversity
best practice.
31 DECEMBER 2023
31 DECEMBER 2022
GENDER REPRESENTATION
Board representation
Group representation
FEMALE
MALE
FEMALE
MALE
NO.
0
130
%
0
13
NO.
3
881
%
100
87
NO.
0
125
%
0
14
NO.
4
781
%
100
86
The following senior position within the Company is held by a female employee;
• Head of Investor Relations and Corporate Communications
• Two Non-executive Directors of Mothae Diamonds (Pty) Ltd
• Human Resources and Administrative Director of Sociedade Mineira Do Lulo Lda
Performance review
A review of the Managing Director’s performance and effectiveness in
respect of the year ended 31 December 2023 was conducted.
Board and Board committees
A review of the Board’s performance and effectiveness is conducted
annually and the performance of individual Directors is undertaken
regularly. The Board has the discretion for these reviews to be conducted
either independently or on a self-assessment basis.
The review focuses on:
• Strategic alignment and engagement;
• Board composition and structure;
• Processes and practices;
• Culture and dynamics; relationship with management; and
• Personal effectiveness.
Retirement and rotation of directors
Retirement and rotation of directors are governed by the Corporations
Act 2001 and the Constitution of the Company. There must be an election
at each annual general meeting of the Company. The Constitution
provides that the following directors must retire at each annual general
meeting;
• any director required to retire under clause 14.4(b) of the Constitution,
being the provision relating to the three year limit on the term of a
director;
• any director required to submit for election under clause 14.2(c) of the
Constitution, being the provision requiring casual vacancies to retire
at the next annual general meeting following their appointment (Mr
Stuart Brown and Mr Ronnie Beevor will seek election at the annual
general meeting on 28 May 2024); or
A review of the Board’s performance and effectiveness in respect of the
year ended 31 December 2023 was conducted.
•
Managing Director and senior executives
Performance evaluations of the Managing Director and senior executives
is undertaken annually through a performance appraisal process which
involves reviewing and assessment of performance against agreed
corporate objectives and individual key performance indicators or
deliverables.
if no person is standing for election or re-election under the above,
then the director that has been in office the longest will seek re-
election (as Mr Brown and Mr Beevor are required to retire and
are seeking election under clause 14.2(c), this will satisfy the
requirements to hold an election at the annual general meeting and
as such, there will be no other director required to retire).
27
Lucapa Diamond Company Limited | Annual Report 2023 | Independent professional advice
Each Director of the Company or a controlled entity has the right to
seek independent professional advice at the expense of the Company
or the controlled entity. However, prior approval of the Chairman is
required which will not be unreasonably withheld.
Principle 2
Structure the Board to be effective
and add value
Access to employees
Directors have the right of access to any employee. Any employee
shall report any breach of corporate governance principles or Company
policies to the Chairman or as outlined under the Whistleblower policy.
If the breach is not rectified to the satisfaction of the employee, they
shall have the right to report any breach to an independent Director
without further reference to senior executives of the Company.
Directors’ and officers’ liability insurance
Directors’ and officers’ liability insurance is maintained by the
Company for the Directors and senior executives at the Company’s
expense.
Board meetings
The frequency of Board meetings and the extent of reporting from
management at Board meetings are as follows:
• A minimum of four scheduled meetings are to be held per each
financial year;
• Other meetings will be held as required;
• Meetings can be held where practicable by electronic means;
•
Information provided to the Board
includes all material
information related to the operations of the Group including
exploration, evaluation, development and mining operations,
budgets, forecasts, cash flows, funding requirements, investment
and divestment proposals, new business development activities,
investor
relations, financial accounts, sales and market
information, taxation, external audits, internal controls, risk
assessments, people and health, safety and environmental
reports, statistics and new business;
• Once established or as necessary, the Chairman of the appropriate
Board sub-committee or other meeting will report at the
subsequent Board meeting the outcomes of that meeting.
The number of Directors’ meetings (including meetings of committees
of Directors where applicable) and the number of meetings attended
by each of the Directors of the Company during the financial year are
set out in the Directors’ Report.
28
The names of the Directors of the Company and their qualifications
are set out in the section headed “Information on Directors” in the
Directors’ Report.
The ASX Corporate Governance Council guidelines recommend that
the Board should constitute a majority of independent Directors and
that the Chairperson should be independent. As at 31 December 2023,
the Board consisted of three Directors of whom one was considered
independent being Mr Miles Kennedy (non-executive Chairman -
appointed as a director on 12 September 2008 and served as Executive
Director until 11 December 2014). The Board considers that whilst
Mr Kennedy has served as a Director for a long period, he remains
independent from management and substantial shareholders and is
therefore able to bring an independent judgement to bear on issues
before the Board and to act in the best interests of the Company as a
whole rather than in the interests of an individual shareholder or other
party. Mr Ross Stanley (non-executive Director – appointed 26 July
2018) had a substantial shareholding in the Company and therefore
did not meet the criteria for an independent Director. Mr Nick Selby
(Managing Director - appointed as a director on 4 September 2017
and served as Executive Director until 1 August 2023 and then interim
Managing Director until 5 October 2023) therefore does not meet the
criteria for an independent Director due to his executive role.
In Q4/2023 the Company announced that the Board had set about
independent non-executive
identifying and assessing suitable
director candidates to complement the existing competencies of
the Board to drive performance, create shareholder value and lead
ethically by example.
In April 2024, Mr Stuart Brown was appointed independent non-
executive Chair and Mr Ronnie Beevor was appointed independent
non-executive director. At the same time, Mr Kennedy stepped
down as Chair and Mr Stanley left the Board. As of the date of this
report the Board consists of four Directors, the majority of which are
considered independent.
Board skills and experience
The Company objective is to have an appropriate mix of experience
and expertise on the Board and Committees so that the Board can
effectively discharge its strategic, corporate governance and oversight
responsibilities.
The composition of the Board has been structured so as to provide
the Company with an adequate mix of non-executive and executive
Directors with exploration, development and mining
industry
knowledge, country specific knowledge, technical, commercial,
capital markets and financial skills together with integrity and
judgment considered necessary to represent shareholders and fulfil
the business objectives of the Group.
During FY23, the Board acknowledges that it was not comprised
by a majority of independent directors, however it has addressed
this subsequent to year end by identifying and appointing two
independent non-executive directors with the skills commensurate
with the growth and development of the Group’s activities and
to complement the existing competencies of the Board to drive
performance, create shareholder value and lead ethically by example.
| Lucapa Diamond Company Limited | Annual Report 2023 This mix described in the Board skills matrix is based on the Board
composition as at 31 December 2023 as follows:
SKILLS
DIRECTORS HOLDING
THIS SKILL
Resources industry and Africa experience
Diamond industry and marketing
Strategy
M&A
Finance
Risk Management
Government relations
Capital projects; financing/
project management
Sustainable development
Previous board experience
Governance
Policy
Executive leadership
Remuneration
3
3
3
3
3
3
3
3
3
3
3
3
3
3
The competencies that the current Board members have formulated
their analysis are based upon the criteria judged as important by the
Board given the Company’s current stage of growth, in conjunction
with independent industry guidance as follows:
• Resources Industry & Africa Experience - experience in the
resources industry, including broad knowledge of exploration,
operations, project development, markets, shipping and
competition.
• Diamond Industry & Marketing Experience - specific experience
in the diamond industry, including an in-depth knowledge of
exploration, operations, project development, markets, cutting
and polishing, competitors and relevant technology.
• Strategy – identifying and critically assessing the strategic
opportunities and threats to the organisation and developing and
implementing successful strategies in context to an organisation’s
policies and business objectives.
• Mergers and Acquisition – experience managing, directing or
advising on mergers, acquisitions, divestments and portfolio
optimisations.
• Finance – senior executive or other experience in financial
accounting and reporting, internal financial and risk controls,
corporate finance and restructuring corporate transactions.
• Risk Management - experience working with and applying broad
risk management frameworks in various countries, regulatory or
business environments, identifying key risks to an organisation,
monitoring risks and compliance and knowledge of legal and
regulatory requirements.
• Government Relations – senior management or equivalent
in politically,
experience (particularly transactional) working
culturally and regulatory diverse business environments.
• Capital Projects; Financing / Project Management – experience
with projects involving contractual negotiations, significant capital
outlays, procuring project investment and securing partners with
long investment horizons.
• Sustainable Development – senior management or equivalent
experience in economic, social and environmental sustainability
and workplace health and safety practices.
• Previous Board Experience – serving on boards of varying size and
composition in varying industries and for a range of organisations.
Awareness of global practices, benchmarking, some international
experience.
• Governance – implementing the high standards of governance
in a major organisation that is subject to rigorous governance
standards and assessing the effectiveness of senior management.
• Policy – identifying key issues for an organisation and developing
appropriate policy parameters within which the organisation
should operate.
• Executive Leadership – experience in corporate structuring,
overseeing strategic human capital planning, evaluating the
performance of senior management, industrial relations,
organizational change management and sustainable success in
business at a senior level.
• Remuneration – experience
strategy,
remuneration governance frameworks, Corporations Act and
employment law, performance and incentive schemes.
remuneration
in
The Board Skills Matrix is an important driver to formalise the director
nomination processes and was applied as a significant number of
candidates were considered for the recently appointed independent
non-executive director positions to complement the existing skill sets
on the Board and in alignment with the Company’s needs and best
practice.
Nomination of other Board members
Membership of the Board of Directors is reviewed on an on-going
basis by the Chairperson of the Board to determine if additional core
strengths are required to be added to the Board in light of the nature
of the Group’s businesses and its objectives and diversity.
The Board currently performs the role of a Nomination Committee
given the Company’s size and stage of growth. However this will
be reviewed to ensure there is a continued emphasis on board
membership which aligns with the Company’s corporate culture and
addresses independence and diversity.
The Board has focussed on a measured process to ensure it maintains
a strong, well-credentialed Board to oversee the Company’s next
growth phase.
As part of the Board restructuring process that commenced during
FY23, the Company sought to identify suitable non-executive director
candidates to join the Board based on readily available information
on respective backgrounds, current Board positions and visible
competencies.
Director induction and ongoing professional
development
The Company does not have a formal induction program for Directors
but does provide Directors with information detailing policies,
corporate governance and various other corporate requirements of
being a director of an ASX listed company. To the extent required, new
Directors are provided access to the diamond industry centres and
given audiences with key management, industry participants as part
of the induction. Due to the size and nature of the business, Directors
are expected to already possess a level of both industry, technical,
corporate and commercial expertise before being considered for
a directorship of the Company. Directors are provided with the
opportunity to access employees of the business and any information
as they require on the business including being given access to regular
operational updates, industry update, news articles and publications
where considered relevant.
29
Lucapa Diamond Company Limited | Annual Report 2023 | Principle 3
Instill a culture of acting
lawfully, ethically and responsibly
Principle 4
Safeguard the integrity
of corporate reports
Lucapa has a financial reporting process which includes quarterly, half
year and full year reports which are signed off by the Board before
they are released to the market.
The Company’s Continuous Disclosure policy ensures that any
corporate reports that are released to the market that are not
audited or reviewed by an external auditor are reviewed by the
Board and appointed responsible officers, which are the Managing
Director, Head of Investor Relations and Corporate Communications,
the Company Secretary and Chief Financial Officer (or equivalent), to
verify the accuracy of information before being released.
The Board does not have a separate Audit Committee given the
current size of the Board. However it is intended that a committee
will be established comprised by a majority of independent directors
as the Company transitions to become a mid-tier producer.
In the interim, the four Board members, who each have extensive
corporate, commercial and financial expertise, manage the financial
oversight as well as advise on the modification and maintenance
of the Group’s financial reporting,
internal control structure,
external audit functions, and appropriate ethical standards for the
management of the Group.
In discharging its oversight role, the Board is empowered to
investigate any matter brought to its attention with full access to
all books, records, facilities, and personnel of the Group and the
authority to engage independent counsel and other advisers as it
determines necessary to carry out its duties.
The Managing Director and Chief Financial Officer (or equivalent)
reports on the propriety of compliance on internal controls and
reporting systems and ensures that they are working efficiently and
effectively in all material respects.
The Company has established procedures for the selection,
appointment and rotation of its external auditor. The Board is
responsible for the initial appointment of the external auditor and
the appointment of a new external auditor when any vacancy arises.
Candidates for the position of external auditor must demonstrate
complete independence from the Company through the engagement
period. The Board may otherwise select an external auditor based
on criteria relevant to the Company’s and Group’s business and
circumstances. The performance of the external auditor is reviewed
on an annual basis by the Board.
The Company’s external auditor attends each annual general meeting
and is available to answer questions from shareholders relevant to
the conduct of the external audit, the preparation and content of the
Auditor’s Report, the accounting policies adopted by the Company
and the independence of the auditor.
Directors, officers, employees and consultants to the Group are
required to observe high standards of behaviour and business ethics
in conducting business on behalf of the Group and they are required to
maintain a reputation of integrity on the part of both the Group and
themselves. The Group does not contract with or otherwise engage
any person or party where it considers integrity may be compromised.
Lucapa recognises the importance of its people in building a strong
and successful organisation. To achieve this, Lucapa has focused on
developing the right culture across the organisation, which is strongly
based on a vision, mission and values communicated in our teams in
Australia and Africa to ensure they know what is expected of them,
both operationally and behaviourally, and are recognised for their
good work.
Code of Conduct
The Company’s Code of Conduct policy has been endorsed by the Board
and applies to all Directors, officers, employees and consultants.
Whistleblower policy
In line with the Code of Conduct, the Company has a Whistleblower
policy that ensures that all eligible whistleblowers who make a report
in good faith can do so without fear of intimidation, disadvantage or
reprisal.
Anti-Bribery and Corruption and
Anti-Slavery policies
The Company’s Anti-Bribery and Corruption and Anti-Slavery policies
have been endorsed by the Board and applies to all Directors, Group
employees, consultants, contractors and third-parties.
Conflicts of interest
Directors are required to disclose to the Board actual or potential
conflicts of interest that may or might reasonably be thought to
exist between the interests of the Director or the interests of any
other party in so far as it affects the activities of the Group and to
act in accordance with the Corporations Act if the conflict cannot be
removed or if it persists. That involves taking no part in the decision-
making process or discussions where a conflict does arise.
Trading in Company securities
Directors are required to make disclosure of any trading in the
Company’s shares. The Company policy in relation to share trading
is that Directors, key management personnel, officers, employees,
consultants and contractors of the Group (“Staff”) are prohibited to
trade whilst in possession of unpublished price sensitive information
concerning the Group or within a certain period of the release of
results i.e. the blackout period. That is information which a reasonable
person would expect to have a material effect on the price or value of
the Company’s shares.
Staff must receive authority to acquire or sell shares from the
Chairman or the Company Secretary prior to doing so to ensure that
there is no price sensitive information of which Staff might not be
aware. The undertaking of any trading in shares by a Director must
be notified to the ASX.
30
| Lucapa Diamond Company Limited | Annual Report 2023 Principle 5
Make timely and
balanced disclosure
The Company has adopted a formal policy dealing with its disclosure
responsibilities. The Board has designated the Company Secretary
as the person responsible for overseeing and coordinating disclosure
of information to the ASX as well as communicating with the ASX.
In accordance with the ASX Listing Rules the Company immediately
notifies the ASX of non-public information:
• Concerning the Group that a reasonable person would expect to
have a material effect on the price or value of the Company’s
securities; and
• That would, or would be likely to, influence persons who commonly
invest in securities in deciding whether to acquire or dispose of
the Company’s securities.
The policy also addresses the Company’s obligations to prevent
the creation of a false market in its securities. The Company also
publishes other information to assist investors to make an informed
decision on its website.
The Managing Director has ultimate authority and responsibility for
recommending market disclosure to the Board which, in practice, is
exercised in conjunction with the Board and Company Secretary.
In addition, the Board will also consider whether there are any matters
requiring continuous disclosure in respect of each and every item of
business that it considers.
Principle 6
Respect the rights of
security holders
The Board’s fundamental responsibility to shareholders is to work
towards meeting the Company’s strategic objectives to add value for
them. The Board maintains an investor relation program which will
inform shareholders of all major developments affecting the Group
by:
• Preparing half yearly and yearly financial reports;
• Preparing quarterly reports as to activities;
• Making announcements in accordance with the listing rules and
the continuous disclosure obligations;
• Posting all the above on the Company’s website once released to
the ASX;
• Annually, and more regularly if required, holding a general meeting
of shareholders and forwarding to them the annual report, if
requested, together with notice of meeting and proxy form; and
• Voluntarily releasing other information which it believes is in the
interest of shareholders.
The Annual General Meeting enables shareholders to discuss the
annual report and participate in the meetings either by attendance
or by written communication. The Company provides all shareholders
with a Notice of Meeting so they can be fully informed and be able to
vote on all resolutions at the Annual General Meeting. Shareholders
are able to discuss any matter with the Directors and/ or the auditor
of the Company who is also invited to attend the Annual General
Meeting.
Shareholders have the option to receive all Company and share
registry communications electronically and may also communicate
with the Company by contacting the Company via email.
Principle 7
Recognise and manage risk
The Board has adopted a Risk Management policy, which sets out
the Group’s risk profile. Under the policy, the Board is responsible for
approving the Group’s policies on risk oversight and management and
satisfying itself that management has developed and implemented a
sound system of risk management and internal control.
Under the policy, the Board delegate’s day-to-day management of
risk to the Managing Director, who is responsible for identifying,
assessing, monitoring and managing risks with other executive
management. The executive is also responsible for updating the
Group’s material business risks to reflect any material changes, with
the approval of the Board.
In fulfilling the duties of risk management, the executive has
unrestricted access to Group employees, contractors and records and
may obtain independent expert advice on any matter they believe
appropriate.
The Board does not have a separate Risk Management Committee
as the Board monitors and reviews the integrity of financial reporting
and the Group’s internal financial control systems. Management
assesses the effectiveness of the internal financial control on an
annual basis and table any concerns and/ or recommendations at
Board meetings where required.
In addition, the following risk management measures have been
adopted by the Board to manage the Group’s material business risks:
• Establishment of financial control procedures and authority limits
for management;
• Approval of an annual budget;
• Adoption of a compliance procedure for the purpose of ensuring
compliance with the Company’s continuous disclosure obligations;
• Adoption of a corporate governance manual which contains
other policies to assist the Group to establish and maintain its
governance practices; and
• Compilation, maintenance and review of a risk register to
identify the Group’s material business and operational risks and
risk management strategies for these risks. The risk register is
reviewed half yearly and updated as required. The Executive
reports to the Board on material business risks at each Board
meeting.
The Board has required the executive to design, implement and
maintain risk management and internal control systems to manage
the material business risks of the Group. The Board also requires
management to report to it confirming that those risks are being
managed effectively.
The Chief Financial Officer (or equivalent) has provided a declaration
to the Board in accordance with section 295A of the Corporations
Act and has assured the Board that such declaration is founded on a
sound system of risk management and internal control and that the
system is operating effectively in all material respects in relation to
financial risks.
31
Lucapa Diamond Company Limited | Annual Report 2023 | The Board monitors the adequacy of its risk management framework
regularly to ensure that it continues to be sound and deals adequately
with contemporary and emerging risks and that the Company is
operating with due regard to the risk appetite set by the Board and
discloses that reviews have taken place at the end of each reporting
period.
Internal Audit
The Group does not have an internal audit function as the Board
believes the business is neither the size nor complexity that requires
such a function. The Board is currently responsible for monitoring the
effectiveness of internal controls, risk management procedures and
governance.
Sustainability and Industry risks
The Group’s operations are and will continue to be subject to a range
of hazards and risks normally incidental to exploring for, evaluating,
developing and mining diamond resources.
The Company and its subsidiaries have detailed risk matrices which
are regularly reviewed, and which highlight critical risk factors that
the Group faces at any particular time. Principal risks to the business
include, amongst others, those relating to:
• Macroeconomic factors, sovereign and partner risk, global
diamond market and diamond demand and pricing;
• The ability to raise capital and/ or required additional funding
for continued exploration, evaluation, development and mining
operations;
• Operational issues such as severe weather conditions, supply
delays, major equipment breakdowns and labour disputes;
• The ability to replace resource and reserves as they are depleted or
become uneconomical and/ or achieve exploration success;
• Environmental, health and safety and social issues (see below);
and
• Retention and reliance on key executives.
As the Group expands its activities either within existing projects or
with the addition of new projects, it is expected that the sustainability
risks will change accordingly.
The Board reviews the overall sustainability of both the diamond
business and more specifically, the Group, in its normal course of
business.
Details of the Group’s sustainability activities and strategic direction
are set out in the ESG Report.
Environmental and Social Risks
The Group strives to operate in accordance with the highest standards
of environmental practice and comply in all material respects with
applicable environmental laws and regulations. Such regulations
typically cover a wide variety of matters including, without limitation,
prevention of waste, pollution and protection of the environment,
labour regulations and worker safety. The Company may also be
subject under such regulations to clean-up costs and liability for
toxic or hazardous substances which may exist on or under any of its
properties or which may be produced as a result of its operations.
The Company has adopted a formal Anti-Bribery and Corruption
and Anti-Slavery policies which apply to all staff, consultants and
contractors that work with the Group. The policies seek to ensure that
32 | Lucapa Diamond Company Limited | Annual Report 2023
32
| Lucapa Diamond Company Limited | Annual Report 2023 the Company operates in an ethical and transparent manner in all
business dealings and that the Company has a Whistleblower policy
and mechanism for staff to alert management should any issues or
incidents occur.
The Board monitors the adequacy of its environmental and social
risk management to ensure that it continues to be sound and deals
adequately with contemporary and emerging risks in the respective
jurisdictions the Group operates within.
The Company is entering an important phase and the Board believes
that whilst the remuneration framework is appropriate and fit-for-
purpose based on the Company’s development and growth profile and
to drive and deliver the outcomes desired by all shareholders, it has
adopted the recommendations from the independent remuneration
consultant which focus on providing directors, key management
personnel and senior management with clear short term, project
based and long-term incentives to drive alignment of the Company’s
key objectives.
Principle 8
Remunerate fairly and responsibly
The Remuneration framework for short-term incentives (STI) is in the
form of cash and equity, Project Based Incentives (PBI) in the form
of equity and long-term incentives (LTI) in the form of equity, were
measured against the Company’s relevant targets in FY22 and FY23
such as;
The Company does not have a Remuneration Committee given the
size of the Board. However it is intended that a committee will be
established comprised by a majority of independent directors as the
Company transitions to become a mid-tier producer. In the interim,
the Board monitors and reviews the remuneration level and policy of
the Group.
STI;
• Production
• Expenditures/ Capex
• ESG and Safety
• Exploration
Details of the remuneration policy are contained in the Remuneration
Report included in the Directors’ Report. The Company’s policy
is to remunerate non-executive Directors at a fixed fee for time,
commitment, and responsibilities. Any services over and above
their agreed responsibility is remunerated separately on normal
commercial terms. Remuneration for non-executive Directors is not
linked to individual performance. The Company may grant options and
performance rights to non-executive Directors. The grant of options
and performance is designed to recognise and reward efforts as well
as to provide non-executive Directors with additional incentive to
continue those efforts for the benefit of shareholders and the Group.
The maximum aggregate amount of fees (including superannuation
payments) that can be paid to non-executive Directors is subject to
approval by the shareholders at general meeting.
Pay and rewards for executive Directors and senior executives
consists of a base salary, performance and retention incentives.
Medium and long-term performance incentives may include options
and/ or performance rights granted at the discretion of the Board and
subject to obtaining the relevant approvals. The grant of options and/
or performance rights is designed to recognise and reward efforts
as well as to provide additional incentives and retentions and may
be subject to the successful completion of performance hurdles.
Executives are offered a competitive level of base pay at market
rates (for comparable companies and industry) and are reviewed
annually to ensure market competitiveness. The Company’s policy is
not to allow transactions in associated products which limit the risk
of participating in unvested elements of equity-based compensation
plans.
The Directors are not entitled to a termination bonus or retirement
benefit (other than for superannuation). The Directors’ contracts
contain a service bonus in the event of a takeover or change of control,
subject to shareholder approval where required.
During the previous reporting period the Board engaged an
independent remuneration consultant, BDO Remuneration and
Reward Pty Limited, to review the pay and rewards for Directors
and senior executives including independent benchmarking as the
Company continues to maximise operating performance from its
existing mines and the development of the Company’s Merlin Project
in the Northern Territory, Australia.
PBI;
• Production at the Merlin Project
LTI;
• Absolute shareholder return
The independent review has considered Non-executive directors total
fixed remuneration in relation to benchmarked peers in which non-
executives are encouraged to hold shares in the Group to partake
in the future growth of the Group and, to participate in the Group’s
profits and dividends that may be realised in future years.
33
Lucapa Diamond Company Limited | Annual Report 2023 | FINANCIAL report
34 | Lucapa Diamond Company Limited | Annual Report 2023
34
| Lucapa Diamond Company Limited | Annual Report 2023 Directors’ Report
Consolidated financial statements
Notes to the consolidated financial statements
Director’s Declaration
Independent Auditor’s Report
Additional ASX Information
Definitions and Abbreviations
36
56
61
105
106
113
116
35
Lucapa Diamond Company Limited | Annual Report 2023 | Directors’ Report
Company Secretary
Financial Report
For the year ended 31 December 2023
Financial Report
For the year ended 31 December 2023
The Directors present their report together with the financial report of Lucapa and the Group for the financial
Directors
year ended 31 December 2023 and independent auditor’s report thereon.
Name
The Directors of the Company at any time during or since the end of the financial period are:
Period of directorship
Position
M Kennedy
N Selby
Non-Executive Chairman
Appointed 12 September 2008
Chief Executive Officer/ Managing Director
R Stanley
Interim Chief Executive Officer/ Managing Director
Previous Chief Operating Officer/ Executive Director
Effective from 5 October 2023
1 August 2023 to 4 October 2023
Appointed 4 September 2017
S Wetherall
Non-Executive Director
Appointed 26 July 2018
Previous Chief Executive Officer/ Managing Director
Appointed 13 October 2014
Resigned 31 July 2023
The qualifications, experience and other directorships of the Directors in office at the date of this report are:
Miles Kennedy
Ross Stanley
Mr Kennedy has held directorships of Australian
listed companies for more than 30 years. He was
previously Chairman of companies
including
Sandfire Resources, Kimberley Diamond Company,
Blina Diamonds, Macraes Mining Company, MOD
Resources and Auris. He has extensive experience in
the management of public companies with specific
emphasis in the resources industry. He lives in
Nick Selby
Dunsborough, Western Australia.
Mr Selby is an extraction metallurgist with over 35
years' experience in the mining industry. He began
his career with De Beers, where he spent 19 years in
a range of technical roles. Mr Selby joined Gem
Diamonds in 2005, where he was responsible for
establishing diamond projects in various countries
including Angola, Australia, DRC, Central African
Republic, Indonesia, Lesotho and Botswana. He lives
in Perth, Western Australia.
36
industry
Mr Stanley has an extensive background in the
in Australia and Africa,
resources
specialising in drilling and related exploration and
mining services. He was the founder and Managing
Director of ASX-listed Stanley Mining Services prior
to its merger with Layne Christensen in 1997. Mr
Stanley was also a major shareholder and Non-
Executive director of Perth-based gold miner
Equigold NL, which was taken over by Lihir Gold for
A$1.1 billion in 2008. He is a Non-Executive director
of ASX listed Emerald Resources NL. He lives in
Stephen Wetherall (resigned 31 July 2023)
Dunsborough, Western Australia.
the South African
Mr Wetherall is a chartered accountant and member
Institute of Chartered
of
Accountants with more than 20 years’ experience in
financial and operational management, corporate
transactions and strategic planning, most of which
has been in the diamond industry. He has held senior
financial and executive roles with diamond major De
Beers and London-listed Gem Diamonds. He lives in
Perth, Western Australia.
Mr Clements was appointed Company Secretary on
currently holds the position of company secretary
2 July 2012. Mr Clements holds a Bachelor of
and/ or director of several publicly listed companies
Commerce degree from the University of Western
and has experience in corporate governance,
Australia and is a Fellow of the Institute of Chartered
finance, accounting and administration, capital
Accountants of Australia, a Fellow of the Governance
raising,
ASX
compliance
and
regulatory
Institute of Australia and member of the Australian
Directors’ Meetings
Institute of Company Directors. Mr Clements
requirements.
The number of Directors’ meetings and the number of meetings attended by each of the Directors of the Company
during the financial year are:
Number of
meetings held
during the time
Number of
the Directors were
meetings
attended
in office during
the year
7
7
7
5
7
7
7
5
Nature of Operations and Principal Activities
Director
M Kennedy
N Selby
R Stanley
S Wetherall
Overview
In 2023, the Group continued to focus on its Angolan
acquisition of Merlin in the Northern Territory and
assets (alluvial diamond mining, resource extension
lamproite diamond exploration at Brooking in
and kimberlite exploration at Lulo), its Lesotho asset
Western Australia). Limited work was also
(kimberlite diamond mining and capacity expansion
undertaken at Lucapa’s Botswana asset (kimberlite
Operating and Financial Review
at Mothae) and its Australian assets (completing the
exploration at Orapa Area F).
Lucapa is a producer of large and high-quality
Territory in 2021. A Feasibility Study into a low-cost,
diamonds from its Lulo Alluvial Mine (“SML”) in
small-scale development of Merlin is expected to be
Angola and the Mothae Kimberlite Mine (“Mothae”)
completed in 2024.
in Lesotho. Both mines produce diamonds which
attract some of the highest prices per carat in the
world. The individual mines earn extra returns from
beyond the mine gate through cutting and polishing
margins which are generated by a partnership with
a high-end diamantaire.
The Company is also advancing exploration and
evaluation activities on several projects in Africa and
Australia. The most advanced of these programs is
the prospective Lulo Kimberlite Exploration Joint
Venture in Angola which is searching for the primary
source of the large, high-value alluvial diamonds
The Company’s 100% owned subsidiary, Australian
regularly recovered by SML’s mining operations.
Natural Diamonds Pty Ltd acquired the Merlin
Diamond Project
(“Merlin”)
in
the Northern
| Lucapa Diamond Company Limited | Annual Report 2023 Directors’ Report
Company Secretary
Financial Report
For the year ended 31 December 2023
Financial Report
For the year ended 31 December 2023
Mr Clements was appointed Company Secretary on
2 July 2012. Mr Clements holds a Bachelor of
Commerce degree from the University of Western
Australia and is a Fellow of the Institute of Chartered
Accountants of Australia, a Fellow of the Governance
Institute of Australia and member of the Australian
Directors’ Meetings
Institute of Company Directors. Mr Clements
currently holds the position of company secretary
and/ or director of several publicly listed companies
in corporate governance,
and has experience
finance, accounting and administration, capital
raising,
regulatory
requirements.
compliance
ASX
and
The number of Directors’ meetings and the number of meetings attended by each of the Directors of the Company
during the financial year are:
Director
M Kennedy
N Selby
R Stanley
S Wetherall
Number of
meetings
attended
7
7
7
5
Number of
meetings held
during the time
the Directors were
in office during
the year
7
7
7
5
Nature of Operations and Principal Activities
In 2023, the Group continued to focus on its Angolan
assets (alluvial diamond mining, resource extension
and kimberlite exploration at Lulo), its Lesotho asset
(kimberlite diamond mining and capacity expansion
Operating and Financial Review
at Mothae) and its Australian assets (completing the
acquisition of Merlin in the Northern Territory and
lamproite diamond exploration at Brooking in
Western Australia). Limited work was also
undertaken at Lucapa’s Botswana asset (kimberlite
exploration at Orapa Area F).
Overview
Lucapa is a producer of large and high-quality
diamonds from its Lulo Alluvial Mine (“SML”) in
Angola and the Mothae Kimberlite Mine (“Mothae”)
in Lesotho. Both mines produce diamonds which
attract some of the highest prices per carat in the
world. The individual mines earn extra returns from
beyond the mine gate through cutting and polishing
margins which are generated by a partnership with
a high-end diamantaire.
The Company’s 100% owned subsidiary, Australian
Natural Diamonds Pty Ltd acquired the Merlin
the Northern
Diamond Project (“Merlin”)
in
Territory in 2021. A Feasibility Study into a low-cost,
small-scale development of Merlin is expected to be
completed in 2024.
The Company is also advancing exploration and
evaluation activities on several projects in Africa and
Australia. The most advanced of these programs is
the prospective Lulo Kimberlite Exploration Joint
Venture in Angola which is searching for the primary
source of the large, high-value alluvial diamonds
regularly recovered by SML’s mining operations.
37
The Directors present their report together with the financial report of Lucapa and the Group for the financial
Directors
year ended 31 December 2023 and independent auditor’s report thereon.
The Directors of the Company at any time during or since the end of the financial period are:
Period of directorship
Position
Name
M Kennedy
N Selby
Non-Executive Chairman
Appointed 12 September 2008
Chief Executive Officer/ Managing Director
Interim Chief Executive Officer/ Managing Director
R Stanley
Previous Chief Operating Officer/ Executive Director
Effective from 5 October 2023
1 August 2023 to 4 October 2023
Appointed 4 September 2017
S Wetherall
Non-Executive Director
Appointed 26 July 2018
Previous Chief Executive Officer/ Managing Director
Appointed 13 October 2014
Resigned 31 July 2023
The qualifications, experience and other directorships of the Directors in office at the date of this report are:
Miles Kennedy
Ross Stanley
Mr Kennedy has held directorships of Australian
Mr Stanley has an extensive background in the
listed companies for more than 30 years. He was
resources
industry
in Australia and Africa,
previously Chairman of
companies
including
specialising in drilling and related exploration and
Sandfire Resources, Kimberley Diamond Company,
mining services. He was the founder and Managing
Blina Diamonds, Macraes Mining Company, MOD
Director of ASX-listed Stanley Mining Services prior
Resources and Auris. He has extensive experience in
to its merger with Layne Christensen in 1997. Mr
the management of public companies with specific
Stanley was also a major shareholder and Non-
emphasis in the resources industry. He lives in
Executive director of Perth-based gold miner
Nick Selby
Dunsborough, Western Australia.
Equigold NL, which was taken over by Lihir Gold for
A$1.1 billion in 2008. He is a Non-Executive director
of ASX listed Emerald Resources NL. He lives in
Stephen Wetherall (resigned 31 July 2023)
Dunsborough, Western Australia.
Mr Selby is an extraction metallurgist with over 35
years' experience in the mining industry. He began
his career with De Beers, where he spent 19 years in
a range of technical roles. Mr Selby joined Gem
Mr Wetherall is a chartered accountant and member
Diamonds in 2005, where he was responsible for
of
the South African
Institute of Chartered
establishing diamond projects in various countries
Accountants with more than 20 years’ experience in
including Angola, Australia, DRC, Central African
financial and operational management, corporate
Republic, Indonesia, Lesotho and Botswana. He lives
transactions and strategic planning, most of which
in Perth, Western Australia.
has been in the diamond industry. He has held senior
financial and executive roles with diamond major De
Beers and London-listed Gem Diamonds. He lives in
Perth, Western Australia.
Lucapa Diamond Company Limited | Annual Report 2023 |
2023 Group Highlights
•
2023 Group highlights include:
•
•
•
•
•
•
•
•
•
•
•
•
•
revenue:
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
100% basis;
Attributable Rough diamond
US$48.4 million (A$72.9 million);
Attributable EBITDA: US$8.3 million (A$12.9
million);
63,469 carats recovered on a 100% basis;
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
Group is debt free after expunging interest-
bearing debt in Q3;
Mothae set new records for tonnes mined
and processed;
Lulo Kimberlite Exploration program
diamondiferous
15
discovered
kimberlite;
Merlin Diamond Project Feasibility Study
pivoted
low-cost, small-scale study
to
option; and
Nick Selby appointed CEO and MD.
its
th
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
•
Lulo Alluvial Mine achieved 9% higher
processing volumes for the year compared to
the previous year due to the recent
investment in new plant and fleet;
Mothae set new records for tonnes mined
(up 23% yoy) and processed (up 22% yoy)
following
the
improvements made
processing plant in 2022;
The Lulo Kimberlite Bulk Sampling Program
processed a total of 26 samples during the
year, or one every two weeks;
to
•
•
38
Financial Report
For the year ended 31 December 2023
Financial Review
•
•
•
The exploration program
identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
•
•
as
volatile. Macro-economic
Overall, the diamond market in 2023 could be
described
and
geopolitical factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack of demand.
From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
The G7 Countries (including the European Union)
announced in December a ban on Russian diamonds
followed by a phase-in of restrictions on the
importation of Russian diamonds and diamond
jewellery from the beginning of 2024. The sanctions
are designed to curb Russia’s ability to continue to
finance the invasion of Ukraine.
Financial Report
For the year ended 31 December 2023
from SML in 2023 and the Group strengthened its
balance sheet by making the final instalments due to
Equigold and the IDC, leaving the Group debt free,
other than for capitalised lease obligations.
The Group reported a loss after tax of US$17.2
million for the year (2022: US$15.1 million) after
recognising a non-cash impairment charge of
million unrealized foreign exchange loss on the
intergroup loan from Lucapa to Mothae due to the
weakening of the South African rand against the
United States dollar. The loss after tax for the year
attributable to members of the Company amounted
to US$9.1 million (2022: US$10.3 million).
US$13.4 million in respect of Mothae’s Property
As at 31 December 2023 the Group’s assets exceeded
Plant and Equipment (“Mothae’s PPE”) and a US$3.5
liabilities by US$71.3 million (2022: US$85.3
Additional performance measures
million).
To enable users of the Financial Report to gain a
better insight into the extent and nature of activities
of the Group, the following financial disclosures are
provided, in addition to the AIFRS requirements:
•
•
Mothae recorded an EBITDA of US$2.9 million for
a pro-forma Consolidated Statement of Profit &
2023 (2022: a loss of US$1.1 million) due to an
Loss by entity including the full results of SML
improved operational performance during H1 after
(refer page 8); and
plant modifications made during the first quarter.
a summary of the attributable EBITDA by entity
Rough diamond revenue per carat sold for the full
(refer page 9).
year was US$775, down from the US$940 achieved
Lucapa is extensively involved in the operating
for H1 2023. Operating costs were well controlled
activities of SML, have funded the development and
and the EBITDA per carat sold was US$90 versus a
has a 40% ownership interest in the mine. It
loss of US$35 for 2022.
The impairment charge for Mothae has been
estimated following the decrease in the value of
diamond recoveries in Q4 and the resulting
uncertainties regarding the impact on future cash
flows. The Company and mine management are
currently exploring options
to restore cash
operating margins.
SML reported an EBITDA of US$23.6 million for
2023 (2022: US$35.2 million). On a per carat sold
basis, rough diamond revenue was US$2,700 (2022:
US$ 2,450) and EBITDA was US$825 (2022: US$
1,082). Operating costs were up due to higher
stripping and processing volumes but kept within
target for the year.
The Group’s equity accounted share of SML’s after
tax profit was US$4.2 million (2022: US$7.7 million).
The Group results for the year also includes a fair
value gain on Lucapa’s investment loan with SML of
US$1.8 million (2022: US$2.5 million) following the
repayments made during the period.
Lucapa received a net dividend of US$1.4 million as
well as US$6.5 million investment loan repayments
therefore provides useful information to incorporate
SML’s results on a consolidated basis and providing
an alternative view of the make-up of the profit after
tax attributable to owners of the Company.
Reconciliations have been prepared to the Operating
Profit/ Loss per the Consolidated Statement of Profit
or Loss.
On the pro-forma consolidated basis as per above,
the Group recorded an EBITDA of US$23.4 million
(2022: US$31.5 million) for the year and a loss after
tax of US$10.9 million (2022: US$3.5 million). Both
year’s results were
impacted by the Mothae
impairment. On a per carat sold basis rough diamond
revenue increased from US$1,576 in 2022 to
US$1,682 for the current year and EBITDA reduced
from US$489 to US$384.
The Group recorded an attributable EBITDA of
US$8.3 million in 2023 (2022: US$10.8 million). Per
carat sold, attributable rough diamond revenue
increased from US$1,335 in 2022 to US$1,425 for
the current period and EBITDA reduced from
US$304 to US$245.
| Lucapa Diamond Company Limited | Annual Report 2023
Financial Report
For the year ended 31 December 2023
•
•
•
•
•
The
exploration program identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
Overall, the diamond market in 2023 could be
described
as
volatile. Macro-economic
and
geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
The G7 Countries (including the European Union)
announced in December a ban on Russian diamonds
followed by a phase-in of restrictions on the
importation of Russian diamonds and diamond
jewellery from the beginning of 2024. The sanctions
are designed to curb Russia’s ability to continue to
finance the invasion of Ukraine.
2023 Group Highlights
2023 Group highlights include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
100% basis;
Attributable Rough diamond
revenue:
US$48.4 million (A$72.9 million);
Attributable EBITDA: US$8.3 million (A$12.9
million);
63,469 carats recovered on a 100% basis;
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
bearing debt in Q3;
and processed;
Group is debt free after expunging interest-
Mothae set new records for tonnes mined
Lulo Kimberlite Exploration program
th
discovered
its
15
diamondiferous
kimberlite;
option; and
Merlin Diamond Project Feasibility Study
pivoted to
low-cost, small-scale study
Nick Selby appointed CEO and MD.
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
Lulo Alluvial Mine achieved 9% higher
processing volumes for the year compared to
the previous year due to the recent
investment in new plant and fleet;
Mothae set new records for tonnes mined
(up 23% yoy) and processed (up 22% yoy)
following
improvements made
to
the
processing plant in 2022;
The Lulo Kimberlite Bulk Sampling Program
processed a total of 26 samples during the
year, or one every two weeks;
Financial Review
The Group reported a loss after tax of US$17.2
million for the year (2022: US$15.1 million) after
impairment charge of
recognising a non-cash
US$13.4 million in respect of Mothae’s Property
Plant and Equipment (“Mothae’s PPE”) and a US$3.5
million unrealized foreign exchange loss on the
intergroup loan from Lucapa to Mothae due to the
weakening of the South African rand against the
United States dollar. The loss after tax for the year
attributable to members of the Company amounted
to US$9.1 million (2022: US$10.3 million).
Mothae recorded an EBITDA of US$2.9 million for
2023 (2022: a loss of US$1.1 million) due to an
improved operational performance during H1 after
plant modifications made during the first quarter.
Rough diamond revenue per carat sold for the full
year was US$775, down from the US$940 achieved
for H1 2023. Operating costs were well controlled
and the EBITDA per carat sold was US$90 versus a
loss of US$35 for 2022.
The impairment charge for Mothae has been
estimated following the decrease in the value of
in Q4 and the resulting
diamond recoveries
uncertainties regarding the impact on future cash
flows. The Company and mine management are
to restore cash
currently exploring options
operating margins.
SML reported an EBITDA of US$23.6 million for
2023 (2022: US$35.2 million). On a per carat sold
basis, rough diamond revenue was US$2,700 (2022:
US$ 2,450) and EBITDA was US$825 (2022: US$
1,082). Operating costs were up due to higher
stripping and processing volumes but kept within
target for the year.
The Group’s equity accounted share of SML’s after
tax profit was US$4.2 million (2022: US$7.7 million).
The Group results for the year also includes a fair
value gain on Lucapa’s investment loan with SML of
US$1.8 million (2022: US$2.5 million) following the
repayments made during the period.
Lucapa received a net dividend of US$1.4 million as
well as US$6.5 million investment loan repayments
Financial Report
For the year ended 31 December 2023
from SML in 2023 and the Group strengthened its
balance sheet by making the final instalments due to
Equigold and the IDC, leaving the Group debt free,
other than for capitalised lease obligations.
As at 31 December 2023 the Group’s assets exceeded
liabilities by US$71.3 million (2022: US$85.3
Additional performance measures
million).
To enable users of the Financial Report to gain a
better insight into the extent and nature of activities
of the Group, the following financial disclosures are
•
provided, in addition to the AIFRS requirements:
•
a pro-forma Consolidated Statement of Profit &
Loss by entity including the full results of SML
(refer page 40); and
a summary of the attributable EBITDA by entity
(refer page 41).
Lucapa is extensively involved in the operating
activities of SML, have funded the development and
has a 40% ownership interest in the mine. It
therefore provides useful information to incorporate
SML’s results on a consolidated basis and providing
an alternative view of the make-up of the profit after
tax attributable to owners of the Company.
Reconciliations have been prepared to the Operating
Profit/ Loss per the Consolidated Statement of Profit
or Loss.
On the pro-forma consolidated basis as per above,
the Group recorded an EBITDA of US$23.4 million
(2022: US$31.5 million) for the year and a loss after
tax of US$10.9 million (2022: US$3.5 million). Both
year’s results were
impacted by the Mothae
impairment. On a per carat sold basis rough diamond
revenue increased from US$1,576 in 2022 to
US$1,682 for the current year and EBITDA reduced
from US$489 to US$384.
The Group recorded an attributable EBITDA of
US$8.3 million in 2023 (2022: US$10.8 million). Per
carat sold, attributable rough diamond revenue
increased from US$1,335 in 2022 to US$1,425 for
the current period and EBITDA reduced from
US$304 to US$245.
39
Lucapa Diamond Company Limited | Annual Report 2023 |
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2023 Group Highlights
2023 Group highlights include:
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revenue:
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
100% basis;
Attributable Rough diamond
US$48.4 million (A$72.9 million);
Attributable EBITDA: US$8.3 million (A$12.9
million);
p
u
o
r
63,469 carats recovered on a 100% basis;
G
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
Group is debt free after expunging interest-
bearing debt in Q3;
Mothae set new records for tonnes mined
and processed;
Lulo Kimberlite Exploration program
diamondiferous
15
discovered
kimberlite;
Merlin Diamond Project Feasibility Study
pivoted to
low-cost, small-scale study
option; and
Nick Selby appointed CEO and MD.
s
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40
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
•
Financial Report
For the year ended 31 December 2023
•
,
$
A
•
•
7
3
7
6
7
3
2
The
exploration program identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
1
1
6
2
2
8
6
1,
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•
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Overall, the diamond market in 2023 could be
as
described
and
volatile. Macro-economic
geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
r
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Financial Report
For the year ended 31 December 2023
•
•
•
•
•
The
exploration program identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
Overall, the diamond market in 2023 could be
described
as
volatile. Macro-economic
and
geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
The G7 Countries (including the European Union)
announced in December a ban on Russian diamonds
followed by a phase-in of restrictions on the
importation of Russian diamonds and diamond
jewellery from the beginning of 2024. The sanctions
are designed to curb Russia’s ability to continue to
finance the invasion of Ukraine.
2023 Group Highlights
2023 Group highlights include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
100% basis;
Attributable Rough diamond
revenue:
US$48.4 million (A$72.9 million);
Attributable EBITDA: US$8.3 million (A$12.9
million);
63,469 carats recovered on a 100% basis;
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
bearing debt in Q3;
and processed;
Group is debt free after expunging interest-
Mothae set new records for tonnes mined
Lulo Kimberlite Exploration program
th
discovered
its
15
diamondiferous
kimberlite;
option; and
Merlin Diamond Project Feasibility Study
pivoted to
low-cost, small-scale study
Nick Selby appointed CEO and MD.
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
Lulo Alluvial Mine achieved 9% higher
processing volumes for the year compared to
the previous year due to the recent
investment in new plant and fleet;
Mothae set new records for tonnes mined
(up 23% yoy) and processed (up 22% yoy)
following
improvements made
to
the
processing plant in 2022;
The Lulo Kimberlite Bulk Sampling Program
processed a total of 26 samples during the
year, or one every two weeks;
| Lucapa Diamond Company Limited | Annual Report 2023
t
r
o
p
e
R
l
a
i
c
n
a
n
F
i
Financial Report
For the year ended 31 December 2023
•
•
•
•
•
The
exploration program identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
Overall, the diamond market in 2023 could be
described
as
volatile. Macro-economic
and
geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
The G7 Countries (including the European Union)
announced in December a ban on Russian diamonds
followed by a phase-in of restrictions on the
importation of Russian diamonds and diamond
jewellery from the beginning of 2024. The sanctions
are designed to curb Russia’s ability to continue to
finance the invasion of Ukraine.
2023 Group Highlights
2023 Group highlights include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
100% basis;
Attributable Rough diamond
revenue:
US$48.4 million (A$72.9 million);
Attributable EBITDA: US$8.3 million (A$12.9
million);
63,469 carats recovered on a 100% basis;
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
bearing debt in Q3;
and processed;
Group is debt free after expunging interest-
Mothae set new records for tonnes mined
Lulo Kimberlite Exploration program
th
discovered
its
15
diamondiferous
kimberlite;
option; and
Merlin Diamond Project Feasibility Study
pivoted to
low-cost, small-scale study
Nick Selby appointed CEO and MD.
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
Lulo Alluvial Mine achieved 9% higher
processing volumes for the year compared to
the previous year due to the recent
investment in new plant and fleet;
Mothae set new records for tonnes mined
(up 23% yoy) and processed (up 22% yoy)
following
improvements made
to
the
processing plant in 2022;
The Lulo Kimberlite Bulk Sampling Program
processed a total of 26 samples during the
year, or one every two weeks;
2023 Group Highlights
2023 Group highlights include:
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t
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e
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the year and a total of 30,585 carats;
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Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
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In 2023, Lucapa continued to achieve the growth
objectives against its goals:
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Financial Report
For the year ended 31 December 2023
•
•
•
The
exploration program identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
•
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Overall, the diamond market in 2023 could be
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geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
s
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From October to December, some Indian diamond
t
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u
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announced in December a ban on Russian diamonds
followed by a phase-in of restrictions on the
importation of Russian diamonds and diamond
h
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a
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c
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Lucapa Diamond Company Limited | Annual Report 2023 |
Review of Financial Condition
Given the Group’s mix of mining, evaluation and
exploration assets, and given their various stages of
development, the Group may require funding for
continued exploration, evaluation, development
and/ or mining activities. To the extent that
sufficient cash is not generated by the Group’s
activities or mining operations for the payment of
loan, interest and/ or dividends, funding will be
required.
As a result of the current global inflationary
environment, supply chain constraints and general
economic uncertainties, and the potential unknown
future impact on the assumptions contained in the
Group’s cash flow forecasts over the next 12 months,
the Directors recognise that the Group may have to
source funding solutions in order to ensure the
realisation of assets and extinguishment of liabilities
as and when they fall due.
The ability of the Group to continue to pay its debts
as and when they fall due for the 12-month period
from the date the financial report is signed is
•
dependent on:
raising new debt
The Group’s staff, operations, partners and the
global diamond industry not being adversely
impacted by the economic environment or
Russia/ Ukraine conflict, thereby impacting key
forecast assumptions and scheduled
loan,
interest and/ or dividend payments;
The Group, as required, successfully sourcing
equity,
facilities with
financiers;
The Group continuing to achieve success with its
exploration and development projects, such as
the Lulo kimberlite exploration program in
Angola and Merlin mine development
in
Australia;
The continued achievement of targeted cash
operating margins at SML, restoration of cash
operating margins at Mothae and the repeal of
the VAT bill by the Lesotho government (refer
page 11); and
The current Mining Investment Contract for the
Lulo Kimberlite JV being renewed in 2024.
42
•
•
•
•
Financial Report
For the year ended 31 December 2023
The Directors believe that the going concern basis is
appropriate for the preparation of the financial
•
statements due to the following reasons:
•
•
•
•
•
The diamond market is relatively stable for
higher value production despite volatility
experienced in the overall market during 2023;
The book value of the Group’s assets exceeds its
liabilities by US$71.3 million (post the Mothae
impairment charge);
All approvals for SML to repay Lucapa’s alluvial
investment loan are in place and are expected to
follow directly
following SML shareholder
approval;
Lucapa should be able to provide the necessary
interim financial support to Mothae whilst it
considers opportunities to improve margins
and/ or implement alternate strategic options;
The Group has historically been successful in
raising equity for the furtherance of its projects
and under ASX Listing Rule 7.1 the Company has
the capacity to place securities to raise equity:
and
The Group has historically been successful in
raising and restructuring debt facilities.
The above conditions
represent a material
uncertainty that might cause significant doubt about
the ability of the Company to continue as a going
concern. Should the Company be unable to continue
as a going concern it may be required to realise its
assets and extinguish its liabilities other than in the
normal course of business and at amounts different
to those stated in the financial statements. The
financial statements do not include any adjustments
relating to recoverability and classification of asset
carrying amounts or to amounts and classification of
liabilities that might result should the Company be
Significant Changes in the State of Affairs
unable to continue as a going concern.
General
In 2023, the global diamond market experienced a
downturn and volatility. Although the large, high-
quality recoveries from both operations achieved
decent prices at sale, the smaller, lower quality
goods were under price pressure.
Following the advancement of the Merlin Diamond
Project Feasibility Study during the year,
the
decision was taken to focus the study on a low-cost,
smaller-scale pathway to development. The outcome
of the study is expected in 2024.
Financial Report
WESTERN AUSTRALIA
For the year ended 31 December 2023
Geochemical and heavy mineral samples were taken
from Brooking during a 2023 drilling campaign. The
results will be interpreted and expected to be
Botswana
released in Q2 2024.
Inflation, combined with disappointing prices for
lower-quality goods impacted margins at both
operations. At Mothae, the annual price per carat
achieved was lower than guidance, however at a
Group level, the Company achieved all of its guidance
metrics, with Lulo diamonds attracting higher
average prices per carat.
Although some stability has returned to the diamond
exploration drilling at the Orapa Area F project to
market in 2024, there can be no guarantee that the
Angola
prices achieved in 2023 will continue in 2024.
Corporate
commence in Q1 2024.
Preparations were made for the commencement of
The Company completed an unmarketable share
Lulo continued to perform well, with previous year’s
parcel sale at 4 cents per share in August 2023. A
capital
investment
continuing
to
improve
total of 1,931 shareholders holding 10,216,253 fully
efficiencies at the Alluvial Mine. The Kimberlite Bulk
paid LOM shares participated in the sale and reduced
Sampling program is now operating continuously
the Company’s shareholder base to 3,352 as at 10
and in 2023, diamonds were recovered from more
Business Risks
August 2023.
than ten samples. The current Mineral Investment
Diamond prices and marketability
In 2023, Mothae achieved records in volumes
diamonds produced by the Company.
Contract (MIC) for the Kimberlite JV expires in May
2024. The new MIC is nearing completion with
Lucapa negotiating for a majority stake in the Joint-
.
Lesotho
Venture
processed and carats recovered following plant
upgrades the year prior. However, in the fourth
quarter of the year, the quality of the diamonds
recovered dropped significantly. There were very
few high-quality large Type IIa diamonds recovered,
and this challenged the year’s overall performance.
A review is underway to determine why the
diamonds being recovered are below expectations.
The passing of the previous Lesotho government’s
Value Added Tax Amendment Bill which will
effectively abolish the 15 percent VAT refund for
goods, services and capital items has been paused,
Australia
however it has still not been repealed.
NORTHERN TERRITORY
The ultimate profitability of
the Company’s
operations will be dependent upon the market price
and marketability of diamonds. There is a risk that a
profitable market may not exist for the sale of
Commodity prices,
including diamond prices
fluctuate widely and are affected by numerous
factors beyond the control of the Company. General
economic factors as well as the world supply of
mineral commodities in general, the stability of
exchange rates and political developments can all
cause significant fluctuations in diamond prices. The
prices of mineral commodities have fluctuated
widely in recent years and future diamond price
declines could cause commercial production to be
uneconomic, thereby having a material adverse
effect on the Company’s business, financial condition
and results of operations.
Moreover, resource and reserve estimates and
studies using different diamond prices than the
prevailing market price could result in material
write-downs of the Company’s investment in the
assets and even a reassessment of the economic
feasibility of the Company’s projects which could
result in putting one or more projects on care and
maintenance and slowing down operations until
| Lucapa Diamond Company Limited | Annual Report 2023 Financial Report
For the year ended 31 December 2023
Review of Financial Condition
Given the Group’s mix of mining, evaluation and
exploration assets, and given their various stages of
The Directors believe that the going concern basis is
appropriate for the preparation of the financial
statements due to the following reasons:
development, the Group may require funding for
The diamond market is relatively stable for
continued exploration, evaluation, development
higher value production despite volatility
and/ or mining activities. To the extent that
experienced in the overall market during 2023;
sufficient cash is not generated by the Group’s
The book value of the Group’s assets exceeds its
activities or mining operations for the payment of
liabilities by US$71.3 million (post the Mothae
loan, interest and/ or dividends, funding will be
impairment charge);
required.
As a result of
the current global
inflationary
environment, supply chain constraints and general
economic uncertainties, and the potential unknown
future impact on the assumptions contained in the
Group’s cash flow forecasts over the next 12 months,
the Directors recognise that the Group may have to
source funding solutions in order to ensure the
realisation of assets and extinguishment of liabilities
as and when they fall due.
The ability of the Group to continue to pay its debts
as and when they fall due for the 12-month period
from the date the financial report is signed is
•
dependent on:
All approvals for SML to repay Lucapa’s alluvial
investment loan are in place and are expected to
follow directly
following SML shareholder
approval;
Lucapa should be able to provide the necessary
interim financial support to Mothae whilst it
considers opportunities to improve margins
and/ or implement alternate strategic options;
The Group has historically been successful in
raising equity for the furtherance of its projects
and under ASX Listing Rule 7.1 the Company has
the capacity to place securities to raise equity:
and
The Group has historically been successful in
raising and restructuring debt facilities.
•
•
•
•
•
•
The Group’s staff, operations, partners and the
The
above
conditions
represent
a material
global diamond industry not being adversely
uncertainty that might cause significant doubt about
impacted by the economic environment or
the ability of the Company to continue as a going
Russia/ Ukraine conflict, thereby impacting key
concern. Should the Company be unable to continue
forecast assumptions and scheduled
loan,
as a going concern it may be required to realise its
assets and extinguish its liabilities other than in the
normal course of business and at amounts different
to those stated in the financial statements. The
financial statements do not include any adjustments
relating to recoverability and classification of asset
carrying amounts or to amounts and classification of
liabilities that might result should the Company be
Significant Changes in the State of Affairs
unable to continue as a going concern.
General
•
•
•
•
interest and/ or dividend payments;
The Group, as required, successfully sourcing
equity,
raising new debt
facilities with
financiers;
The Group continuing to achieve success with its
exploration and development projects, such as
the Lulo kimberlite exploration program in
Angola and Merlin mine development
in
Australia;
The continued achievement of targeted cash
operating margins at SML, restoration of cash
operating margins at Mothae and the repeal of
the VAT bill by the Lesotho government (refer
page 11); and
The current Mining Investment Contract for the
Lulo Kimberlite JV being renewed in 2024.
Inflation, combined with disappointing prices for
lower-quality diamonds
impacted margins at
both operations. At Mothae, the average price
per carat achieved was
lower than guidance,
however at a Group level, the Company achieved
all of its guidance metrics, with Lulo diamonds
attracting higher average prices per carat.
Although some stability has returned to the diamond
market in 2024, there can be no guarantee that the
Angola
prices achieved in 2023 will continue in 2024.
to
continuing
investment
Lulo continued to perform well, with previous year’s
capital
improve
efficiencies at the Alluvial Mine. The Kimberlite Bulk
Sampling program is now operating continuously
and in 2023, diamonds were recovered from more
than ten samples. The current Mineral Investment
Contract (MIC) for the Kimberlite JV expires in May
2024. The new MIC is nearing completion with
Lucapa negotiating for a majority stake in the Joint-
Lesotho
Venture
.
In 2023, Mothae achieved records in volumes
processed and carats recovered following plant
upgrades the year prior. However, in the fourth
quarter of the year, the quality of the diamonds
recovered dropped significantly. There were very
few high-quality large Type IIa diamonds recovered,
and this challenged the year’s overall performance.
A review is underway to determine why the
diamonds being recovered are below expectations.
The passing of the previous Lesotho government’s
Value Added Tax Amendment Bill which will
effectively abolish the 15 percent VAT refund for
goods, services and capital items has been paused,
Australia
however it has still not been repealed.
NORTHERN TERRITORY
In 2023, the global diamond market experienced a
downturn and volatility. Although the large, high-
quality recoveries from both operations achieved
decent prices at sale, the smaller, lower quality
goods were under price pressure.
Following the advancement of the Merlin Diamond
Project Feasibility Study during the year, the
decision was taken to focus the study on a low-cost,
smaller-scale pathway to development. The outcome
of the study is expected in 2024.
Financial Report
WESTERN AUSTRALIA
For the year ended 31 December 2023
Geochemical and heavy mineral samples were taken
from Brooking during a 2023 drilling campaign. The
results will be
to
Botswana
be released in Q2 2024.
interpreted and expected
Preparations were made for the commencement of
exploration drilling at the Orapa Area F project to
Corporate
commence in Q1 2024.
The Company completed an unmarketable share
parcel sale at 4 cents per share in August 2023. A
total of 1,931 shareholders holding 10,216,253 fully
paid LOM shares participated in the sale and reduced
the Company’s shareholder base to 3,352 as at 10
Business Risks
August 2023.
Diamond prices and marketability
The ultimate profitability of
the Company’s
operations will be dependent upon the market price
and marketability of diamonds. There is a risk that a
profitable market may not exist for the sale of
diamonds produced by the Company.
Commodity prices,
including diamond prices
fluctuate widely and are affected by numerous
factors beyond the control of the Company. General
economic factors as well as the world supply of
mineral commodities in general, the stability of
exchange rates and political developments can all
cause significant fluctuations in diamond prices. The
prices of mineral commodities have fluctuated
widely in recent years and future diamond price
declines could cause commercial production to be
uneconomic, thereby having a material adverse
effect on the Company’s business, financial condition
and results of operations.
Moreover, resource and reserve estimates and
studies using different diamond prices than the
prevailing market price could result in material
write-downs of the Company’s investment in the
assets and even a reassessment of the economic
feasibility of the Company’s projects which could
result in putting one or more projects on care and
maintenance and slowing down operations until
43
Lucapa Diamond Company Limited | Annual Report 2023 |
there is a change in diamond prices. Despite the high
quality of the diamond production
from the
Company’s operations, an increase in the acceptance
of manufactured (synthetic or lab-grown) gem-
quality diamonds for the jewellery industry could
Sovereign risks
negatively affect the market for natural stones.
In addition to its activities in Australia, the Company
is also involved in operations in Angola, Botswana
and Lesotho and may explore other opportunities in
other countries in the future.
in
Whilst the Directors are of the opinion that the
democratic and regulatory systems
those
countries are relatively stable, the Company may be
adversely affected by changes in economic, political,
judicial, administrative, taxation or other regulatory
factors. There can be no assurance that the political
environment in these jurisdictions will continue and
this could materially adversely affect the Company’s
prospects, operations,
financial condition and
results of operations.
The Company’s projects and businesses may be
adversely impacted by acts of terrorism or war.
While the Company will undertake all reasonable
due diligence in assessing the risks of terrorism and
war in the countries and regions in which it invests,
the risks of acts of terrorism and war cannot be fully
mitigated.
fluctuations,
Other risks and uncertainties include, but are not
limited to, high rates of inflation, labour unrest, mass
migration, pandemics, shortages of food, water,
currency exchange
limitations or
delays in repatriation of profits, renegotiation or
nullification of existing licences, changes in taxation
policies, currency controls and regulations that
favour or require the awarding of contracts to local
contractors or require foreign contractors to employ
citizens, or purchase supplies from, a particular
jurisdiction.
The occurrence of any of these risks or any material
in government policies, attitude or
changes
legislation
investment,
repatriation of foreign currency, taxation or mineral
exploration, development or mining activities, may
adversely affect the viability and profitability of the
foreign
affect
that
44
Financial Report
For the year ended 31 December 2023
in Angola,
Company’s assets and operations
Botswana and Lesotho or other southern African
jurisdictions in a highly material manner. Failure to
comply strictly with applicable laws, regulations and
local practices relating to mineral tenure and
development, could result in loss, reduction or
expropriation of entitlements.
Industry profitability can be affected by changes in
government within Angiola, Botswana, Lesotho,
South Africa, Australia and elsewhere, which are not
within the control of the Company. The Company’s
activities are subject
laws and
regulations controlling not only the activities of the
Company, and the possible effects of those activities
on the environment and on the interests of local
inhabitants, among other things.
to extensive
Licences and permits from regulatory authorities
are required for many aspects of the Company’s
activities. There is no guarantee that the required
licences in Angola, Botswana, Lesotho or Australia
will continue to be extended past the current expiry
dates could materially affect
the Company’s
prospects, operations,
financial condition and
results of operations.
including significant
Whilst the Company is satisfied that it has taken
reasonable measures to ensure an unencumbered
right to explore, develop its licence areas in Angola,
Australia, Lesotho and Botswana, some of these
countries are subject to greater risks than more
legal,
developed markets,
economic and political risks. Title to mining
properties
in Angola, Australia, Lesotho and
Botswana is subject to potential litigation by third
parties claiming an interest in them and the failure
to comply with all applicable laws and regulations,
including failure to pay taxes, meet minimum
expenditure requirements or carry out and report
assessment work may invalidate title to mineral
Regulatory delays
rights held by the Company.
The business of mineral exploration, project
evaluation, development, mining and processing is
subject to various national and local laws and plans
relating
licencing and
maintenance of title; environmental consents;
to, amongst others,
taxation; employee relations; heritage or historic
matters; health
and
safety;
royalties;
land
acquisition and other matters.
Although the Board believe that the Company is well
placed to have all of its licences issued or renewed in
relation to its material assets, should the Company
identify
future development opportunities or
operations there is a risk that
the necessary
concessions, permits,
licences, consents, titles,
authorisations and agreements
to implement
planned exploration, project development, or
mining may not be obtained or renewed under
conditions or within time frames that make such
plans economic, that applicable laws, regulations or
the governing authorities will change or that such
changes will
result
in additional material
expenditures or time delays could materially
adversely
affect
the
Company’s
prospects,
operations,
financial condition and results of
inherent
in
exploration,
Risks and hazards
operations.
development and mining
Financial Report
For the year ended 31 December 2023
Dividends
No dividends were paid or declared by the Company
Environmental Regulation
during the current or prior financial year.
The Group’s mining and exploration activities are
subject to various environmental regulations. The
respective Company,
subsidiary and associate
Boards are responsible for the regular monitoring of
environmental exposures and compliance with
environmental regulations.
The Group is committed to achieving a high standard
of environmental performance and conducts its
activities in a professional and environmentally
conscious manner and in accordance with applicable
laws and permit requirements.
The Board believes the Group has adequate systems
in place for the management of its environmental
requirements and is not aware of any material
breach of those environmental requirements as they
Events Subsequent to Reporting Date
apply to the projects.
Exploration, evaluation, development and mining
generally involves a high degree of risk. The
On 25 January, 2024, Lucapa notified shareholders
Company’s operations are and will continue to be
of the proposed share consolidation of 5 shares to 1.
subject
to all
the hazards and risks normally
If
the proposed consolidation is approved by
incidental to exploring for, evaluating, developing
shareholders at the general meeting, the number of
and mining diamond resources.
ordinary LOM shares on issue will reduce from
Likely Developments
1,439,559,875 to 287,911,975.
Whilst the Company has taken, and will continue to
take, all precautions necessary to minimize risk, the
Company’s operations will be exposed to hazards
including, but not limited to: environmental hazards,
periodic interruptions due to bad or hazardous
weather conditions, unusual or unexpected geology
or grade problems, unanticipated changes in the
The Directors consider the following as a summary
of the likely developments and expected results for
Lulo, Angola
the next 12 months.
gravels or ore-body characteristics and diamond
It is expected that Lucapa and its partners will
recovery, difficulties in sourcing, commissioning and
continue alluvial mining and mine development at
operating plant and equipment, mechanical failure
Lulo in 2024 alongside the alluvial exploration
or plant breakdown, unexpected shortages, delays
program. Further sales of Lulo diamonds are
or increases in the sourcing or cost of consumables,
planned, with more diamonds continuing to be
spare parts, plant and equipment,
industrial or
delivered into the cutting & polishing partnership
labour disputes, seismic activity, flooding, fire,
with Safdico.
equipment
failure,
pit wall
failure and other
conditions involved in the exploration, evaluation,
development and mining activities.
It is expected the new Mineral Investment Contract
for the Project Lulo Kimberlite Exploration JV will be
| Lucapa Diamond Company Limited | Annual Report 2023 Financial Report
For the year ended 31 December 2023
there is a change in diamond prices. Despite the high
Company’s assets and operations
in Angola,
quality of
the diamond production
from the
Botswana and Lesotho or other southern African
Company’s operations, an increase in the acceptance
jurisdictions in a highly material manner. Failure to
of manufactured (synthetic or lab-grown) gem-
comply strictly with applicable laws, regulations and
quality diamonds for the jewellery industry could
local practices relating to mineral tenure and
Sovereign risks
negatively affect the market for natural stones.
development, could result in loss, reduction or
In addition to its activities in Australia, the Company
is also involved in operations in Angola, Botswana
and Lesotho and may explore other opportunities in
other countries in the future.
Whilst the Directors are of the opinion that the
democratic and regulatory systems
in
those
countries are relatively stable, the Company may be
adversely affected by changes in economic, political,
judicial, administrative, taxation or other regulatory
factors. There can be no assurance that the political
environment in these jurisdictions will continue and
this could materially adversely affect the Company’s
prospects, operations,
financial
condition and
results of operations.
The Company’s projects and businesses may be
adversely impacted by acts of terrorism or war.
While the Company will undertake all reasonable
due diligence in assessing the risks of terrorism and
war in the countries and regions in which it invests,
the risks of acts of terrorism and war cannot be fully
mitigated.
Other risks and uncertainties include, but are not
limited to, high rates of inflation, labour unrest, mass
migration, pandemics, shortages of
food, water,
currency exchange
fluctuations,
limitations or
delays in repatriation of profits, renegotiation or
nullification of existing licences, changes in taxation
policies, currency controls and regulations that
favour or require the awarding of contracts to local
contractors or require foreign contractors to employ
citizens, or purchase supplies from, a particular
jurisdiction.
The occurrence of any of these risks or any material
changes
in government policies,
attitude or
legislation
that
affect
foreign
investment,
repatriation of foreign currency, taxation or mineral
exploration, development or mining activities, may
adversely affect the viability and profitability of the
expropriation of entitlements.
Industry profitability can be affected by changes in
government within Angiola, Botswana, Lesotho,
South Africa, Australia and elsewhere, which are not
within the control of the Company. The Company’s
activities are subject
to extensive laws and
regulations controlling not only the activities of the
Company, and the possible effects of those activities
on the environment and on the interests of local
inhabitants, among other things.
Licences and permits from regulatory authorities
are required for many aspects of the Company’s
activities. There is no guarantee that the required
licences in Angola, Botswana, Lesotho or Australia
will continue to be extended past the current expiry
dates could materially affect
the Company’s
prospects, operations,
financial
condition and
results of operations.
Whilst the Company is satisfied that it has taken
reasonable measures to ensure an unencumbered
right to explore, develop its licence areas in Angola,
Australia, Lesotho and Botswana, some of these
countries are subject to greater risks than more
developed markets,
including significant
legal,
economic and political risks. Title to mining
properties
in Angola, Australia, Lesotho and
Botswana is subject to potential litigation by third
parties claiming an interest in them and the failure
to comply with all applicable laws and regulations,
including failure to pay taxes, meet minimum
expenditure requirements or carry out and report
assessment work may invalidate title to mineral
Regulatory delays
rights held by the Company.
The business of mineral exploration, project
evaluation, development, mining and processing is
subject to various national and local laws and plans
relating
to,
amongst
others,
licencing and
maintenance of
title; environmental
consents;
taxation; employee relations; heritage or historic
matters; health and
land
acquisition and other matters.
royalties;
safety;
Although the Board believe that the Company is well
placed to have all of its licences issued or renewed in
relation to its material assets, should the Company
identify
future development opportunities or
operations there is a risk that the necessary
licences, consents, titles,
concessions, permits,
authorisations and agreements
implement
to
planned exploration, project development, or
mining may not be obtained or renewed under
conditions or within time frames that make such
plans economic, that applicable laws, regulations or
the governing authorities will change or that such
changes will
in additional material
expenditures or time delays could materially
the Company’s prospects,
affect
adversely
financial condition and results of
operations,
exploration,
Risks and hazards
operations.
development and mining
inherent
result
in
Exploration, evaluation, development and mining
generally involves a high degree of risk. The
Company’s operations are and will continue to be
subject to all the hazards and risks normally
incidental to exploring for, evaluating, developing
and mining diamond resources.
Whilst the Company has taken, and will continue to
take, all precautions necessary to minimize risk, the
Company’s operations will be exposed to hazards
including, but not limited to: environmental hazards,
periodic interruptions due to bad or hazardous
weather conditions, unusual or unexpected geology
or grade problems, unanticipated changes in the
gravels or ore-body characteristics and diamond
recovery, difficulties in sourcing, commissioning and
operating plant and equipment, mechanical failure
or plant breakdown, unexpected shortages, delays
or increases in the sourcing or cost of consumables,
spare parts, plant and equipment, industrial or
labour disputes, seismic activity, flooding, fire,
equipment failure,
pit wall failure and other
conditions involved in the exploration, evaluation,
development and mining activities.
Financial Report
For the year ended 31 December 2023
Dividends
No dividends were paid or declared by the Company
Environmental Regulation
during the current or prior financial year.
The Group’s mining and exploration activities are
subject to various environmental regulations. The
respective Company, subsidiary and associate
Boards are responsible for the regular monitoring of
environmental exposures and compliance with
environmental regulations.
The Group is committed to achieving a high standard
of environmental performance and conducts its
activities in a professional and environmentally
conscious manner and in accordance with applicable
laws and permit requirements.
The Board believes the Group has adequate systems
in place for the management of its environmental
requirements and is not aware of any material
breach of those environmental requirements as they
Events Subsequent to Reporting Date
apply to the projects.
On 25 January, 2024, Lucapa notified shareholders
of the proposed share consolidation of 5 shares to 1.
If the proposed consolidation is approved by
shareholders at the general meeting, the number of
ordinary LOM shares on issue will reduce from
Likely Developments
1,439,559,875 to 287,911,975.
The Directors consider the following as a summary
of the likely developments and expected results for
Lulo, Angola
the next 12 months.
It is expected that Lucapa and its partners will
continue alluvial mining and mine development at
Lulo in 2024 alongside the alluvial exploration
program. Further sales of Lulo diamonds are
planned, with more diamonds continuing to be
delivered into the cutting & polishing partnership
with Safdico.
It is expected the new Mineral Investment Contract
for the Project Lulo Kimberlite Exploration JV will be
45
Lucapa Diamond Company Limited | Annual Report 2023 | Financial Report
For the year ended 31 December 2023
signed with Lucapa to receive a majority stake in the
JV. Mothae, Lesotho
Company structuring and securing an appropriate
funding solution to maximise the benefits for all
Brooking, Western Australia
stakeholders.
Lucapa and its Lesotho Government partner will
review the current marginal performance of the
mine. Strategic decisions regarding the future of
Mothae will be considered post the review.
Lucapa will continue to build on its marketing
Merlin Diamonds, Northern Territory, Australia
activities and cutting and polishing partnership.
The Merlin Feasibility Study detailing the smaller
scale
low-cost development pathway will be
completed and an investment decision will be made.
Directors’ Interest
The development of Merlin is dependent on the
The Board will decide whether to continue with a
program of work following examination of recent
Orapa Area F, Botswana
sample analysis.
Exploration drilling at the 100% owned Orapa Area
F project in Botswana will be carried out in Q1 2024.
A decision will be made to renew the exploration
licence in mid-2024.
The relevant interest of each Director in the shares and options over such instruments issued by the Company
and other related bodies corporate, as notified by the Directors to the ASX in accordance with S205G(1) of the
Corporations Act 2001, at the date of this report is as follows:
Director
M Kennedy
N Selby
R Stanley
Fully paid
ordinary shares
3,116,819
2,187,350
87,156,600
Performance
rights - various
expiry dates (1)
-
7,176,494
-
Performance rights issued following shareholder approval at the
annual general meeting held 30 May 2022, subject to various vesting
1
conditions.
Share Options and Performance Rights
Unissued Shares Under Options and Performance Rights
At the date of this report unissued ordinary shares of the Company under option and performance rights are set
out below. These options and performance rights over unissued shares do not entitle the holder to participate in
any share issue of the Company or any other body corporate.
Expiry date
Share options
Exercise price
(A$)
Number of
securities
Quoted
30 July 2025
Performance rights
Various expiry dates (1)
$0.08
5,000,000
$0.00 62,565,059
-
-
Performance rights issued following shareholder approval at the annual general meetings held 30 May
2022 and 30 May 2023, subject to various vesting conditions
1
.
46
Financial Report
For the year ended 31 December 2023
Remuneration Report (Audited)
Principles of Compensation
excluding
the
fair value of any options or
Key management personnel (“KMP”) have authority
performance rights granted. Directors’ fees cover all
and responsibility for planning, directing and
main Board activities and membership of any
controlling the activities of the Group, including
committee and subsidiary Boards. The Board has no
Directors of the Company and other Executive
established retirement (other than superannuation)
management. Currently, KMP comprises
the
or redundancy schemes in relation to Directors. The
Directors of the Company, the Company Secretary
Directors’ contracts contain a service bonus in the
and the Chief Technical Officer, Mr Neil Kaner.
event of a takeover or change of control, subject to
Use of Remuneration Consultants
shareholder approval where required.
Compensation levels for KMP are competitively set
to attract and retain appropriately qualified and
experienced Directors and Executives. The Directors
The Board has previously engaged an independent
of the Company obtain independent advice on the
remuneration consultant, BDO Reward WA Pty
appropriateness of compensation packages of KMP
Limited (BDO) to review the pay and rewards for
given trends in comparative companies both locally
Directors
and
senior
executives
including
and internationally, and the objectives of the Group’s
independent benchmarking as
the Company
compensation strategy.
The compensation structures are designed to attract
and retain suitably qualified industry experts and
candidates, reward the achievement of strategic
objectives, and achieve the broader outcome of
continues to maximise operating performance from
its existing mines and exploration programs and
moves toward the development of the Merlin Project
in the Northern Territory, Australia.
The recommendations were incorporated into the
creation of value for shareholders. Compensation
Group’s Incentive and Retention Plan (Plan), which
packages include a mix of
fixed compensation,
was approved by shareholders at the annual general
equity-based compensation as well as employer
Equity-based Compensation
meeting held on 30 May 2022.
contributions to superannuation funds.
Shares, options and performance rights may only be
issued
to Directors subject
to approval by
Fixed Compensation
shareholders at a general meeting.
Fixed compensation consists of base compensation,
determined from a market review, to reflect core
performance requirements and expectations of the
relevant
position
and
statutory
employer
contributions
to
superannuation
funds.
Compensation levels
are
generally
reviewed
annually by the Board through a process that
considers individual, segment, comparable peers
Directors’ Fees
and overall performance of the Group.
Total compensation for Directors is set based on
advice from external advisors with reference to fees
paid to other Directors of comparable companies.
Non-Executive Directors’ fees are presently limited
to an aggregate total of US$500,000 per annum,
The purpose of
the Plan is to assist in the
incentivisation, reward and retention of Directors
and management, align their interests with those of
the shareholders of the Company and to focus on the
Company’s development strategy through the award
of equity-based incentives in the form of options or
Short-term and Long-term Incentive Structure and
performance rights.
Consequences of Performance on Shareholder Wealth
Given the Group’s principal activities during the
course of
the
financial period consisting of
exploration, evaluation, development and mining of
mineral
resources,
successful
expansion and
acquisition workstreams, the Board has for 2023
given significance to service criteria, performance
criteria and overall market related criteria in setting
the Group’s incentive and retention schemes.
| Lucapa Diamond Company Limited | Annual Report 2023
signed with Lucapa to receive a majority stake in the
Company structuring and securing an appropriate
Principles of Compensation
Remuneration Report (Audited)
Financial Report
For the year ended 31 December 2023
Key management personnel (“KMP”) have authority
and responsibility for planning, directing and
controlling the activities of the Group, including
Directors of the Company and other Executive
the
management. Currently, KMP comprises
Directors of the Company, the Company Secretary
and the Chief Technical Officer, Mr Neil Kaner.
Compensation levels for KMP are competitively set
to attract and retain appropriately qualified and
experienced Directors and Executives. The Directors
of the Company obtain independent advice on the
appropriateness of compensation packages of KMP
given trends in comparative companies both locally
and internationally, and the objectives of the Group’s
compensation strategy.
The compensation structures are designed to attract
and retain suitably qualified industry experts and
candidates, reward the achievement of strategic
objectives, and achieve the broader outcome of
creation of value for shareholders. Compensation
packages include a mix of fixed compensation,
equity-based compensation as well as employer
contributions to superannuation funds.
Shares, options and performance rights may only be
issued
to approval by
Fixed Compensation
shareholders at a general meeting.
to Directors subject
JV.Mothae, Lesotho
funding solution to maximise the benefits for all
Brooking, Western Australia
stakeholders.
Lucapa and its Lesotho Government partner will
review the current marginal performance of the
The Board will decide whether to continue with a
mine. Strategic decisions regarding the future of
program of work following examination of recent
Mothae will be considered post the review.
Orapa Area F, Botswana
sample analysis.
Lucapa will continue to build on its marketing
Merlin Diamonds, Northern Territory, Australia
activities and cutting and polishing partnership.
The Merlin Feasibility Study detailing the smaller
scale
low-cost development pathway will be
completed and an investment decision will be made.
Directors’ Interest
The development of Merlin is dependent on the
Exploration drilling at the 100% owned Orapa Area
F project in Botswana will be carried out in Q1 2024.
A decision will be made to renew the exploration
licence in mid-2024.
The relevant interest of each Director in the shares and options over such instruments issued by the Company
and other related bodies corporate, as notified by the Directors to the ASX in accordance with S205G(1) of the
Corporations Act 2001, at the date of this report is as follows:
Fully paid
ordinary shares
3,116,819
2,187,350
87,156,600
Performance
rights - various
expiry dates (1)
7,176,494
-
-
Director
M Kennedy
N Selby
R Stanley
conditions.
Performance rights issued following shareholder approval at the
1
annual general meeting held 30 May 2022, subject to various vesting
Share Options and Performance Rights
Unissued Shares Under Options and Performance Rights
At the date of this report unissued ordinary shares of the Company under option and performance rights are set
out below. These options and performance rights over unissued shares do not entitle the holder to participate in
any share issue of the Company or any other body corporate.
Exercise price
(A$)
Number of
securities
Quoted
Expiry date
Share options
30 July 2025
Performance rights
Various expiry dates (1)
$0.08
5,000,000
$0.00 62,565,059
-
-
Performance rights issued following shareholder approval at the annual general meetings held 30 May
1
2022 and 30 May 2023, subject to various vesting conditions
.
Fixed compensation consists of base compensation,
determined from a market review, to reflect core
performance requirements and expectations of the
employer
and
relevant
funds.
contributions
Compensation
reviewed
annually by the Board through a process that
considers individual, segment, comparable peers
Directors’ Fees
and overall performance of the Group.
superannuation
levels are generally
position
to
statutory
Total compensation for Directors is set based on
advice from external advisors with reference to fees
paid to other Directors of comparable companies.
Non-Executive Directors’ fees are presently limited
to an aggregate total of US$500,000 per annum,
Financial Report
For the year ended 31 December 2023
the
excluding
fair value of any options or
performance rights granted. Directors’ fees cover all
main Board activities and membership of any
committee and subsidiary Boards. The Board has no
established retirement (other than superannuation)
or redundancy schemes in relation to Directors. The
Directors’ contracts contain a service bonus in the
event of a takeover or change of control, subject to
Use of Remuneration Consultants
shareholder approval where required.
and
The Board has previously engaged an independent
remuneration consultant, BDO Reward WA Pty
Limited (BDO) to review the pay and rewards for
including
Directors
independent benchmarking as
the Company
continues to maximise operating performance from
its existing mines and exploration programs and
moves toward the development of the Merlin Project
in the Northern Territory, Australia.
executives
senior
The recommendations were incorporated into the
Group’s Incentive and Retention Plan (Plan), which
was approved by shareholders at the annual general
Equity-based Compensation
meeting held on 30 May 2022.
The purpose of the Plan is to assist in the
incentivisation, reward and retention of Directors
and management, align their interests with those of
the shareholders of the Company and to focus on the
Company’s development strategy through the award
of equity-based incentives in the form of options or
Short-term and Long-term Incentive Structure and
performance rights.
Consequences of Performance on Shareholder Wealth
the
Given the Group’s principal activities during the
financial period consisting of
course of
exploration, evaluation, development and mining of
mineral resources, successful expansion and
acquisition workstreams, the Board has for 2023
given significance to service criteria, performance
criteria and overall market related criteria in setting
the Group’s incentive and retention schemes.
47
Lucapa Diamond Company Limited | Annual Report 2023 | remuneration
The Board does not consider the Group’s earnings to
be the only appropriate key performance indicator
for setting remuneration packages. In addition, the
issue of options and performance rights as part of
Directors,
the
management, employees and contractors is an
established practice
exploration,
for
development and mining companies and has the
benefit of conserving cash whilst appropriately
rewarding and retaining the recipient.
package
listed
of
Financial Report
For the year ended 31 December 2023
•
LTI’s
Absolute Shareholder return
A Performance Right is exercisable, at no cost, on
satisfaction of relevant performance hurdles, into a
Share. The Performance Rights proposed to be
granted to the Executive Directors will vest based on
the achievement of short term, project based and
hurdles
long-term
respectively and as a key staff retention mechanism,
employment with the Company at time of vesting.
performance
incentive
In circumstances where cash flow permits, the Board
may approve the payment of a discretionary cash
bonus as a reward for performance.
In considering the relationship between the Group’s
remuneration policy and the consequences for the
Company’s shareholder wealth, changes in the
Company’s share price are also considered.
The Board currently monitors and reviews the
remuneration level and policy of the Group as the
Company does not have a Remuneration Committee
given the size of the Board. However it is intended
that a Remuneration Committee will be established
comprised by a majority of independent Directors as
the Company transitions to become a mid-tier
Remuneration Outcomes (FY23)
producer and explorer.
The Board believes that the current remuneration
framework is appropriate and fit-for-purpose based
on the Company’s development and growth profile
and to drive and deliver the outcomes desired by all
shareholders.
The FY23 framework for STI’s in the form of cash
and equity and LTI’s in the form of equity, were to be
measured against the Company’s relevant targets
and individual key performance indicators (KPI’s) in
FY23 such as:
•
STI’s
o
Company Targets
o
Production
o
Operating and Capital Expenditures
o
ESG/ Safety
Exploration
•
Individual KPI’s for participants in the Incentive
Plan
48
Details for the remuneration outcomes for the year
EXECUTIVE FIXED REMUNERATION
ended 31 December 2023 are summarised below.
In FY23, Mr Selby’s total annual fixed remuneration
was adjusted for inflation and for his appointment as
Managing Director/ Chief Executive Officer to
A$595,000 and former Managing Director/ Chief
Executive Officer Mr Wetherall’s total annual fixed
remuneration was adjusted for the
increased
EXECUTIVE INCENTIVES
superannuation guarantee to A$717,851.
Short-term incentives (‘STI’)
The Company’s STI framework was established in
FY22 following the recommendations from BDO
whereby performance measures set for the KMP and
key staff based upon the Company’s relevant targets
for the year in relation to production, operating &
capital expenditure, ESG/safety and exploration,
together with personal performance indicators
(KPIs). STI’s for FY23 consist of equity-based
incentives in the form of performance rights (67%)
and cash bonuses (33%). Performance rights were
planned to be issued to Mr Selby (4,410,998) and Mr
Wetherall (7,557,780) and included for shareholder
approval in the notice of meeting for the Company’s
AGM on 30 May 2023. However, the relevant
resolutions were withdrawn before the meeting at
the request of Mr Selby and Mr Wetherall and STI
performance rights were only issued to key staff in
FY23. Ninety-four and a half percent of the STI
measures were achieved in FY23 and a cash bonus
was awarded to executive director Mr Selby
(A$84,911) and to key staff.
In addition, a
discretionary bonus of A$167,618 was awarded by
the Board to Mr Selby following his appointment as
Managing Director/ Chief Executive Officer and in
lieu of the withdrawn performance rights.
The results of the FY23 STI incentive are as follows:
target
Vesting
Final
%
Milestones
weighting
achieved
%
award %
% of
Production (carats)
17.5%
Operating expenditure
Capital expenditure
- SML
- Mothae
- SML
- Mothae
- SML
- Mothae
ESG
- SML
- Mothae
Social - ESG plan
Environmental - zero
major incidents
- SML
- Mothae
Safety - LTIFR
- SML
- Mothae
- Brooking, Merlin &
Corporate
Exploration plans
- Lulo
- Merlin
- Brooking
Personal KPIs
8.8%
8.8%
8.8%
4.4%
4.4%
8.8%
4.4%
4.4%
17.5%
2.2%
2.2%
2.2%
2.2%
2.9%
2.9%
2.9%
17.5%
8.8%
4.4%
4.4%
30%
100%
Total Company Targets
70.0%
Long-term incentives (‘LTI’)
98.7% 100.0% 8.8%
111.5% 100.0% 8.8%
84.8% 100.0% 4.4%
94.2% 100.0% 4.4%
82.1% 100.0% 4.4%
34.4% 100.0% 4.4%
100% 2.2%
100% 2.2%
100% 2.2%
100% 2.2%
100% 2.9%
100% 2.9%
100% 2.9%
100% 8.8%
0% 0.0%
100% 4.4%
65.6%
96% 28.9%
94.5%
Performance rights with various vesting conditions
and performance milestones
relating to the
Company’s Absolute Shareholder Return, were
planned to be issued to Mr Selby (3,950,147) and Mr
Wetherall (7,520,179) and included for shareholder
approval in the notice of meeting for the Company’s
AGM on 30 May 2023. However, the relevant
resolutions were withdrawn before the meeting at
the request of Mr Selby and Mr Wetherall and LTI
performance rights were only issued to key staff in
FY23.
Financial Report
NON-EXECUTIVE DIRECTOR REMUNERATION
For the year ended 31 December 2023
In FY23 Mr Kennedy and Mr Stanley’s total fixed
remuneration was adjusted
for
inflation
to
Service contracts (as at the date of these financial
A$208,435 and A$127,827 respectively.
statements)
NICK SELBY
Mr Selby has been engaged to act as the Company’s
Managing Director/ Chief Executive Officer. Mr Selby
is entitled to receive remuneration of A$595,000
(gross, including superannuation) per annum which
is subject to review by the Board from time to time.
He will be eligible to participate in any future
incentive and retention plans implemented by the
Board. Shareholder approval will be sought for his
participation in any incentive plan involving equity
of
the Company. The appointment may be
terminated for various causes of a standard nature.
Upon termination, no benefits are due unless
MILES KENNEDY
approved by shareholders.
Mr Kennedy has been engaged to act as the
Company’s non-executive Chairman. Mr Kennedy is
entitled to receive Director fees of A$208,435
(gross) per annum, which is subject to review by the
Board from time to time. The appointment may be
terminated for various causes of a standard nature.
Upon termination, no benefits are due unless
approved by shareholders. Mr Kennedy is entitled to
be reimbursed all his travel, accommodation, food
and other expenses in the conduct of his role as non-
executive Chairman of the Company and to a rate of
A$500 a day in respect of each day worked by him in
ROSS STANLEY
excess of 4 days in any calendar month.
Mr Stanley has been engaged to act as a non-
executive Director of the Company. Mr Stanley is
entitled to receive Director fees of A$127,827
(gross) per annum, which is subject to review by the
Board from time to time. The appointment may be
terminated for various causes of a standard nature.
Upon termination, no benefits are due unless
approved by shareholders.
| Lucapa Diamond Company Limited | Annual Report 2023 The Board does not consider the Group’s earnings to
•
LTI’s
be the only appropriate key performance indicator
Absolute Shareholder return
Managing Director/ Chief Executive Officer and in
lieu of the withdrawn performance rights.
% of
target
achieved
Vesting
%
Production (carats)
- SML
- Mothae
Operating expenditure
The results of the FY23 STI incentive are as follows:
Final
%
Milestones
award %
weighting
17.5%
8.8%
8.8%
8.8%
4.4%
4.4%
8.8%
4.4%
4.4%
17.5%
84.8% 100.0% 4.4%
94.2% 100.0% 4.4%
98.7% 100.0% 8.8%
111.5% 100.0% 8.8%
82.1% 100.0% 4.4%
34.4% 100.0% 4.4%
- SML
- Mothae
- SML
- Mothae
Capital expenditure
ESG
Social - ESG plan
- SML
- Mothae
Environmental - zero
major incidents
- SML
- Mothae
Safety - LTIFR
- SML
- Mothae
- Brooking, Merlin &
Corporate
Exploration plans
- Lulo
- Merlin
- Brooking
Total Company Targets
Personal KPIs
2.2%
2.2%
2.2%
2.2%
2.9%
2.9%
2.9%
17.5%
8.8%
4.4%
4.4%
70.0%
30%
100%
Long-term incentives (‘LTI’)
100% 2.2%
100% 2.2%
100% 2.2%
100% 2.2%
100% 2.9%
100% 2.9%
100% 2.9%
100% 8.8%
0% 0.0%
100% 4.4%
65.6%
96% 28.9%
94.5%
to
Performance rights with various vesting conditions
and performance milestones relating
the
Company’s Absolute Shareholder Return, were
planned to be issued to Mr Selby (3,950,147) and Mr
Wetherall (7,520,179) and included for shareholder
approval in the notice of meeting for the Company’s
AGM on 30 May 2023. However, the relevant
resolutions were withdrawn before the meeting at
the request of Mr Selby and Mr Wetherall and LTI
performance rights were only issued to key staff in
FY23.
The Board currently monitors and reviews the
Executive Officer Mr Wetherall’s total annual fixed
remuneration level and policy of the Group as the
remuneration was adjusted for the
increased
EXECUTIVE INCENTIVES
superannuation guarantee to A$717,851.
Short-term incentives (‘STI’)
Financial Report
For the year ended 31 December 2023
A Performance Right is exercisable, at no cost, on
satisfaction of relevant performance hurdles, into a
Share. The Performance Rights proposed to be
granted to the Executive Directors will vest based on
the achievement of short term, project based and
long-term
incentive
performance
hurdles
respectively and as a key staff retention mechanism,
employment with the Company at time of vesting.
Details for the remuneration outcomes for the year
EXECUTIVE FIXED REMUNERATION
ended 31 December 2023 are summarised below.
In FY23, Mr Selby’s total annual fixed remuneration
was adjusted for inflation and for his appointment as
Managing Director/ Chief Executive Officer to
A$595,000 and former Managing Director/ Chief
The Company’s STI framework was established in
FY22 following the recommendations from BDO
whereby performance measures set for the KMP and
key staff based upon the Company’s relevant targets
for the year in relation to production, operating &
capital expenditure, ESG/safety and exploration,
together with personal performance indicators
(KPIs). STI’s for FY23 consist of equity-based
incentives in the form of performance rights (67%)
and cash bonuses (33%). Performance rights were
planned to be issued to Mr Selby (4,410,998) and Mr
Wetherall (7,557,780) and included for shareholder
approval in the notice of meeting for the Company’s
AGM on 30 May 2023. However, the relevant
resolutions were withdrawn before the meeting at
the request of Mr Selby and Mr Wetherall and STI
performance rights were only issued to key staff in
FY23. Ninety-four and a half percent of the STI
measures were achieved in FY23 and a cash bonus
was awarded to executive director Mr Selby
(A$84,911) and to key staff.
In addition, a
discretionary bonus of A$167,618 was awarded by
the Board to Mr Selby following his appointment as
for setting remuneration packages. In addition, the
issue of options and performance rights as part of
the
remuneration
package
of
Directors,
management, employees and contractors is an
established practice
for
listed
exploration,
development and mining companies and has the
benefit of conserving cash whilst appropriately
rewarding and retaining the recipient.
In circumstances where cash flow permits, the Board
may approve the payment of a discretionary cash
bonus as a reward for performance.
In considering the relationship between the Group’s
remuneration policy and the consequences for the
Company’s shareholder wealth, changes in the
Company’s share price are also considered.
Company does not have a Remuneration Committee
given the size of the Board. However it is intended
that a Remuneration Committee will be established
comprised by a majority of independent Directors as
the Company transitions to become a mid-tier
Remuneration Outcomes (FY23)
producer and explorer.
The Board believes that the current remuneration
framework is appropriate and fit-for-purpose based
on the Company’s development and growth profile
and to drive and deliver the outcomes desired by all
shareholders.
The FY23 framework for STI’s in the form of cash
and equity and LTI’s in the form of equity, were to be
measured against the Company’s relevant targets
and individual key performance indicators (KPI’s) in
FY23 such as:
•
STI’s
Company Targets
Production
•
ESG/ Safety
Exploration
o
o
o
o
Plan
Operating and Capital Expenditures
Individual KPI’s for participants in the Incentive
Financial Report
NON-EXECUTIVE DIRECTOR REMUNERATION
For the year ended 31 December 2023
In FY23 Mr Kennedy and Mr Stanley’s total fixed
remuneration was adjusted
to
Service contracts (as at the date of these financial
A$208,435 and A$127,827 respectively.
statements)
inflation
for
NICK SELBY
Mr Selby has been engaged to act as the Company’s
Managing Director/ Chief Executive Officer. Mr Selby
is entitled to receive remuneration of A$595,000
(gross, including superannuation) per annum which
is subject to review by the Board from time to time.
He will be eligible to participate in any future
incentive and retention plans implemented by the
Board. Shareholder approval will be sought for his
participation in any incentive plan involving equity
of
the Company. The appointment may be
terminated for various causes of a standard nature.
Upon termination, no benefits are due unless
MILES KENNEDY
approved by shareholders.
Mr Kennedy has been engaged to act as the
Company’s non-executive Chairman. Mr Kennedy is
entitled to receive Director fees of A$208,435
(gross) per annum, which is subject to review by the
Board from time to time. The appointment may be
terminated for various causes of a standard nature.
Upon termination, no benefits are due unless
approved by shareholders. Mr Kennedy is entitled to
be reimbursed all his travel, accommodation, food
and other expenses in the conduct of his role as non-
executive Chairman of the Company and to a rate of
A$500 a day in respect of each day worked by him in
ROSS STANLEY
excess of 4 days in any calendar month.
Mr Stanley has been engaged to act as a non-
executive Director of the Company. Mr Stanley is
entitled to receive Director fees of A$127,827
(gross) per annum, which is subject to review by the
Board from time to time. The appointment may be
terminated for various causes of a standard nature.
Upon termination, no benefits are due unless
approved by shareholders.
49
Lucapa Diamond Company Limited | Annual Report 2023 |
Financial Report
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a
s
n
o
i
t
p
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e
m
y
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p
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e
n
o
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t
a
u
n
n
a
r
e
p
u
S
Full Year Group production guidance
e
c
n
achieved;
a
m
r
Rough diamond revenue: US$102.2 million
o
f
r
e
(A$154.3 million) on a 100% basis at an
p
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
:
s
e
t
r
100% basis;
i
t
a
s
f
e
o
y
n
P
Attributable Rough diamond
n
e
b
a
p
US$48.4 million (A$72.9 million);
m
o
Attributable EBITDA: US$8.3 million (A$12.9
C
e
million);
h
t
f
s
63,469 carats recovered on a 100% basis;
o
t
i
P
f
e
Lulo recovered 5 +100 carat diamonds for
M
n
e
K
b
the year and a total of 30,585 carats;
h
m
c
r
Mothae recovered a total of 32,884 carats;
a
e
e
t
-
f
t
Repatriation of US$7.9 million (A$11.9
o
r
o
)
h
D
million) in capital loan repayments and SML
S
S
U
dividends;
n
i
Group is debt free after expunging interest-
(
n
o
bearing debt in Q3;
i
t
a
Mothae set new records for tonnes mined
r
e
n
and processed;
u
m
Lulo Kimberlite Exploration program
e
r
f
diamondiferous
15
discovered
o
t
n
kimberlite;
e
m
Merlin Diamond Project Feasibility Study
e
l
e
low-cost, small-scale study
pivoted to
r
r
o
o
t
option; and
j
c
a
e
m
r
Di
Nick Selby appointed CEO and MD.
h
g
c
n
a
g
e
a
f
n
o
a
M
t
n
u
o
m
a
d
n
a
e
r
u
t
a
n
e
h
t
Lulo Alluvial Mine achieved 9% higher
processing volumes for the year compared to
e
n
the previous year due to the recent
n
s
o
n
u
r
s
investment in new plant and fleet;
o
o
c
r
e
e
t
i
c
p
x
t
e
a
E
Mothae set new records for tonnes mined
r
t
r
i
n
D
e
e
e
(up 23% yoy) and processed (up 22% yoy)
n
e
m
h
v
u
C
e
i
m
t
g
the
improvements made
following
u
a
c
e
n
e
R
a
processing plant in 2022;
x
E
m
P
-
n
y
The Lulo Kimberlite Bulk Sampling Program
M
o
e
K
N
K
processed a total of 26 samples during the
year, or one every two weeks;
e
to
W
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h
p
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t
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r
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g
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i
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-
-
•
•
9
7
1
8
1
6
3
7
5
0
9
7
3
6
3
7
3
3
7
4
5
2
0
9
5
1,
1
1
6
1
7
4
2
3
The
exploration program identified 6
diamondiferous kimberlites during the year
7
8
8
taking the total to 15;
1,
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
2
3
3
4
2
2
4
0
0
5
5
1
9
8
3
7
4
5
4
4
5
3
7
8
5
9
7
2
9
0
9
1
6
5
4
7
7
9
2
3
0
1
4
4
1
8
1
9
7
1
8
•
•
-
-
-
-
,
,
,
,
,
,
,
,
,
,
,
,
7
4
1
,
3
6
8
7
4
,
3
7
2
2
c
e
D
3
2
c
e
D
7
6
4
,
5
6
5
7
2
,
6
7
2
1
6
6
,
3
7
2
2
3
8
,
7
0
3
1,
1
8
9
,
0
9
3
1,
Overall, the diamond market in 2023 could be
1
4
7
1,
as
described
and
volatile. Macro-economic
7
geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
3
2
quality and exceptional rough diamonds felt less
c
e
D
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
3
2
c
e
D
2
2
c
e
D
3
2
c
e
D
2
2
c
e
D
2
2
c
e
D
l
l
t
i
f
i
t
r
e
c
y
r
a
e
n
n
o
s
r
e
P
From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
r
o
t
c
e
r
Di
The G7 Countries (including the European Union)
e
v
announced in December a ban on Russian diamonds
u
c
followed by a phase-in of restrictions on the
e
x
E
importation of Russian diamonds and diamond
-
n
o
jewellery from the beginning of 2024. The sanctions
N
,
y
n
are designed to curb Russia’s ability to continue to
e
e
m
n
finance the invasion of Ukraine.
a
e
Cl
S
s
k
s
r
a
o
M
R
t
n
e
m
e
g
a
n
a
M
y
e
K
r
e
h
t
O
e
r
c
e
S
y
n
a
p
m
o
C
Of
a
c
n
h
c
e
T
,
r
e
n
a
K
a
t
o
T
e
h
C
e
N
,
s
t
l
i
t
f
l
l
i
i
-
-
4
4
1
8
1
,
0
5
9
4
1
,
-
-
5
7
5
,
4
1
1
8
9
7
1,
1
1
3
2
c
e
D
2
2
c
e
D
n
a
m
r
i
a
h
C
e
v
i
t
u
c
e
x
E
-
n
o
N
,
y
d
e
n
n
e
K
s
e
l
i
M
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
•
Financial Report
For the year ended 31 December 2023
Equity Investments
Other Key Management Personnel
Other Key Management Personnel
Resigned 31 July 2023
1
MOVEMENTS IN SHARES
.
follows:
2023
Directors
M Kennedy
N Selby
R Stanley
S Wetherall (1)
N Kaner
M Clements
2022
Directors
M Kennedy
S Wetherall
N Selby
R Stanley
N Kaner
M Clements
Directors
2023
Directors
M Kennedy
N Selby
R Stanley
S Wetherall (1)
N Kaner
M Clements
2022
Directors
M Kennedy
S Wetherall
N Selby
R Stanley
N Kaner
M Clements
Other Key Management Personnel
Other Key Management Personnel
Resigned 31 July 2023
1
.
All options refer to options and performance rights over ordinary shares of the Company, which are exercisable
Analysis of movements in options, performance rights and shares
on a one-for-one basis.
OPTIONS AND PERFORMATION RIGHTS OVER EQUITY INSTRUMENTS
The movement during the reporting period in the number of options and performance rights over ordinary
shares in the Company held, directly, indirectly or beneficially, by each KMP, including their related parties, is as
Exercise of
Held at 31
Held at
1 January
options and
Options and
performance
Expired without
performance
December
or date of
Options acquired
rights
exercise
rights granted
resignation
Vested &
exercisable
-
-
7,644,300
14,234,220
6,600,546
1,523,104
525,026
445,850
297,892
9,287,683
597,317
163,303
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(467,806)
(9,333,469)
(525,026)
(445,850)
(297,892)
(9,287,683)
-
-
-
-
-
-
-
-
-
-
-
-
7,176,494
1,200,494
4,900,751
4,900,751
(403,931)
(93,209)
4,195,278
900,113
10,391,893
2,330,008
1,036,579
239,195
-
-
-
-
-
-
-
-
-
-
14,234,220
7,644,300
14,234,220
7,644,300
(597,317)
(163,303)
6,600,546
1,523,104
6,600,546
1,523,104
-
-
-
-
-
-
-
-
The movement during the reporting period in the number of ordinary shares in the Company held, directly,
Received upon
indirectly or beneficially, by each KMP, including their related parties, is as follows:
exercise of
Held at 31
Held at
1 January
options and
performance
rights
Sales
Purchases
December
or date of
resignation
3,116,819
2,187,350
80,940,347
4,425,100
3,583,900
1,159,817
3,116,819
4,425,100
2,187,350
67,607,014
3,583,900
1,159,817
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,216,253
13,333,333
-
-
-
-
-
-
-
-
-
-
3,116,819
2,187,350
87,156,600
4,425,100
3,583,900
1,159,817
3,116,819
4,425,100
2,187,350
80,940,347
3,583,900
1,159,817
End of audited section.
No shares were granted to KMP during the reporting period as compensation in 2023 or 2022.
| Lucapa Diamond Company Limited | Annual Report 2023
3
2
0
2
e
b
m
e
c
e
1
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
F
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
t
r
o
p
e
R
l
a
i
c
n
a
n
i
F
2023 Group Highlights
r
2023 Group highlights include:
D
2
0
1
,
9
7
•
•
•
1
6
3
,
7
•
•
)
$
S
U
(
l
a
t
o
T
s
t
i
f
e
n
s
u
o
B
e
e
&
a
l
a
S
The
exploration program identified 6
diamondiferous kimberlites during the year
0
7
3
3
6
9
7
1
7
4
8
8
1
7
taking the total to 15;
1,
1,
5
7
4
8
,
,
,
,
6
3
3
9
5
1
1
2
2
3
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
4
smaller-scale pathway to development;
4
8
5
9
6
2
1
,
0
-
-
4
,
,
8
Advanced the exploration projects in Angola,
1
7
9
7
9
7
1
7
5
,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
9
5
9
9
2
4
polishing partnership; and
8
1
2
7
0
3
4
3
3
4
3
,
,
7
,
5
,
0
8
,
4
0
,
5
1
2
Improved safety performance at both
4
1
5
2
3
7
7
5
,
9
6
1,
8
0
7
,
7
1
6
9
,
5
0
1
Full Year Group production guidance
d
d
0
5
9
e
e
c
9
-
-
-
-
achieved;
d
l
t
t
e
s
-
i
u
E
e
s
a
b
e
a
h
s
t
n
e
m
a
p
n
a
s
n
o
t
p
n
a
m
r
r
e
1)
(
s
t
h
r
Rough diamond revenue: US$102.2 million
o
g
y
y
r
t
f
i
i
(A$154.3 million) on a 100% basis at an
O
q
p
s
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
n
0
1
0
1
:
t
,
,
i
4
4
2
9
8
1
,
9
1
0
2
5
1
2
9
,
9
1
4
4
1
,
8
1
0
5
9
,
4
1
5
0
9
,
7
100% basis;
a
t
s
e
r
y
o
P
s
t
i
f
e
n
t
e
m
y
o
m
Attributable Rough diamond
n
p
e
e
r
l
b
b
revenue:
US$48.4 million (A$72.9 million);
u
e
Attributable EBITDA: US$8.3 million (A$12.9
C
0
4
0
n
o
a
u
n
n
a
e
p
S
million);
63,469 carats recovered on a 100% basis;
o
n
t
s
Lulo recovered 5 +100 carat diamonds for
M
n
the year and a total of 30,585 carats;
h
Mothae recovered a total of 32,884 carats;
a
e
3
7
9
e
s
8
t
7
3
Repatriation of US$7.9 million (A$11.9
o
o
2
3
7
4
r
f
,
,
,
million) in capital loan repayments and SML
S
y
r
5
,
3
3
4
6
4
6
8
2
3
2
5
6
4
i
f
e
e
b
m
r
-
t
h
dividends;
Group is debt free after expunging interest-
(
1
6
,
6
6
1
5
0
1,
4
3
3
,
0
7
-
-
-
-
-
Diamond market
operations.
bearing debt in Q3;
t
i
Mothae set new records for tonnes mined
e
n
e
e
e
e
e
r
c
c
c
c
r
d
o
i
d
e
d
P
e
3
2
2
2
3
2
2
2
D
D
D
D
3
2
c
e
D
2
2
c
e
D
3
2
2
2
e
D
e
D
3
2
2
2
3
2
2
2
3
2
2
2
e
D
e
D
e
D
e
D
e
D
e
D
8
Overall, the diamond market in 2023 could be
1
1
8
5
7
7
4
2
1
6
5
7
5
,
4
1
1
8
9
7
1,
1
1
7
4
7
7
,
described
7
3
1,
7
2
,
6
7
2
6
4
,
5
6
6
,
3
as
7
2
4
1
,
6
9
3
8
9
3
0
3
,
3
volatile. Macro-economic
0
7
,
and
geopolitical
factors contributed to weakness in
1,
1,
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
c
c
c
c
c
c
c
c
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
c
y
t
l
The G7 Countries (including the European Union)
o
r
f
i
i
announced in December a ban on Russian diamonds
S
e
t
l
e
followed by a phase-in of restrictions on the
n
n
a
t
i
-
importation of Russian diamonds and diamond
n
e
e
N
jewellery from the beginning of 2024. The sanctions
e
a
s
f
,
i
are designed to curb Russia’s ability to continue to
M
e
e
,
a
finance the invasion of Ukraine.
n
e
e
t
e
n
n
s
r
P
e
m
g
n
a
y
K
r
e
h
t
O
r
e
c
Of
a
c
h
c
T
h
C
r
e
a
K
l
i
e
N
r
a
t
e
c
e
y
n
p
m
o
C
t
n
m
Cl
k
r
a
M
r
o
e
r
Di
e
v
u
c
x
E
o
,
y
l
n
S
s
s
o
R
l
a
t
o
T
and processed;
u
Lulo Kimberlite Exploration program
e
r
o
th
discovered
o
its
15
diamondiferous
e
r
kimberlite;
e
n
option; and
a
j
Merlin Diamond Project Feasibility Study
e
g
i
pivoted to
r
low-cost, small-scale study
a
3
r
Nick Selby appointed CEO and MD.
In 2023, Lucapa continued to achieve the growth
e
a
g
e
v
n
t
objectives against its goals:
t
Lulo Alluvial Mine achieved 9% higher
o
e
c
f
processing volumes for the year compared to
Of
a
h
u
l
t
i
the previous year due to the recent
n
e
v
x
a
i
investment in new plant and fleet;
o
r
c
r
Mothae set new records for tonnes mined
a
a
r
0
r
t
l
l
f
Of
r
i
n
(up 23% yoy) and processed (up 22% yoy)
m
e
h
e
h
u
n
e
v
i
l
i
m
following
e
improvements made
a
y
,
R
processing plant in 2022;
s
l
a
3
2
2
y
J
1
3
d
e
n
g
i
s
s
r
o
t
c
e
D
e
x
E
-
n
o
N
t
e
to
W
i
t
the
u
c
The Lulo Kimberlite Bulk Sampling Program
M
C
e
e
e
c
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processed a total of 26 samples during the
year, or one every two weeks;
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Financial Report
For the year ended 31 December 2023
1
9
2
,
4
2
6
7
8
3
,
4
9
3
5
2
4
,
4
2
6
9
5
9
,
9
6
5
9
1
7
,
2
3
1
8
4
7
,
6
2
1
4
8
3
1,
8
8
9
3
,
3
5
4
7
7
3
,
6
3
3
9
6
2
1,
0
1
3
1
2
,
3
7
5
8
4
,
7
1
0
,
2
6
8
7
,
9
7
5
1,
Equity Investments
Financial Report
For the year ended 31 December 2023
All options refer to options and performance rights over ordinary shares of the Company, which are exercisable
Analysis of movements in options, performance rights and shares
on a one-for-one basis.
OPTIONS AND PERFORMATION RIGHTS OVER EQUITY INSTRUMENTS
The movement during the reporting period in the number of options and performance rights over ordinary
shares in the Company held, directly, indirectly or beneficially, by each KMP, including their related parties, is as
follows:
Exercise of
options and
performance
rights
Expired without
exercise
Options and
performance
rights granted
Held at 31
December
or date of
resignation
Held at
1 January
Options acquired
Vested &
exercisable
2023
Directors
M Kennedy
N Selby
R Stanley
S Wetherall (1)
Other Key Management Personnel
N Kaner
M Clements
2022
Directors
M Kennedy
S Wetherall
N Selby
R Stanley
Other Key Management Personnel
N Kaner
M Clements
Resigned 31 July 2023
1
MOVEMENTS IN SHARES
.
-
7,644,300
-
14,234,220
6,600,546
1,523,104
525,026
445,850
297,892
9,287,683
597,317
163,303
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(467,806)
-
(9,333,469)
-
-
-
-
(403,931)
(93,209)
4,195,278
900,113
(525,026)
(445,850)
(297,892)
(9,287,683)
-
14,234,220
7,644,300
-
(597,317)
(163,303)
6,600,546
1,523,104
-
7,176,494
-
4,900,751
10,391,893
2,330,008
-
14,234,220
7,644,300
-
6,600,546
1,523,104
-
1,200,494
-
4,900,751
1,036,579
239,195
-
-
-
-
-
-
The movement during the reporting period in the number of ordinary shares in the Company held, directly,
indirectly or beneficially, by each KMP, including their related parties, is as follows:
Received upon
exercise of
options and
performance
rights
Sales
Purchases
Held at 31
December
or date of
resignation
Directors
2023
Directors
M Kennedy
N Selby
R Stanley
S Wetherall (1)
Other Key Management Personnel
N Kaner
M Clements
2022
Directors
M Kennedy
S Wetherall
N Selby
R Stanley
Other Key Management Personnel
N Kaner
M Clements
Resigned 31 July 2023
1
Held at
1 January
3,116,819
2,187,350
80,940,347
4,425,100
3,583,900
1,159,817
3,116,819
4,425,100
2,187,350
67,607,014
3,583,900
1,159,817
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,216,253
-
-
-
-
-
-
13,333,333
-
-
3,116,819
2,187,350
87,156,600
4,425,100
3,583,900
1,159,817
3,116,819
4,425,100
2,187,350
80,940,347
3,583,900
1,159,817
End of audited section.
No shares were granted to KMP during the reporting period as compensation in 2023 or 2022.
.
51
Lucapa Diamond Company Limited | Annual Report 2023 |
Auditor Independence and Non-Audit Services
The Directors received the following declaration from the Company’s auditors, Elderton Audit Pty Ltd:
Financial Report
For the year ended 31 December 2023
IInnddeemmnniiffiiccaattiioonn aanndd IInnssuurraannccee ooff OOffffiicceerrss aanndd DDiirreeccttoorrss
Financial Report
For the year ended 31 December 2023
The Company has entered into deeds of indemnity, insurance and access (“Deeds”) with each of its Directors.
Under these Deeds, the Company indemnifies each Director or officer to the maximum extent permitted by the
Corporations Act 2001 from liability to third parties and in successfully defending legal and administrative
proceedings and applications for such proceedings. The Company must use its best endeavours to insure a
Director or officer against any liability, which does not arise out of conduct constituting a wilful breach of duty
or a contravention of the Corporations Act 2001. The Company must also use its best endeavour to insure a
Director or officer against liability for costs and expenses incurred in defending proceedings whether civil or
criminal.
The Company has, during and since the end of the year, in respect of any person who is an officer of the Company
or a related body corporate, paid a premium in respect of Directors and Officer liability insurance which
indemnifies Directors, officers and the Company of any claims made against the Directors, officers of the
Company and the Company, subject to conditions contained in the insurance policy. The Directors have not
included details of the premium paid in respect of the Directors’ and officers’ liability and legal expenses’
insurance contracts, as such disclosure is prohibited under the terms of the contract.
The Company has not entered into any agreement to indemnify the auditors against any claims by third parties
arising from their reports on the financial report for the year ended 31 December 2023 and prior period ended
31 December 2022.
52
| Lucapa Diamond Company Limited | Annual Report 2023 Under these Deeds, the Company indemnifies each Director or officer to the maximum extent permitted by the
Corporations Act 2001 from liability to third parties and in successfully defending legal and administrative
proceedings and applications for such proceedings. The Company must use its best endeavours to insure a
Director or officer against any liability, which does not arise out of conduct constituting a wilful breach of duty
or a contravention of the Corporations Act 2001. The Company must also use its best endeavour to insure a
Director or officer against liability for costs and expenses incurred in defending proceedings whether civil or
criminal.
The Company has, during and since the end of the year, in respect of any person who is an officer of the Company
or a related body corporate, paid a premium in respect of Directors and Officer liability insurance which
Company and the Company, subject to conditions contained in the insurance policy. The Directors have not
included details of the premium paid in respect of the Directors’ and officers’ liability and legal expenses’
insurance contracts, as such disclosure is prohibited under the terms of the contract.
The Company has not entered into any agreement to indemnify the auditors against any claims by third parties
arising from their reports on the financial report for the year ended 31 December 2023 and prior period ended
31 December 2022.
IInnddeemmnniiffiiccaattiioonn aanndd IInnssuurraannccee ooff OOffffiicceerrss aanndd DDiirreeccttoorrss
Auditor Independence and Non-Audit Services
Financial Report
For the year ended 31 December 2023
Financial Report
For the year ended 31 December 2023
The Company has entered into deeds of indemnity, insurance and access (“Deeds”) with each of its Directors.
The Directors received the following declaration from the Company’s auditors, Elderton Audit Pty Ltd:
indemnifies Directors, officers and the Company of any claims made against the Directors, officers of the
To those charged with the governance of Lucapa Diamond Company Limited
Auditor's Independence Declaration
As auditor for the audit of Lucapa Diamond Company Limited for the year ended 31 December 2023, I declare
that, to the best of my knowledge and belief, there have been:
i.
no contraventions of the independence requirements of the Corporations Act 2001 in relation to the
audit; and
ii.
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Lucapa Diamond Company Limited and the entities it controlled during the year.
Elderton Audit Pty Ltd
Sajjad Cheema
Director
28 February 2024
Perth
53
Lucapa Diamond Company Limited | Annual Report 2023 | Financial Report
For the year ended 31 December 2023
Financial Report
For the year ended 31 December 2023
During the period Elderton Audit Pty Ltd have not performed any other services for the Company in addition to
their statutory audit and as a result the Directors are satisfied that auditors have not compromised the auditor
independence requirements of the Corporations Act 2001.
Details of the amounts paid to the current auditor of the Company, Elderton Audit Pty Ltd are set out below:
Audit services
Other services
31 Dec 2023
31 Dec 2022
US$
40,027
-
40,027
39,652
-
39,652
MILES KENNEDY
Chairman
Dated this 28th FEBRUARY 2024
Signed in accordance with a resolution of the Directors, on behalf of the Directors.
54
| Lucapa Diamond Company Limited | Annual Report 2023
Financial Report
For the year ended 31 December 2023
Financial Report
For the year ended 31 December 2023
During the period Elderton Audit Pty Ltd have not performed any other services for the Company in addition to
Signed in accordance with a resolution of the Directors, on behalf of the Directors.
their statutory audit and as a result the Directors are satisfied that auditors have not compromised the auditor
independence requirements of the Corporations Act 2001.
Details of the amounts paid to the current auditor of the Company, Elderton Audit Pty Ltd are set out below:
Audit services
Other services
31 Dec 2023
31 Dec 2022
US$
40,027
-
40,027
39,652
-
39,652
MILES KENNEDY
Chairman
Dated this 28th FEBRUARY 2024
55
Lucapa Diamond Company Limited | Annual Report 2023 | Consolidated Statement of Other Comprehensive Income
FOR YEAR ENDED 31 DECEMBER 2023
Loss for the period
Other comprehensive income
Total comprehensive loss for the year
Attributable to:
Owners of the Company
Non-controlling interests
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$000
(17,235)
2,471
(14,764)
(7,323)
(7,441)
(14,764)
(15,074)
1,609
(13,465)
(9,236)
(4,229)
(13,465)
The Consolidated Statement of Other Comprehensive Income is to be read in conjunction with the accompanying
notes.
Consolidated Financial Statements
Consolidated Statement of Profit or Loss
FOR YEAR ENDED 31 DECEMBER 2023
Revenue
Cost of sales
Gross profit/ (loss)
Impairment charge
Gross loss after impairment
Share of profit of associate
Royalties and selling expenses
Corporate expenses
Share-based payments
Foreign exchange loss
Operating loss
Finance cost
Finance income
Fair value adjustments
Loss before income tax
Income tax expense
Loss after income tax
Attributable to:
Owners of the Company
Non-controlling interests
Earnings per share
Basic loss per share
Diluted loss per share
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$000
27,999
(27,962)
37
(13,370)
(13,333)
4,195
(1,297)
(3,824)
(741)
(3,855)
(18,855)
(534)
17
2,354
(17,018)
(217)
(17,235)
(9,051)
(8,184)
(17,235)
Cents
(0.63)
(0.60)
23,350
(26,977)
(3,627)
(10,608)
(14,235)
7,660
(1,164)
(3,692)
(70)
(3,880)
(15,381)
(2,063)
12
2,822
(14,610)
(464)
(15,074)
(10,302)
(4,772)
(15,074)
Cents
(0.73)
(0.73)
Note
3
4
4
11
4
13
8
6
7
7
The Consolidated Statement of Profit or Loss is to be read in conjunction with the accompanying notes.
56
| Lucapa Diamond Company Limited | Annual Report 2023
Consolidated Statement of Other Comprehensive Income
FOR YEAR ENDED 31 DECEMBER 2023
Loss for the period
Other comprehensive income
Total comprehensive loss for the year
Attributable to:
Owners of the Company
Non-controlling interests
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$000
(17,235)
2,471
(14,764)
(7,323)
(7,441)
(14,764)
(15,074)
1,609
(13,465)
(9,236)
(4,229)
(13,465)
The Consolidated Statement of Other Comprehensive Income is to be read in conjunction with the accompanying
notes.
Consolidated Financial Statements
Consolidated Statement of Profit or Loss
FOR YEAR ENDED 31 DECEMBER 2023
Revenue
Cost of sales
Gross profit/ (loss)
Impairment charge
Gross loss after impairment
Share of profit of associate
Royalties and selling expenses
Corporate expenses
Share-based payments
Foreign exchange loss
Operating loss
Finance cost
Finance income
Fair value adjustments
Loss before income tax
Income tax expense
Loss after income tax
Attributable to:
Owners of the Company
Non-controlling interests
Earnings per share
Basic loss per share
Diluted loss per share
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
Note
US$000
3
4
4
11
4
13
8
6
7
7
27,999
(27,962)
37
(13,370)
(13,333)
4,195
(1,297)
(3,824)
(741)
(3,855)
(18,855)
(534)
17
2,354
(17,018)
(217)
(17,235)
(9,051)
(8,184)
(17,235)
Cents
(0.63)
(0.60)
23,350
(26,977)
(3,627)
(10,608)
(14,235)
7,660
(1,164)
(3,692)
(70)
(3,880)
(15,381)
(2,063)
12
2,822
(14,610)
(464)
(15,074)
(10,302)
(4,772)
(15,074)
Cents
(0.73)
(0.73)
The Consolidated Statement of Profit or Loss is to be read in conjunction with the accompanying notes.
57
Lucapa Diamond Company Limited | Annual Report 2023 |
Consolidated Statement of Financial Position
AS AT 31 DECEMBER 2023
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
Note
US$000
2023 Group Highlights
2023 Group highlights include:
Assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Inventories
Other current financial assets
Total current assets
Property plant and equipment
Non-current financial assets
Investment in associate
Total non-current assets
Total assets
Liabilities
Trade and other payables
Current borrowings
Total current liabilities
Non-current provisions
Non-current borrowings
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Equity attributable to owners of the Company
Non-controlling interests
Total equity
8a
8b
9
8c
10
8c
11
8d
8e
12
8e
6
13
1,317
2,466
833
2,351
3,923
10,890
51,863
699
18,281
70,843
81,733
8,231
235
8,466
1,956
-
26
1,982
10,448
71,285
154,230
(1,344)
(64,164)
88,722
(17,437)
71,285
6,905
2,412
-
2,359
4,000
15,676
63,110
7,497
15,686
86,293
101,969
7,881
6,393
14,274
2,329
33
26
2,388
16,662
85,307
154,230
(3,798)
(55,129)
95,303
(9,996)
85,307
The Consolidated Statement of Financial Position is to be read in conjunction with the accompanying notes.
58
Financial Report
For the year ended 31 December 2023
•
•
•
•
•
The
exploration program identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
Overall, the diamond market in 2023 could be
described
as
volatile. Macro-economic
and
geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
The G7 Countries (including the European Union)
announced in December a ban on Russian diamonds
followed by a phase-in of restrictions on the
importation of Russian diamonds and diamond
jewellery from the beginning of 2024. The sanctions
are designed to curb Russia’s ability to continue to
finance the invasion of Ukraine.
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
100% basis;
Attributable Rough diamond
revenue:
US$48.4 million (A$72.9 million);
Attributable EBITDA: US$8.3 million (A$12.9
million);
63,469 carats recovered on a 100% basis;
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
bearing debt in Q3;
and processed;
Group is debt free after expunging interest-
Mothae set new records for tonnes mined
Lulo Kimberlite Exploration program
th
discovered
its
15
diamondiferous
kimberlite;
option; and
Merlin Diamond Project Feasibility Study
pivoted to
low-cost, small-scale study
Nick Selby appointed CEO and MD.
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
Lulo Alluvial Mine achieved 9% higher
processing volumes for the year compared to
the previous year due to the recent
investment in new plant and fleet;
Mothae set new records for tonnes mined
(up 23% yoy) and processed (up 22% yoy)
following
improvements made
to
the
processing plant in 2022;
The Lulo Kimberlite Bulk Sampling Program
processed a total of 26 samples during the
year, or one every two weeks;
| Lucapa Diamond Company Limited | Annual Report 2023
Consolidated Statement of Financial Position
AS AT 31 DECEMBER 2023
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
Note
US$000
Assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Inventories
Other current financial assets
Total current assets
Property plant and equipment
Non-current financial assets
Investment in associate
Total non-current assets
Total assets
Liabilities
Trade and other payables
Current borrowings
Total current liabilities
Non-current provisions
Non-current borrowings
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Equity attributable to owners of the Company
Non-controlling interests
Total equity
8a
8b
9
8c
10
8c
11
8d
8e
12
8e
6
13
1,317
2,466
833
2,351
3,923
10,890
51,863
699
18,281
70,843
81,733
8,231
235
8,466
1,956
-
26
1,982
10,448
71,285
154,230
(1,344)
(64,164)
88,722
(17,437)
71,285
6,905
2,412
-
2,359
4,000
15,676
63,110
7,497
15,686
86,293
101,969
7,881
6,393
14,274
2,329
33
26
2,388
16,662
85,307
154,230
(3,798)
(55,129)
95,303
(9,996)
85,307
The Consolidated Statement of Financial Position is to be read in conjunction with the accompanying notes.
2023 Group Highlights
y
t
i
u
q
e
l
a
t
o
T
2023 Group highlights include:
t
r
o
p
e
R
l
a
i
c
n
a
n
F
i
3
2
0
2
r
e
b
m
e
c
e
D
1
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
F
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Financial Report
6
6
1
,
0
9
)
4
7
0
,
5
1
(
9
0
6
1,
)
5
6
4
,
3
1
(
6
5
0
,
9
0
7
)
2
5
1
(
4
)
2
7
3
(
6
0
6
,
8
)
5
3
2
,
7
1
(
1
7
4
,
2
)
4
6
7
,
4
1
(
7
0
3
,
5
8
•
For the year ended 31 December 2023
2
4
7
-
2
4
7
5
8
2
1,
7
-
-
-
-
-
-
-
-
)
6
5
9
,
3
(
8
2
7
1,
8
2
7
1,
)
8
2
2
,
2
(
-
-
-
-
-
)
2
5
1
(
)
2
7
3
(
0
1
-
)
2
6
1
(
-
-
)
2
7
3
(
g
n
s
t
s
e
r
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revenue:
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F
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
100% basis;
Attributable Rough diamond
US$48.4 million (A$72.9 million);
Attributable EBITDA: US$8.3 million (A$12.9
million);
63,469 carats recovered on a 100% basis;
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
d
dividends;
e
s
a
Group is debt free after expunging interest-
b
e
r
a
bearing debt in Q3;
h
S
Mothae set new records for tonnes mined
and processed;
Lulo Kimberlite Exploration program
diamondiferous
15
discovered
y
kimberlite;
t
i
u
Merlin Diamond Project Feasibility Study
q
E
low-cost, small-scale study
pivoted to
n
option; and
i
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Nick Selby appointed CEO and MD.
g
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Lulo Alluvial Mine achieved 9% higher
M
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processing volumes for the year compared to
C
m
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the previous year due to the recent
D
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investment in new plant and fleet;
2
3
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Mothae set new records for tonnes mined
e
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(up 23% yoy) and processed (up 22% yoy)
n
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the
improvements made
following
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p
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processing plant in 2022;
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The Lulo Kimberlite Bulk Sampling Program
l
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processed a total of 26 samples during the
F
year, or one every two weeks;
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The
exploration program identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
)
4
6
1
,
4
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(
)
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Overall, the diamond market in 2023 could be
as
described
and
volatile. Macro-economic
geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
w
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From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
ci
a
p
a
c
r
i
e
h
t
n
The G7 Countries (including the European Union)
announced in December a ban on Russian diamonds
s
s
r
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n
followed by a phase-in of restrictions on the
w
w
o
o
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importation of Russian diamonds and diamond
t
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i
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v
jewellery from the beginning of 2024. The sanctions
s
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e
are designed to curb Russia’s ability to continue to
h
i
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finance the invasion of Ukraine.
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S
59
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
•
Lucapa Diamond Company Limited | Annual Report 2023 |
Consolidated Statement of Cash Flows
FOR YEAR ENDED 31 DECEMBER 2023
Cash flows from operating activities
Receipts from products and related debtors
Cash paid to suppliers and employees
Interest and finance cost
Interest received
Net cash used in operating activities
Cash flows from investing activities
Payments for exploration costs
Payments for development
Dividend and receivable proceeds from associate
Payments for property plant and equipment
Net cash generated from investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Share issue costs
Repayment of borrowings
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Exchange loss on foreign cash balances
Cash and cash equivalents at end of period
Reconciliation of loss after tax to cash flows from operations:
Loss for the period
Adjustments for:
Depreciation expense
Loss on disposal of assets
Impairment
Director and employee options
Exchange gains
Interest and other finance costs paid
Fair value loss on financial assets
Share of loss/ (profit) of associate
Other non cash items
Working Capital adjustments:
Change in inventory
Change in trade and other receivables
Change in trade and other payables relating to operating
activities
Net cash used in operating activities
Financial Report
For the year ended 31 December 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
31 Dec 2023
31 Dec 2022
Note
US$000
11.. BBaassiiss ooff PPrreeppaarraattiioonn
Corporate Information
24,817
(26,739)
(997)
17
(2,902)
(1,031)
(3,345)
7,875
(692)
2,807
-
-
(5,463)
(5,463)
(5,558)
6,905
(30)
1,317
22,669
(24,350)
(1,907)
13
(3,575)
(3,356)
(3,689)
15,818
(1,097)
7,676
9,060
(584)
(12,872)
(4,396)
(295)
7,366
(166)
6,905
(17,235)
(15,074)
5,841
1
13,370
741
29
(463)
(2,354)
(4,195)
(867)
6
(844)
3,068
(2,902)
5,142
131
10,608
70
165
916
(2,822)
(7,660)
(1,368)
725
(3)
5,595
(3,575)
8a
10
4
The Consolidated Statement of Cash Flows is to be read in conjunction with the accompanying notes.
60
Financial Report
For the year ended 31 December 2023
Lucapa to Mothae due to the weakening of the South
African rand against the United States dollar.
Mothae’s results for the year was affected by the low
value of diamond recoveries in Q4. SML reported
another strong year with results in line with
expectations and generated sufficient cash flow for
the payment of a US$7.8 million dividend and
alluvial
investment
loan repayments to Lucapa
during the year.
The Group strengthened its balance sheet during the
year by making the final instalments due to Equigold
and the IDC, leaving the Group debt free, other than
for capitalised lease obligations.
As at 31 December 2023, after taking into account
the Mothae non-cash impairment charge of US$13.4
million, the Group’s assets exceeded liabilities by
US$71.3 million (2022: US$85.3 million).
•
•
•
•
•
•
The diamond market is relatively stable for
higher value production despite volatility
experienced in the overall market during 2023;
The book value of the Group’s assets exceeds its
liabilities by US$71.3 million (post the Mothae
impairment charge);
All approvals for SML to repay Lucapa’s alluvial
investment loan are in place and are expected to
follow directly
following SML shareholder
approval;
Lucapa should be able to provide the necessary
interim financial support to Mothae whilst it
considers opportunities to improve margins
and/ or implement alternate strategic options;
The Group has historically been successful in
raising equity for the furtherance of its projects
and under ASX Listing Rule 7.1 the Company has
the capacity to place securities to raise equity:
and
The Group has historically been successful in
raising and restructuring debt facilities;
Lucapa Diamond Company Limited (“Lucapa” or “the
Company”)
is
a
company domiciled
and
incorporated in Australia.
The address of the
Company’s registered office is 34 Bagot Road,
Subiaco WA 6008. The Company, its subsidiaries and
associates (collectively “the Group”) are primarily
involved in the exploration, evaluation, development
and mining on diamond projects in Africa and
Statement of compliance
Australia.
The financial report is a general purpose financial
report which has been prepared in accordance with
Australian Accounting
Standards
(“AASBs”)
(including Australian Interpretations) adopted by
the Australian Accounting Standards Board
(“IFRSs”) and interpretations adopted by the
International Accounting Standards Board (“IASB”).
The basis of preparation of the financial report is set
out below and in the notes to the consolidated
financial statements. The financial statements were
authorised for issue by the Board of Directors on the
Basis of measurement
date of the Directors’ report.
The financial statements have been prepared on the
going concern basis, which contemplates the
continuity of normal business activities and the
realisation of assets and settlement of current
Going concern
liabilities in the ordinary course of business.
As detailed in the Directors’ report, the Group
recorded an Attributable EBITDA of US$8.3 million
(2022: US$10.7 million) and a loss after tax of
US$17.2 million in 2023, (2022: US$15.1 million).
The results include, amongst others, the non-cash
impairment charge of US$13.4 million in respect of
Mothae’s PPE and a US$3.5 million unrealised
foreign exchange loss on the intergroup loan from
(“AASB”) and the Corporations Act 2001.
The
Despite current slowing economic conditions, the
financial
report of
the Group complies with
Directors believe that the going concern basis is
International
Financial
Reporting
Standards
appropriate for the following reasons:
| Lucapa Diamond Company Limited | Annual Report 2023
Consolidated Statement of Cash Flows
FOR YEAR ENDED 31 DECEMBER 2023
Cash flows from operating activities
Receipts from products and related debtors
Cash paid to suppliers and employees
Interest and finance cost
Interest received
Net cash used in operating activities
Cash flows from investing activities
Payments for exploration costs
Payments for development
Dividend and receivable proceeds from associate
Payments for property plant and equipment
Net cash generated from investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Share issue costs
Repayment of borrowings
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Exchange loss on foreign cash balances
Cash and cash equivalents at end of period
Loss for the period
Adjustments for:
Depreciation expense
Loss on disposal of assets
Impairment
Director and employee options
Exchange gains
Interest and other finance costs paid
Fair value loss on financial assets
Share of loss/ (profit) of associate
Other non cash items
Working Capital adjustments:
Change in inventory
Change in trade and other receivables
Change in trade and other payables relating to operating
activities
Net cash used in operating activities
8a
10
4
24,817
(26,739)
(997)
17
(2,902)
(1,031)
(3,345)
7,875
(692)
2,807
-
-
(5,463)
(5,463)
(5,558)
6,905
(30)
1,317
5,841
1
13,370
741
29
(463)
(2,354)
(4,195)
(867)
6
(844)
3,068
(2,902)
22,669
(24,350)
(1,907)
13
(3,575)
(3,356)
(3,689)
15,818
(1,097)
7,676
9,060
(584)
(12,872)
(4,396)
(295)
7,366
(166)
6,905
5,142
131
10,608
70
165
916
(2,822)
(7,660)
(1,368)
725
(3)
5,595
(3,575)
Reconciliation of loss after tax to cash flows from operations:
(17,235)
(15,074)
The Consolidated Statement of Cash Flows is to be read in conjunction with the accompanying notes.
Financial Report
For the year ended 31 December 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
Note
US$000
11.. BBaassiiss ooff PPrreeppaarraattiioonn
Corporate Information
a
is
company domiciled
Lucapa Diamond Company Limited (“Lucapa” or “the
Company”)
and
incorporated in Australia. The address of the
Company’s registered office is 34 Bagot Road,
Subiaco WA 6008. The Company, its subsidiaries and
associates (collectively “the Group”) are primarily
involved in the exploration, evaluation, development
and mining on diamond projects in Africa and
Statement of compliance
Australia.
Standards
The financial report is a general purpose financial
report which has been prepared in accordance with
(“AASBs”)
Australian Accounting
(including Australian Interpretations) adopted by
the Australian Accounting Standards Board
(“AASB”) and the Corporations Act 2001. The
financial report of the Group complies with
Financial Reporting
International
Standards
(“IFRSs”) and
interpretations adopted by the
International Accounting Standards Board (“IASB”).
The basis of preparation of the financial report is set
out below and in the notes to the consolidated
financial statements. The financial statements were
authorised for issue by the Board of Directors on the
Basis of measurement
date of the Directors’ report.
The financial statements have been prepared on the
going concern basis, which contemplates the
continuity of normal business activities and the
realisation of assets and settlement of current
Going concern
liabilities in the ordinary course of business.
As detailed in the Directors’ report, the Group
recorded an Attributable EBITDA of US$8.3 million
(2022: US$10.7 million) and a loss after tax of
US$17.2 million in 2023, (2022: US$15.1 million).
The results include, amongst others, the non-cash
impairment charge of US$13.4 million in respect of
Mothae’s PPE and a US$3.5 million unrealised
foreign exchange loss on the intergroup loan from
Lucapa to Mothae due to the weakening of the South
African rand against the United States dollar.
Mothae’s results for the year was affected by the low
value of diamond recoveries in Q4. SML reported
another strong year with results in line with
expectations and generated sufficient cash flow for
the payment of a US$7.8 million dividend and
alluvial investment loan repayments to Lucapa
during the year.
The Group strengthened its balance sheet during the
year by making the final instalments due to Equigold
and the IDC, leaving the Group debt free, other than
for capitalised lease obligations.
As at 31 December 2023, after taking into account
the Mothae non-cash impairment charge of US$13.4
million, the Group’s assets exceeded liabilities by
US$71.3 million (2022: US$85.3 million).
Despite current slowing economic conditions, the
Directors believe that the going concern basis is
•
appropriate for the following reasons:
•
•
•
•
•
The diamond market is relatively stable for
higher value production despite volatility
experienced in the overall market during 2023;
The book value of the Group’s assets exceeds its
liabilities by US$71.3 million (post the Mothae
impairment charge);
All approvals for SML to repay Lucapa’s alluvial
investment loan are in place and are expected to
follow directly
following SML shareholder
approval;
Lucapa should be able to provide the necessary
interim financial support to Mothae whilst it
considers opportunities to improve margins
and/ or implement alternate strategic options;
The Group has historically been successful in
raising equity for the furtherance of its projects
and under ASX Listing Rule 7.1 the Company has
the capacity to place securities to raise equity:
and
The Group has historically been successful in
raising and restructuring debt facilities;
61
Lucapa Diamond Company Limited | Annual Report 2023 | BBaassiiss ooff PPrreeppaarraattiioonn ((ccoonnttiinnuueedd))
Going concern (continued)
Financial Report
For the year ended 31 December 2023
The above conditions represent a material uncertainty that might cause significant doubt about the ability of the
Company to continue as a going concern. Should the Company be unable to continue as a going concern it may be
required to realise its assets and extinguish its liabilities other than in the normal course of business and at
amounts different to those stated in the financial statements. The financial statements do not include any
adjustments relating to recoverability and classification of asset carrying amounts or to amounts and
classification of liabilities that might result should the Company be unable to continue as a going concern.
62
Financial Report
For the year ended 31 December 2023
•
•
•
•
•
The
exploration program identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
Overall, the diamond market in 2023 could be
described
as
volatile. Macro-economic
and
geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
The G7 Countries (including the European Union)
announced in December a ban on Russian diamonds
followed by a phase-in of restrictions on the
importation of Russian diamonds and diamond
jewellery from the beginning of 2024. The sanctions
are designed to curb Russia’s ability to continue to
finance the invasion of Ukraine.
2023 Group Highlights
2023 Group highlights include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
100% basis;
Attributable Rough diamond
revenue:
US$48.4 million (A$72.9 million);
Attributable EBITDA: US$8.3 million (A$12.9
million);
63,469 carats recovered on a 100% basis;
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
bearing debt in Q3;
and processed;
Group is debt free after expunging interest-
Mothae set new records for tonnes mined
Lulo Kimberlite Exploration program
th
discovered
its
15
diamondiferous
kimberlite;
option; and
Merlin Diamond Project Feasibility Study
pivoted to
low-cost, small-scale study
Nick Selby appointed CEO and MD.
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
Lulo Alluvial Mine achieved 9% higher
processing volumes for the year compared to
the previous year due to the recent
investment in new plant and fleet;
Mothae set new records for tonnes mined
(up 23% yoy) and processed (up 22% yoy)
following
improvements made
to
the
processing plant in 2022;
The Lulo Kimberlite Bulk Sampling Program
processed a total of 26 samples during the
year, or one every two weeks;
| Lucapa Diamond Company Limited | Annual Report 2023 Financial Report
For the year ended 31 December 2023
BBaassiiss ooff PPrreeppaarraattiioonn ((ccoonnttiinnuueedd))
Going concern (continued)
The above conditions represent a material uncertainty that might cause significant doubt about the ability of the
Company to continue as a going concern. Should the Company be unable to continue as a going concern it may be
required to realise its assets and extinguish its liabilities other than in the normal course of business and at
amounts different to those stated in the financial statements. The financial statements do not include any
adjustments relating to recoverability and classification of asset carrying amounts or to amounts and
classification of liabilities that might result should the Company be unable to continue as a going concern.
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EBITDA: US$23.4 million (A$36.3 million) on
100% basis;
Attributable Rough diamond
US$48.4 million (A$72.9 million);
Attributable EBITDA: US$8.3 million (A$12.9
million);
63,469 carats recovered on a 100% basis;
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
Group is debt free after expunging interest-
bearing debt in Q3;
Mothae set new records for tonnes mined
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diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
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Overall, the diamond market in 2023 could be
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volatile. Macro-economic
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factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
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followed by a phase-in of restrictions on the
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jewellery from the beginning of 2024. The sanctions
are designed to curb Russia’s ability to continue to
finance the invasion of Ukraine.
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63
Lucapa Diamond Company Limited | Annual Report 2023 |
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
SSeeggmmeenntt RReeppoorrttiinngg ((ccoonnttiinnuueedd))
Additional Information
Financial Report
For the year ended 31 December 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
33.. RReevveennuuee
Financial Overview
The Group engages in business activities within the following business segments:
-
exploration & evaluation projects in Angola, Botswana and Australia;
- mining in Angola and Lesotho and mine development in Australia; and
-
corporate and other administrative functions in Western Australia to support and promote its activities.
Revenue from contracts with customers
Sale of goods
The Group’s operating segments are managed by geographical region as the risks and required rates of returns
Accounting policy
are largely affected by differences in the regions in which they operate.
Additional information
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$000
27,999
27,999
23,350
23,350
Segment disclosures are based on information that is provided to the Board of Directors, which is the Group’s
chief decision-making body.
An operating segment is a component of the Group that engages in business activities from which it may expend
capital and generate revenues and incur expenses, including revenues and expenses that relate to transactions
with any of the Group’s other components.
All operating segments’ operating results, for which discrete financial information is available, are reviewed by
the Group’s Managing Director and management to assess their performance and make decisions with respect to
the allocation of resources to that segment.
The Group’s revenue arises from the sale of rough diamonds and from cutting and polishing of diamonds.
Accounting policy
To determine whether to recognise revenue, the
Revenue from cutting and polishing partnerships:
Allocating the transaction price to the
future when the uncertainty has been
-
-
-
-
following 5-step process is followed:
Identifying the contract with a customer;
Identifying the performance obligations;
- Determining the transaction price;
performance obligations; and
Recognising revenue when/ as performance
obligation(s) are satisfied.
The transaction price is the amount to which the
Group expects to be entitled to in exchange for the
transfer of goods and services and is allocated
amongst the various performance obligations based
on their relative stand-alone selling prices. The
transaction price for a contract excludes any
amounts collected on behalf of third parties.
Revenue is recognised either at a point in time or
over time, when (or as)
the Group satisfies
performance obligations by
transferring
the
promised goods or services to its customers.
-
is considered to be variable consideration
and is recognised to the extent that it is
highly probable that its inclusion will not
result in a significant revenue reversal in the
resolved. This is generally the case when
cutting and polishing work has substantially
been completed and relative certainty exists
over the quality of the final product or when
the polished diamonds have been sold;
-
is recognised once a high level of certainty
exists regarding factors that influence the
sale prices including the size, quality and
colour of the final polished diamonds. These
factors are considered per individual stone.
If the Group satisfies a performance obligation
before it receives the consideration, either a contract
asset or a receivable is recognised in the statement
of
financial position, depending on whether
something other than the passage of time is required
Revenue from the sale of rough diamonds is
before the consideration is due.
recognised on a point in time basis.
64
| Lucapa Diamond Company Limited | Annual Report 2023 Financial Report
For the year ended 31 December 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
SSeeggmmeenntt RReeppoorrttiinngg ((ccoonnttiinnuueedd))
Additional Information
The Group engages in business activities within the following business segments:
exploration & evaluation projects in Angola, Botswana and Australia;
- mining in Angola and Lesotho and mine development in Australia; and
-
-
corporate and other administrative functions in Western Australia to support and promote its activities.
33.. RReevveennuuee
Financial Overview
Revenue from contracts with customers
Sale of goods
The Group’s operating segments are managed by geographical region as the risks and required rates of returns
Accounting policy
are largely affected by differences in the regions in which they operate.
Additional information
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$000
27,999
27,999
23,350
23,350
Segment disclosures are based on information that is provided to the Board of Directors, which is the Group’s
chief decision-making body.
The Group’s revenue arises from the sale of rough diamonds and from cutting and polishing of diamonds.
Accounting policy
An operating segment is a component of the Group that engages in business activities from which it may expend
capital and generate revenues and incur expenses, including revenues and expenses that relate to transactions
To determine whether to recognise revenue, the
following 5-step process is followed:
with any of the Group’s other components.
All operating segments’ operating results, for which discrete financial information is available, are reviewed by
the Group’s Managing Director and management to assess their performance and make decisions with respect to
the allocation of resources to that segment.
Identifying the contract with a customer;
Identifying the performance obligations;
-
-
- Determining the transaction price;
-
Allocating the transaction price to the
performance obligations; and
Recognising revenue when/ as performance
obligation(s) are satisfied.
-
The transaction price is the amount to which the
Group expects to be entitled to in exchange for the
transfer of goods and services and is allocated
amongst the various performance obligations based
on their relative stand-alone selling prices. The
transaction price for a contract excludes any
amounts collected on behalf of third parties.
Revenue is recognised either at a point in time or
over time, when (or as) the Group satisfies
the
performance obligations by
promised goods or services to its customers.
transferring
Revenue from the sale of rough diamonds is
recognised on a point in time basis.
Revenue from cutting and polishing partnerships:
-
-
is considered to be variable consideration
and is recognised to the extent that it is
highly probable that its inclusion will not
result in a significant revenue reversal in the
future when the uncertainty has been
resolved. This is generally the case when
cutting and polishing work has substantially
been completed and relative certainty exists
over the quality of the final product or when
the polished diamonds have been sold;
is recognised once a high level of certainty
exists regarding factors that influence the
sale prices including the size, quality and
colour of the final polished diamonds. These
factors are considered per individual stone.
If the Group satisfies a performance obligation
before it receives the consideration, either a contract
asset or a receivable is recognised in the statement
of
financial position, depending on whether
something other than the passage of time is required
before the consideration is due.
65
Lucapa Diamond Company Limited | Annual Report 2023 |
Financial Report
For the year ended 31 December 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
EExxppeennsseess ((ccoonnttiinnuueedd))
Employee benefits
SHORT-TERM EMPLOYEE BENEFITS
Liabilities for employee benefits for wages, salaries and annual leave that are expected to be settled within 12
months of the reporting date represent present obligations resulting from employees’ services provided to
reporting date and are calculated at undiscounted amounts based on remuneration wage and salary rates that
the Group expects to pay as at the reporting date including related on-costs, such as workers compensation
LONG-TERM EMPLOYEE BENEFITS
insurance and payroll tax.
The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that
employees have earned in return for their service in the current and prior periods plus related on-costs: that
benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The
discount rate is the yield at the reporting date on government bonds that have maturity dates approximating the
TERMINATION BENEFITS
terms of the Group’s obligations.
Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic
possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement
Share based payments
date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.
Refer note 13.
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
44.. EExxppeennsseess
Financial Overview
Breakdown of expenses by nature
Raw materials, consumables and other input costs
Changes in inventories of finished goods and work in progress
Employee benefits expenses (excluding share based payments)
Depreciation and amortisation
Impairment charge
Auditors remuneration
Mining and short term leases
Consulting fees and other administrative expenses
Total expenses
Breakdown of expenses by function
Cost of sales
Impairment charge
Corporate expenses
Total expenses
Employee benefits expenses
Wages, salaries and director remuneration
Superannuation costs
Share-based payments
Other associated employee expenses
Auditors remuneration
Elderton Pty Ltd (Auditors of parent company & consolidation)
Audit services
Other services
Other group auditors (for subsidiary companies)
Audit services
Other services
Accounting policy
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
Note
US$000
10
13
17,720
(358)
7,435
5,842
13,370
50
254
843
45,156
27,962
13,370
3,824
45,156
7,259
116
741
60
8,176
40
-
40
10
-
10
50
16,657
370
7,255
5,142
10,608
51
221
973
41,277
26,977
10,608
3,692
41,277
6,960
109
70
186
7,325
40
-
40
11
-
11
51
Expenses recognised in profit or loss are classified and presented on a functional basis.
66
| Lucapa Diamond Company Limited | Annual Report 2023
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
Note
US$000
44.. EExxppeennsseess
Financial Overview
Breakdown of expenses by nature
Raw materials, consumables and other input costs
Changes in inventories of finished goods and work in progress
Employee benefits expenses (excluding share based payments)
Depreciation and amortisation
Impairment charge
Auditors remuneration
Mining and short term leases
Consulting fees and other administrative expenses
Total expenses
Breakdown of expenses by function
Cost of sales
Impairment charge
Corporate expenses
Total expenses
Employee benefits expenses
Wages, salaries and director remuneration
Superannuation costs
Share-based payments
Other associated employee expenses
Auditors remuneration
Elderton Pty Ltd (Auditors of parent company & consolidation)
Other group auditors (for subsidiary companies)
Audit services
Other services
Audit services
Other services
Accounting policy
10
13
45,156
41,277
17,720
(358)
7,435
5,842
13,370
50
254
843
27,962
13,370
3,824
45,156
7,259
116
741
60
8,176
40
-
40
10
-
10
50
16,657
370
7,255
5,142
10,608
51
221
973
26,977
10,608
3,692
41,277
6,960
109
70
186
7,325
40
-
40
11
-
11
51
Expenses recognised in profit or loss are classified and presented on a functional basis.
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
Financial Report
For the year ended 31 December 2023
EExxppeennsseess ((ccoonnttiinnuueedd))
Employee benefits
SHORT-TERM EMPLOYEE BENEFITS
Liabilities for employee benefits for wages, salaries and annual leave that are expected to be settled within 12
months of the reporting date represent present obligations resulting from employees’ services provided to
reporting date and are calculated at undiscounted amounts based on remuneration wage and salary rates that
the Group expects to pay as at the reporting date including related on-costs, such as workers compensation
LONG-TERM EMPLOYEE BENEFITS
insurance and payroll tax.
The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that
employees have earned in return for their service in the current and prior periods plus related on-costs: that
benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The
discount rate is the yield at the reporting date on government bonds that have maturity dates approximating the
TERMINATION BENEFITS
terms of the Group’s obligations.
Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic
possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement
Share based payments
date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.
Refer note 13.
67
Lucapa Diamond Company Limited | Annual Report 2023 | NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
55.. FFiinnaannccee CCoosstt aanndd IInnccoommee
Financial Overview
Finance cost
Finance cost on borrowings
Interest expense on lease labilities
Unwinding of discount rate on rehabilitation liability
Finance income
Interest income on bank deposits
Net finance cost on financial instruments
Accounting policy
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$000
279
88
167
534
17
17
517
1,864
74
125
2,063
12
12
2,051
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$000
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
66..
IInnccoommee TTaaxx
Financial Overview
Current tax expense
Current income tax charge
Current income tax adjustments relating to prior years
Deferred tax expense
Relating to origination and reversal of temporary differences
Total income tax expense
Reconciliation of tax expense and the accounting profit multiplied
by Australia’s domestic tax rate
Net loss before tax
Income tax benefit using the Australian domestic tax rate of 30%
(5,105)
(4,383)
(17,018)
(14,610)
Finance income and expenses comprises interest income on funds invested, interest expense on borrowings
calculated using the effective interest method and unwinding of discounts on provisions.
Interest income is recognised in the statement of profit or loss and other comprehensive income as it accrues,
using the effective interest method. All borrowing costs are recognised in the statement of profit or loss and
other comprehensive income using the effective interest method.
General and specific borrowing costs that are directly attributable to the acquisition, construction or production
of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset
for its intended use or sale. Exchange differences arising from foreign currency borrowings used to acquire
qualifying assets are regarded as an adjustment to the interest cost and included in the capitalised amount.
Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use
or sale.
Increase in income tax due to tax effect of:
Non-deductible expenses
Tax rate differential on foreign income
Net current year tax losses not recognised
Foreign taxes paid
Derecognition of previously recognised tax losses
Decrease in income tax expense due to:
Non-assessable income
Share of profit of associate
Impact of movement in unrecognised temporary differences
Utilisation of previously unrecognised tax losses
Deductible equity raising costs
Income tax expense
Recognised deferred tax assets and liabilities
Recognised deferred tax assets
Tax losses
Accruals & provisions
Less: Set off of deferred tax liabilities
Net deferred tax assets
Recognised deferred tax liabilities
Property plant and equipment
Other
Less: Set off of deferred tax assets
Net deferred tax liabilities
Deferred tax assets not recognised
Tax revenue losses
Tax capital losses
Deductible temporary differences
217
-
-
217
481
1,313
2,325
217
4,209
(608)
(1,259)
(446)
(879)
(31)
217
638
565
1,203
(1,203)
-
(627)
(602)
(1,229)
1,203
(26)
20,028
4,501
16,233
40,762
464
-
-
464
2,386
610
3,031
464
3,083
(1,182)
(2,298)
(1,010)
(198)
(39)
464
4,847
640
5,487
(5,487)
-
(5,071)
(442)
(5,513)
5,487
(26)
17,698
4,506
3,220
25,424
68
| Lucapa Diamond Company Limited | Annual Report 2023
55.. FFiinnaannccee CCoosstt aanndd IInnccoommee
Financial Overview
Finance cost
Finance cost on borrowings
Interest expense on lease labilities
Unwinding of discount rate on rehabilitation liability
Finance income
Interest income on bank deposits
Net finance cost on financial instruments
Accounting policy
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$000
279
88
167
534
17
17
517
1,864
74
125
2,063
12
12
2,051
Finance income and expenses comprises interest income on funds invested, interest expense on borrowings
calculated using the effective interest method and unwinding of discounts on provisions.
Interest income is recognised in the statement of profit or loss and other comprehensive income as it accrues,
using the effective interest method. All borrowing costs are recognised in the statement of profit or loss and
other comprehensive income using the effective interest method.
General and specific borrowing costs that are directly attributable to the acquisition, construction or production
of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset
for its intended use or sale. Exchange differences arising from foreign currency borrowings used to acquire
qualifying assets are regarded as an adjustment to the interest cost and included in the capitalised amount.
Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use
or sale.
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
66..
IInnccoommee TTaaxx
Financial Overview
Current tax expense
Current income tax charge
Current income tax adjustments relating to prior years
Deferred tax expense
Relating to origination and reversal of temporary differences
Total income tax expense
Reconciliation of tax expense and the accounting profit multiplied
by Australia’s domestic tax rate
Net loss before tax
Income tax benefit using the Australian domestic tax rate of 30%
Increase in income tax due to tax effect of:
Non-deductible expenses
Tax rate differential on foreign income
Net current year tax losses not recognised
Foreign taxes paid
Derecognition of previously recognised tax losses
Decrease in income tax expense due to:
Non-assessable income
Share of profit of associate
Impact of movement in unrecognised temporary differences
Utilisation of previously unrecognised tax losses
Deductible equity raising costs
Income tax expense
Recognised deferred tax assets and liabilities
Recognised deferred tax assets
Tax losses
Accruals & provisions
Less: Set off of deferred tax liabilities
Net deferred tax assets
Recognised deferred tax liabilities
Property plant and equipment
Other
Less: Set off of deferred tax assets
Net deferred tax liabilities
Deferred tax assets not recognised
Tax revenue losses
Tax capital losses
Deductible temporary differences
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$000
217
-
-
217
464
-
-
464
(17,018)
(14,610)
(5,105)
(4,383)
481
1,313
2,325
217
4,209
(608)
(1,259)
(446)
(879)
(31)
217
638
565
1,203
(1,203)
-
(627)
(602)
(1,229)
1,203
(26)
20,028
4,501
16,233
40,762
2,386
610
3,031
464
3,083
(1,182)
(2,298)
(1,010)
(198)
(39)
464
4,847
640
5,487
(5,487)
-
(5,071)
(442)
(5,513)
5,487
(26)
17,698
4,506
3,220
25,424
69
Lucapa Diamond Company Limited | Annual Report 2023 |
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
77.. EEaarrnniinnggss ppeerr SShhaarree
Financial Overview
Basic loss per share
Diluted loss per share
Loss used in calculating earnings per share
Attributable to members of the Company used in calculating:
- basic earnings per share
- diluted earnings per share
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares outstanding during
the period used in calculation of:
- basic earnings per share
- diluted earnings per share
Accounting Policy
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
Cents
(0.63)
(0.60)
Cents
(0.73)
(0.73)
US$000
US$000
(9,051)
(9,051)
(10,302)
(10,302)
Number
Number
1,439,559,875
1,404,558,518
1,497,589,836
1,406,888,388
Basic earnings/ (loss) per share is calculated by dividing the net profit/ (loss) attributable to the ordinary
shareholders of the Company by the weighted average number of ordinary shares of the Company during the
period. Diluted earnings/ (loss) per share is determined by adjusting the net profit/ (loss) attributable to the
ordinary shareholders and the number of shares outstanding for the effects of all dilutive potential shares, which
comprise share options.
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
IInnccoommee TTaaxx ((ccoonnttiinnuueedd))
Additional information
Financial Report
For the year ended 31 December 2023
The estimated tax losses above may be available to be offset against taxable income in future years. The
availability of these losses is subject to satisfying taxation legislative requirements. The deferred tax asset
attributable to tax losses has not been brought to account in these financial statements because the Directors
believe it is not presently appropriate to regard realisation of the future income tax benefits as probable.
Accounting policy
Income tax expense represents the sum of the tax
The tax
currently payable and deferred tax.
currently payable is based on taxable profit/ (loss)
for the period. Taxable profit differs from net profit
as reported in the statement of profit or loss and
other comprehensive income because it excludes
items of income or expense that are taxable or
deductible in other years and it further excludes
items that are never taxable or deductible. The
Group’s liability for current tax is calculated using
tax rates that have been enacted or substantively
enacted by the balance sheet date for each
jurisdiction.
Management periodically evaluates positions taken
in the tax returns with respect to situations in which
applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax
authorities.
Deferred tax is the tax expected to be payable or
recoverable on differences between the carrying
amount of assets and liabilities in the financial
statements and the corresponding tax bases used in
the computation of taxable profit/ (loss) and is
accounted for using the balance sheet liability
method.
Deferred tax liabilities are generally
recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that
it is probable that taxable profits will be available
against which deductible temporary differences can
be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from
goodwill (or negative goodwill) or from the initial
recognition (other than in a business combination)
of other assets and liabilities in a transaction that
affects neither the tax profit/ (loss) nor the
accounting profit/ (loss).
Deferred tax liabilities are recognised for taxable
temporary differences arising on investments in
subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control
the reversal of the temporary difference and it is
probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is
reviewed at each balance sheet date and reduced to
the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of
the asset to be recovered.
Deferred tax is calculated at the tax rates that are
expected to apply in the period when the liability is
settled or the asset realised. Deferred tax is charged
or credited in the statement of profit or loss and
other comprehensive income, except when it relates
to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in
equity.
Deferred tax assets and liabilities are offset when
they relate to income taxes levied by the same
taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis
70
| Lucapa Diamond Company Limited | Annual Report 2023 Financial Report
For the year ended 31 December 2023
IInnccoommee TTaaxx ((ccoonnttiinnuueedd))
Additional information
The estimated tax losses above may be available to be offset against taxable income in future years. The
availability of these losses is subject to satisfying taxation legislative requirements. The deferred tax asset
attributable to tax losses has not been brought to account in these financial statements because the Directors
believe it is not presently appropriate to regard realisation of the future income tax benefits as probable.
Accounting policy
Income tax expense represents the sum of the tax
recognised if the temporary difference arises from
currently payable and deferred tax.
The tax
goodwill (or negative goodwill) or from the initial
currently payable is based on taxable profit/ (loss)
recognition (other than in a business combination)
for the period. Taxable profit differs from net profit
of other assets and liabilities in a transaction that
as reported in the statement of profit or loss and
affects neither the tax profit/ (loss) nor the
other comprehensive income because it excludes
accounting profit/ (loss).
items of income or expense that are taxable or
deductible in other years and it further excludes
items that are never taxable or deductible. The
Group’s liability for current tax is calculated using
tax rates that have been enacted or substantively
enacted by the balance sheet date for each
jurisdiction.
Management periodically evaluates positions taken
in the tax returns with respect to situations in which
applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax
authorities.
Deferred tax is the tax expected to be payable or
recoverable on differences between the carrying
amount of assets and liabilities in the financial
statements and the corresponding tax bases used in
the computation of taxable profit/ (loss) and is
accounted for using the balance sheet liability
method. Deferred tax liabilities are generally
recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that
it is probable that taxable profits will be available
against which deductible temporary differences can
be utilised. Such assets and liabilities are not
Deferred tax liabilities are recognised for taxable
temporary differences arising on investments in
subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control
the reversal of the temporary difference and it is
probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is
reviewed at each balance sheet date and reduced to
the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of
the asset to be recovered.
Deferred tax is calculated at the tax rates that are
expected to apply in the period when the liability is
settled or the asset realised. Deferred tax is charged
or credited in the statement of profit or loss and
other comprehensive income, except when it relates
to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in
equity.
Deferred tax assets and liabilities are offset when
they relate to income taxes levied by the same
taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
77.. EEaarrnniinnggss ppeerr SShhaarree
Financial Overview
Basic loss per share
Diluted loss per share
Loss used in calculating earnings per share
Attributable to members of the Company used in calculating:
- basic earnings per share
- diluted earnings per share
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares outstanding during
the period used in calculation of:
- basic earnings per share
- diluted earnings per share
Accounting Policy
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
Cents
(0.63)
(0.60)
US$000
Cents
(0.73)
(0.73)
US$000
(9,051)
(9,051)
(10,302)
(10,302)
Number
Number
1,439,559,875
1,497,589,836
1,404,558,518
1,406,888,388
Basic earnings/ (loss) per share is calculated by dividing the net profit/ (loss) attributable to the ordinary
shareholders of the Company by the weighted average number of ordinary shares of the Company during the
period. Diluted earnings/ (loss) per share is determined by adjusting the net profit/ (loss) attributable to the
ordinary shareholders and the number of shares outstanding for the effects of all dilutive potential shares, which
comprise share options.
71
Lucapa Diamond Company Limited | Annual Report 2023 |
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
88.. FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt
Financial Overview
Financial Report
For the year ended 31 December 2023
Summary of carrying value of financial instruments
31 Dec 2023
31 Dec 2022
Note
US$000
8a
8b
8c
8c
8d
8e
8e
Financial assets
Cash and cash equivalents
Trade and other receivables
Other current financial assets
Non-current financial assets
Financial liabilities
Trade and other payables
Current borrowings
Non-current borrowings
Summary of amounts recognised in profit or loss
Fair value adjustments
Gain in respect of the alluvial project receivable
Gain on borrowing embedded derivatives
Foreign exchange loss
On revaluation of intergroup loans
On other financial instruments
Net finance cost/ (income) on financial instruments
5
1,317
2,466
3,923
699
8,405
8,231
235
-
8,466
1,832
522
2,354
(3,535)
(320)
(3,855)
517
6,905
2,412
4,000
7,497
20,814
7,881
6,393
33
14,307
2,481
341
2,822
(3,010)
(870)
(3,880)
2,051
Additional information
Financial risk management
The Group has exposure to market, credit and
liquidity risks from the use of financial instruments.
This note presents information about the Group’s
exposure to each of the above risks, their objectives,
policies and processes for measuring and managing
risk, and the management of capital. Further
quantitative disclosures are included throughout
this financial report.
The Board of Directors has overall responsibility for
the establishment and oversight of the risk
management framework. Risk management policies
are established to identify and analyse the risks
faced by the Group, to set appropriate risk limits and
controls, and to monitor risks and adherence to
limits. Risk management policies and systems are
reviewed to reflect changes in market conditions
72
and management
and the Group’s activities. The Group, through its
training
and
procedures, aims to develop a disciplined and
constructive control environment in which all
MARKET RISK
employees understand their roles and obligations.
standards
COMMODITY PRICE RISK
The Group is focussed on its diamond mining and
exploration interests in Africa and Australia.
Accordingly, the Group is exposed to the global
pricing structures of the diamond market.
Financial Report
For the year ended 31 December 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
FOREIGN EXCHANGE RISK
LIQUIDITY RISK
The Group operates
internationally and is
Liquidity risk is the risk that the Group will not be
exposed to foreign exchange risk arising from
able to meet its financial obligations as they fall due.
various currency exposures, primarily with
The Group’s approach to managing liquidity is to
respect to the US dollar, Australian dollar, South
ensure, as far as possible, that it will always has
African rand and Angolan kwanza.
Foreign
sufficient liquidity to meet its liabilities when due,
exchange risk arises from future commercial
under both normal and stressed conditions, without
transactions, recognised assets and liabilities and
incurring unacceptable losses or risking damage to
net investments in foreign operations that are not
the Group’s reputation.
in the
individual business unit’s functional
currency. The Group manages
its
foreign
exchange risk by monitoring its net exposures,
maintaining an appropriate balance between
foreign currency assets and liabilities and making
use of hedging instruments. The Group does not
speculate with the use of hedging instruments
and derivatives.
The extent of the Group’s
exposure to foreign currency risk at balance date
is disclosed below for each category of financial
CASH FLOW INTEREST RATE RISK
instrument.
Cash flow interest rate risk, is the risk that a
financial instrument’s value will fluctuate as a
result of changes in the market interest rates on
interest-bearing
financial
instruments. The
Group does not currently use derivatives to
mitigate these exposures. The extent of the
Group’s exposure to interest rate risk at balance
date is disclosed below for each category of
CREDIT RISK
financial instrument.
Credit risk refers to the risk that a counterparty will
default on its contractual obligations resulting in a
financial loss to the Group. The Group’s potential
concentration of credit risk mainly relates to
amounts advanced to SML (Note 7c). The Group’s
short-term cash surpluses are placed with banks
that have investment grade ratings. The maximum
credit risk exposure relating to the financial assets is
represented by their carrying values as at the
balance sheet date.
Ultimate
responsibility
for
liquidity
risk
management rests with the Board of Directors. The
Group manages
liquidity risk by maintaining
adequate cash reserves, or from funds raised in the
market, or by debt and by continuously monitoring
forecast and actual cash flows. The liquidity profile
of the Group’s financial liabilities are disclosed in the
Capital risk management
relevant notes below.
The Group’s objectives when managing capital are to
safeguard its ability to continue as a going concern,
so as to maintain a strong capital base sufficient to
maintain future exploration and development of its
projects. In order to maintain or adjust the capital
structure,
the Group may return capital
to
shareholders, issue new shares, raise debt finance or
sell assets to reduce debt. The Group’s focus has
been to raise sufficient funds through equity and
debt finance to fund exploration, mine development,
Fair value hierarchy
evaluation activities and corporate overhead.
Details of the significant accounting policies and
methods adopted,
including
the criteria
for
recognition, the basis of measurement and the basis
on which revenues and expenses are recognised, in
respect of each class of financial asset, financial
liability and equity instrument are disclosed below.
| Lucapa Diamond Company Limited | Annual Report 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
Financial Report
For the year ended 31 December 2023
FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
FOREIGN EXCHANGE RISK
LIQUIDITY RISK
internationally and
The Group operates
is
exposed to foreign exchange risk arising from
various currency exposures, primarily with
respect to the US dollar, Australian dollar, South
African rand and Angolan kwanza. Foreign
exchange risk arises from future commercial
transactions, recognised assets and liabilities and
net investments in foreign operations that are not
individual business unit’s functional
in the
currency. The Group manages
foreign
exchange risk by monitoring its net exposures,
maintaining an appropriate balance between
foreign currency assets and liabilities and making
use of hedging instruments. The Group does not
speculate with the use of hedging instruments
and derivatives. The extent of the Group’s
exposure to foreign currency risk at balance date
is disclosed below for each category of financial
CASH FLOW INTEREST RATE RISK
instrument.
its
Cash flow interest rate risk, is the risk that a
financial instrument’s value will fluctuate as a
result of changes in the market interest rates on
instruments. The
interest-bearing
Group does not currently use derivatives to
mitigate these exposures. The extent of the
Group’s exposure to interest rate risk at balance
date is disclosed below for each category of
financial instrument.
financial
CREDIT RISK
Credit risk refers to the risk that a counterparty will
default on its contractual obligations resulting in a
financial loss to the Group. The Group’s potential
concentration of credit risk mainly relates to
amounts advanced to SML (Note 7c). The Group’s
short-term cash surpluses are placed with banks
that have investment grade ratings. The maximum
credit risk exposure relating to the financial assets is
represented by their carrying values as at the
balance sheet date.
Liquidity risk is the risk that the Group will not be
able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity is to
ensure, as far as possible, that it will always has
sufficient liquidity to meet its liabilities when due,
under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to
the Group’s reputation.
for
liquidity
responsibility
Ultimate
risk
management rests with the Board of Directors. The
Group manages
liquidity risk by maintaining
adequate cash reserves, or from funds raised in the
market, or by debt and by continuously monitoring
forecast and actual cash flows. The liquidity profile
of the Group’s financial liabilities are disclosed in the
Capital risk management
relevant notes below.
The Group’s objectives when managing capital are to
safeguard its ability to continue as a going concern,
so as to maintain a strong capital base sufficient to
maintain future exploration and development of its
projects. In order to maintain or adjust the capital
to
structure,
shareholders, issue new shares, raise debt finance or
sell assets to reduce debt. The Group’s focus has
been to raise sufficient funds through equity and
debt finance to fund exploration, mine development,
Fair value hierarchy
evaluation activities and corporate overhead.
the Group may return capital
Details of the significant accounting policies and
methods adopted,
for
including
recognition, the basis of measurement and the basis
on which revenues and expenses are recognised, in
respect of each class of financial asset, financial
liability and equity instrument are disclosed below.
the criteria
73
Financial Report
For the year ended 31 December 2023
88.. FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt
Financial Overview
Summary of carrying value of financial instruments
31 Dec 2023
31 Dec 2022
Note
US$000
Net finance cost/ (income) on financial instruments
5
Financial assets
Cash and cash equivalents
Trade and other receivables
Other current financial assets
Non-current financial assets
Financial liabilities
Trade and other payables
Current borrowings
Non-current borrowings
Summary of amounts recognised in profit or loss
Fair value adjustments
Gain in respect of the alluvial project receivable
Gain on borrowing embedded derivatives
Foreign exchange loss
On revaluation of intergroup loans
On other financial instruments
Additional information
Financial risk management
The Group has exposure to market, credit and
liquidity risks from the use of financial instruments.
This note presents information about the Group’s
exposure to each of the above risks, their objectives,
policies and processes for measuring and managing
risk, and the management of capital.
Further
quantitative disclosures are included throughout
this financial report.
The Board of Directors has overall responsibility for
the establishment and oversight of
the risk
management framework. Risk management policies
are established to identify and analyse the risks
faced by the Group, to set appropriate risk limits and
controls, and to monitor risks and adherence to
limits. Risk management policies and systems are
reviewed to reflect changes in market conditions
8a
8b
8c
8c
8d
8e
8e
1,317
2,466
3,923
699
8,405
8,231
235
-
8,466
1,832
522
2,354
(3,535)
(320)
(3,855)
517
6,905
2,412
4,000
7,497
20,814
7,881
6,393
33
14,307
2,481
341
2,822
(3,010)
(870)
(3,880)
2,051
and the Group’s activities. The Group, through its
training
and management
standards
and
procedures, aims to develop a disciplined and
constructive control environment
in which all
MARKET RISK
employees understand their roles and obligations.
COMMODITY PRICE RISK
The Group is focussed on its diamond mining and
exploration interests in Africa and Australia.
Accordingly, the Group is exposed to the global
pricing structures of the diamond market.
Lucapa Diamond Company Limited | Annual Report 2023 | NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
Financial Report
For the year ended 31 December 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
Financial Report
For the year ended 31 December 2023
FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
FINANCIAL ASSETS AT AMORTISED COST
Leases
The financial assets and liabilities are classified as
follows in terms of the fair value hierarchy:
-
-
the SML receivable (Note 7c): level 3 due to
the use of unobservable inputs;
the Equigold embedded derivative: level 3
due to the use of market based and
observable inputs; and
liabilities
assets
other
approximate their net fair value, determined
Accounting policy
in accordance with the accounting policies.
Recognition, initial measurement and derecognition
financial
and
-
financial
Financial assets and
liabilities are
recognised when the Group becomes a party to the
contractual provisions of the financial instrument
and are measured initially at fair value adjusted by
transactions costs, except for those carried at fair
value through profit or loss, which are measured
initially at fair value. Subsequent measurement of
financial assets and financial liabilities are described
below.
Financial assets are derecognised when
the
contractual rights to the cash flows from the
financial asset expire, or when the financial asset and
all substantial risks and rewards are transferred. A
financial
is
Subsequent measurement of financial assets
extinguished, discharged, cancelled or expires.
is derecognised when
liability
it
For the purpose of subsequent measurement,
financial assets of the Group are classified into either
the amortised cost or fair value through profit or loss
(“FVPL”) categories. Classifications are determined
by both the Group’s business model for managing
the financial asset and the contractual cash flow
characteristics of the financial assets.
All income and expenses relating to financial assets
that are recognised in profit or loss are presented
within finance costs, finance income or other
financial items, except for impairment of trade
is presented within other
receivables which
expenses.
74
Lease
liabilities
are
recognised
at
the
discounted at the market rate of interest at the
Financial assets are measured at amortised cost if
the assets meet the following conditions (and are not
designated as FVPL):
-
-
they are held with the objective to hold the
assets and collect its contractual cash flows;
the contractual terms of the financial assets
give rise to cash flows that are solely
payments of principal and interest on the
principal amount outstanding.
is omitted where
After initial recognition, these are measured at
amortised cost using the effective interest method.
Discounting
the effect of
discounting is immaterial. The Group’s cash and cash
equivalents, trade and most other receivables fall
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR
into this category of financial instruments.
LOSS
Financial assets that are held within a different
business model other than ‘hold to collect’ or ‘hold to
collect and sell’ are categorised at fair value through
profit and loss. Further, irrespective of business
model financial assets whose contractual cash flows
are not solely payments of principal and interest are
accounted for at FVPL. All derivative financial
Subsequent measurement of financial liabilities
instruments fall into this category.
The Group’s financial liabilities include borrowings,
trade and other payables and derivative financial
initial recognition,
instruments. Subsequent to
financial liabilities are measured at amortised cost
using the effective interest method, except for
derivatives and financial liabilities designated at
FVPL, which are carried subsequently at fair value
with gains or losses recognised in profit or loss.
interest-related charges and,
if applicable,
All
changes in an instrument’s fair value that are
reported in profit or loss are included within finance
costs or finance income.
Contracts are assessed at inception to determine
whether a contract is, or contains, a lease. It is
classified as such if the contract conveys the right to
control the use of an identified asset for a period of
time in exchange for consideration.
A single recognition and measurement approach is
applied for all leases, except for short-term leases,
leases of low-value assets and leases to explore for
or mine minerals and similar non-regenerative
resources. The Group recognises lease liabilities to
make
lease payments and right-of-use assets
representing the right to use the underlying assets.
Right-of-use assets are included under Property
Plant and Equipment (refer note 9).
commencement date of the lease and measured at
the present value of lease payments to be made over
the lease term. The lease payments include fixed
payments (including in-substance fixed payments)
less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and
amounts expected to be paid under residual value
guarantees. The lease payments also include the
exercise price of a purchase option reasonably
certain to be exercised by the Group and payments
terminate.
The Group uses its incremental borrowing rate at the
lease commencement date to calculate the present
value of lease payments, if the interest rate implicit
in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities
is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition,
the carrying amount of
lease
liabilities
is
remeasured if there is a modification, a change in the
lease term, a change in the lease payments (e.g.,
changes to future payments resulting from a change
in an index or rate used to determine such lease
payments) or a change in the assessment of an
option to purchase the underlying asset.
Lease liabilities are included in interest-bearing
loans and borrowings.
Lease payments for short-term leases, leases of low-
value assets and leases to explore for or mine
minerals as well as variable lease payments that do
not depend on an index or a rate are recognised as
expenses (unless they are incurred to produce
inventories) in the period in which the event or
Determination of fair values
condition that triggers the payment occurs.
TRADE AND OTHER RECEIVABLES
The fair value of trade and other receivables is
estimated as the present value of future cash flows,
FINANCIAL LIABILITIES
reporting date.
Fair value, which is determined for disclosure
purposes, is calculated based on the present value of
future principal and interest cash flows, discounted
Significant accounting judgements, estimates and
at the market rate of interest at the reporting date.
assumptions
FINANCIAL ASSETS
reimbursement in US dollars of the Group’s historic
alluvial exploration and development costs incurred
at Lulo. The recoverable amount of the receivable is
reassessed using calculations which incorporate
various key assumptions as per above.
of penalties for terminating the lease, if the lease
The Group’s financial assets include the receivable in
term reflects the Group exercising the option to
respect of associate, SML, that represents the future
| Lucapa Diamond Company Limited | Annual Report 2023 NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
Financial Report
For the year ended 31 December 2023
Financial Report
For the year ended 31 December 2023
FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
FINANCIAL ASSETS AT AMORTISED COST
Leases
The financial assets and liabilities are classified as
follows in terms of the fair value hierarchy:
-
-
-
the SML receivable (Note 7c): level 3 due to
the use of unobservable inputs;
the Equigold embedded derivative:
level 3
due to the use of market based and
observable inputs; and
other
financial
assets
and
liabilities
approximate their net fair value, determined
Accounting policy
in accordance with the accounting policies.
Recognition, initial measurement and derecognition
Financial
assets and
financial
liabilities are
recognised when the Group becomes a party to the
contractual provisions of the financial instrument
and are measured initially at fair value adjusted by
transactions costs, except for those carried at fair
LOSS
value through profit or loss, which are measured
initially at fair value. Subsequent measurement of
financial assets and financial liabilities are described
below.
Financial assets are derecognised when
the
contractual rights to the cash flows from the
financial asset expire, or when the financial asset and
all substantial risks and rewards are transferred. A
financial
liability is derecognised when it
is
Subsequent measurement of financial assets
extinguished, discharged, cancelled or expires.
For the purpose of subsequent measurement,
financial assets of the Group are classified into either
the amortised cost or fair value through profit or loss
(“FVPL”) categories. Classifications are determined
by both the Group’s business model for managing
the financial asset and the contractual cash flow
characteristics of the financial assets.
All income and expenses relating to financial assets
that are recognised in profit or loss are presented
within finance costs,
finance income or other
financial
items, except for impairment of trade
receivables which
is presented within other
expenses.
Financial assets are measured at amortised cost if
the assets meet the following conditions (and are not
designated as FVPL):
-
-
they are held with the objective to hold the
assets and collect its contractual cash flows;
the contractual terms of the financial assets
give rise to cash flows that are solely
payments of principal and interest on the
principal amount outstanding.
After initial recognition, these are measured at
amortised cost using the effective interest method.
Discounting is omitted where the effect of
discounting is immaterial. The Group’s cash and cash
equivalents, trade and most other receivables fall
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR
into this category of financial instruments.
Financial assets that are held within a different
business model other than ‘hold to collect’ or ‘hold to
collect and sell’ are categorised at fair value through
profit and loss. Further, irrespective of business
model financial assets whose contractual cash flows
are not solely payments of principal and interest are
accounted for at FVPL. All derivative financial
Subsequent measurement of financial liabilities
instruments fall into this category.
The Group’s financial liabilities include borrowings,
trade and other payables and derivative financial
instruments. Subsequent
to
initial recognition,
financial liabilities are measured at amortised cost
using the effective interest method, except for
derivatives and financial
liabilities designated at
FVPL, which are carried subsequently at fair value
with gains or losses recognised in profit or loss.
All
interest-related charges and,
if applicable,
changes in an instrument’s fair value that are
reported in profit or loss are included within finance
costs or finance income.
Contracts are assessed at inception to determine
whether a contract is, or contains, a lease. It is
classified as such if the contract conveys the right to
control the use of an identified asset for a period of
time in exchange for consideration.
A single recognition and measurement approach is
applied for all leases, except for short-term leases,
leases of low-value assets and leases to explore for
or mine minerals and similar non-regenerative
resources. The Group recognises lease liabilities to
make
lease payments and right-of-use assets
representing the right to use the underlying assets.
Right-of-use assets are included under Property
Plant and Equipment (refer note 9).
at
are
liabilities
recognised
Lease
the
commencement date of the lease and measured at
the present value of lease payments to be made over
the lease term. The lease payments include fixed
payments (including in-substance fixed payments)
less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and
amounts expected to be paid under residual value
guarantees. The lease payments also include the
exercise price of a purchase option reasonably
certain to be exercised by the Group and payments
of penalties for terminating the lease, if the lease
term reflects the Group exercising the option to
terminate.
The Group uses its incremental borrowing rate at the
lease commencement date to calculate the present
value of lease payments, if the interest rate implicit
in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities
is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition,
is
the carrying amount of
remeasured if there is a modification, a change in the
lease term, a change in the lease payments (e.g.,
changes to future payments resulting from a change
in an index or rate used to determine such lease
liabilities
lease
payments) or a change in the assessment of an
option to purchase the underlying asset.
Lease liabilities are included in interest-bearing
loans and borrowings.
Lease payments for short-term leases, leases of low-
value assets and leases to explore for or mine
minerals as well as variable lease payments that do
not depend on an index or a rate are recognised as
expenses (unless they are incurred to produce
inventories) in the period in which the event or
Determination of fair values
condition that triggers the payment occurs.
TRADE AND OTHER RECEIVABLES
The fair value of trade and other receivables is
estimated as the present value of future cash flows,
discounted at the market rate of interest at the
FINANCIAL LIABILITIES
reporting date.
Fair value, which is determined for disclosure
purposes, is calculated based on the present value of
future principal and interest cash flows, discounted
Significant accounting judgements, estimates and
at the market rate of interest at the reporting date.
assumptions
FINANCIAL ASSETS
The Group’s financial assets include the receivable in
respect of associate, SML, that represents the future
reimbursement in US dollars of the Group’s historic
alluvial exploration and development costs incurred
at Lulo. The recoverable amount of the receivable is
reassessed using calculations which incorporate
various key assumptions as per above.
75
Lucapa Diamond Company Limited | Annual Report 2023 | NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
Financial Report
For the year ended 31 December 2023
FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
88aa..
CCaasshh aanndd CCaasshh EEqquuiivvaalleennttss
Financial Overview
Balances on hand
Bank balances
Foreign exchange risk
Cash balances exposed to foreign currency risk, based on notional amounts
Interest rate risk
Cash balances held at variable interest rates
Average rate for 2023: 2.1% (2022: 1.5%)
Additional Information
Foreign exchange sensitivity analysis
31 Dec 2023
31 Dec 2022
US$000
1,317
1,317
103
1,317
6,905
6,905
325
6,905
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
88bb..
TTrraaddee aanndd OOtthheerr RReecceeiivvaabblleess
Financial Overview
Receivable balances exposed to foreign currency risk, based on
Current
GST/ VAT receivable
Prepayments and other receivables
Foreign exchange risk
notional amounts
Interest rate risk
Non-interest bearing balances
Additional Information
Foreign exchange sensitivity analysis
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$000
1,307
1,159
2,466
229
2,466
1,289
1,123
2,412
264
2,412
A sensitivity analysis has been prepared to demonstrate the sensitivity to a reasonably possible change in foreign
exchange rates, with all other variables held constant.
A change of 10 percentage points in foreign exchange rates at the reporting date would have an estimated impact
of US$0.01 million (2022: US$0.03 million) before tax on the statement of profit of loss and other comprehensive
income. There would be no effect on the equity reserves other than those directly related to the statement of
profit of loss and other comprehensive income. The analysis is performed on the same basis as for the prior
period.
A sensitivity analysis has been prepared to demonstrate the sensitivity to a reasonably possible change in foreign
exchange rates, with all other variables held constant.
A change of 10 percentage points in foreign exchange rates at the reporting date would have an estimated impact
of US$0.02 million (2022: US$0.02million) before tax on the statement of profit of loss and other comprehensive
income. There would be no effect on the equity reserves other than those directly related to the statement of
profit of loss and other comprehensive income. The analysis is performed on the same basis as for the prior
Credit risk
period.
Directors’ Report.
The Group is not exposed to any significant credit risk. The VAT receivable is expected to be fully recoverable
despite the uncertainty in respect of the repeal of the VAT bill by the Lesotho government mentioned in the
76
| Lucapa Diamond Company Limited | Annual Report 2023
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$000
1,317
1,317
103
1,317
6,905
6,905
325
6,905
88aa..
CCaasshh aanndd CCaasshh EEqquuiivvaalleennttss
Financial Overview
Balances on hand
Bank balances
Foreign exchange risk
Interest rate risk
Cash balances held at variable interest rates
Average rate for 2023: 2.1% (2022: 1.5%)
Additional Information
Foreign exchange sensitivity analysis
Cash balances exposed to foreign currency risk, based on notional amounts
A sensitivity analysis has been prepared to demonstrate the sensitivity to a reasonably possible change in foreign
exchange rates, with all other variables held constant.
A change of 10 percentage points in foreign exchange rates at the reporting date would have an estimated impact
of US$0.01 million (2022: US$0.03 million) before tax on the statement of profit of loss and other comprehensive
income. There would be no effect on the equity reserves other than those directly related to the statement of
profit of loss and other comprehensive income. The analysis is performed on the same basis as for the prior
period.
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
Financial Report
For the year ended 31 December 2023
FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
88bb..
TTrraaddee aanndd OOtthheerr RReecceeiivvaabblleess
Financial Overview
Current
GST/ VAT receivable
Prepayments and other receivables
Foreign exchange risk
Receivable balances exposed to foreign currency risk, based on
notional amounts
Interest rate risk
Non-interest bearing balances
Additional Information
Foreign exchange sensitivity analysis
31 Dec 2023
31 Dec 2022
US$000
1,307
1,159
2,466
229
2,466
1,289
1,123
2,412
264
2,412
A sensitivity analysis has been prepared to demonstrate the sensitivity to a reasonably possible change in foreign
exchange rates, with all other variables held constant.
A change of 10 percentage points in foreign exchange rates at the reporting date would have an estimated impact
of US$0.02 million (2022: US$0.02million) before tax on the statement of profit of loss and other comprehensive
income. There would be no effect on the equity reserves other than those directly related to the statement of
profit of loss and other comprehensive income. The analysis is performed on the same basis as for the prior
Credit risk
period.
The Group is not exposed to any significant credit risk. The VAT receivable is expected to be fully recoverable
despite the uncertainty in respect of the repeal of the VAT bill by the Lesotho government mentioned in the
Directors’ Report.
77
Lucapa Diamond Company Limited | Annual Report 2023 |
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
88dd..
TTrraaddee aanndd OOtthheerr PPaayyaabblleess
Financial Overview
Trade payables
Short-term advance
Employee related accruals
Accruals and other payables
Total
notional amounts
Interest rate risk
Liquidity risk
Contractual maturities profile
Payable within one year
Additional Information
Foreign exchange risk
Payable balances exposed to foreign currency risk, based on
Non-interest bearing balances
8,231
7,881
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$000
1,275
2,213
1,875
2,868
8,231
1,664
2,685
1,471
2,061
7,881
1,493
1,515
8,231
7,881
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
Financial Report
For the year ended 31 December 2023
FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
88cc..
FFiinnaanncciiaall AAsssseettss
Financial Overview
Non-current financial assets
Receivable in respect of SML
At 1 January
Investment during the period
Repayment received
Transferred to Deferred exploration and evaluation costs for Kimberlite JV
Fair value adjustment due to discounting
At end of period
Less: Current portion of receivable
Non-current receivable
Security deposit for environmental rehabilitation in respect of Merlin
Total non-current financial assets
Current financial assets
Receivable in respect of SML
Current portion of receivable
Foreign exchange risk
31 Dec 2023
31 Dec 2022
US$000
12,643
565
(5,781)
(3,504)
3,923
-
3,923
(3,923)
-
699
699
26,366
1,038
(12,218)
(2,543)
12,643
(1,831)
10,812
(4,000)
6,812
685
7,497
3,923
4,000
Receivables exposure to foreign currency risk, based on notional amounts:
-
-
Interest rate risk
Non-interest bearing balances
Additional information
3,923
11,497
The receivable in respect of SML was transferred from Alluvial development in 2016 and represents the future
reimbursement in US dollars of the Company’s historic alluvial exploration and development costs incurred at
Lulo. The receivable is classified as a current asset in the current year. In 2022 it was re-measured to its estimated
fair value using the income approach, which is a valuation technique that converts future cash flow into a single
discounted present value and is classified as level 3 in the fair value hierarchy due to the use of unobservable
inputs.
Significant unobservable inputs are the timing and amounts of future repayments which are based on the
expected cash flows per the Company’s forecast model for SML. Sensitivity factors which could impact the
valuation include operational recoveries, prices and delays in the timing of repayments which will decrease the
fair value estimate. A discount rate of 16.39% was applied in 2022 in the fair value calculation.
The short-term advance relates to monies advanced to Mothae in terms of the minimum cash price of US$630/
carat contained in the partnership agreement with Safdico International Limited. The advance is non-interest
bearing and repayable from future sales, polished partnership profits, in cash by 31 December 2022, or as
otherwise agreed. These repayment terms are currently being revised with a view to extending the partnership
Foreign exchange sensitivity analysis
agreement (subject to approval from the GoL).
A sensitivity analysis has been prepared to demonstrate the sensitivity to a reasonably possible change in foreign
exchange rates, with all other variables held constant.
A change of 10 percentage points in foreign exchange rates at the reporting date would have an estimated impact
of US$0.1 million (2022: US$0.2 million) before tax on the statement of profit of loss and other comprehensive
income. There would be no effect on the equity reserves other than those directly related to the statement of
profit of loss and other comprehensive income. The analysis is performed on the same basis as for the prior
period.
78
| Lucapa Diamond Company Limited | Annual Report 2023
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$000
26,366
1,038
(12,218)
(2,543)
12,643
(1,831)
10,812
(4,000)
6,812
685
7,497
12,643
565
(5,781)
(3,504)
3,923
3,923
(3,923)
699
699
-
-
-
3,923
4,000
3,923
11,497
88cc..
FFiinnaanncciiaall AAsssseettss
Financial Overview
Non-current financial assets
Receivable in respect of SML
At 1January
Investment during the period
Repayment received
Total non-current financial assets
Current financial assets
Receivable in respect of SML
Current portion of receivable
Foreign exchange risk
Interest rate risk
Non-interest bearing balances
Additional information
Transferred to Deferred exploration and evaluation costs for Kimberlite JV
Fair value adjustment due to discounting
At end of period
Less: Current portion of receivable
Non-current receivable
Security deposit for environmental rehabilitation in respect of Merlin
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
Financial Report
For the year ended 31 December 2023
FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
88dd..
TTrraaddee aanndd OOtthheerr PPaayyaabblleess
Financial Overview
Trade payables
Short-term advance
Employee related accruals
Accruals and other payables
Total
Foreign exchange risk
Payable balances exposed to foreign currency risk, based on
notional amounts
Interest rate risk
Non-interest bearing balances
Liquidity risk
Contractual maturities profile
Payable within one year
31 Dec 2023
31 Dec 2022
US$000
1,275
2,213
1,875
2,868
8,231
1,664
2,685
1,471
2,061
7,881
1,493
1,515
8,231
7,881
8,231
7,881
Receivables exposure to foreign currency risk, based on notional amounts:
-
Additional Information
The receivable in respect of SML was transferred from Alluvial development in 2016 and represents the future
reimbursement in US dollars of the Company’s historic alluvial exploration and development costs incurred at
Lulo. The receivable is classified as a current asset in the current year. In 2022 it was re-measured to its estimated
fair value using the income approach, which is a valuation technique that converts future cash flow into a single
discounted present value and is classified as level 3 in the fair value hierarchy due to the use of unobservable
inputs.
Significant unobservable inputs are the timing and amounts of future repayments which are based on the
expected cash flows per the Company’s forecast model for SML. Sensitivity factors which could impact the
valuation include operational recoveries, prices and delays in the timing of repayments which will decrease the
fair value estimate. A discount rate of 16.39% was applied in 2022 in the fair value calculation.
The short-term advance relates to monies advanced to Mothae in terms of the minimum cash price of US$630/
carat contained in the partnership agreement with Safdico International Limited. The advance is non-interest
bearing and repayable from future sales, polished partnership profits, in cash by 31 December 2022, or as
otherwise agreed. These repayment terms are currently being revised with a view to extending the partnership
Foreign exchange sensitivity analysis
agreement (subject to approval from the GoL).
A sensitivity analysis has been prepared to demonstrate the sensitivity to a reasonably possible change in foreign
exchange rates, with all other variables held constant.
A change of 10 percentage points in foreign exchange rates at the reporting date would have an estimated impact
of US$0.1 million (2022: US$0.2 million) before tax on the statement of profit of loss and other comprehensive
income. There would be no effect on the equity reserves other than those directly related to the statement of
profit of loss and other comprehensive income. The analysis is performed on the same basis as for the prior
period.
79
Lucapa Diamond Company Limited | Annual Report 2023 |
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
Financial Report
For the year ended 31 December 2023
Financial Report
For the year ended 31 December 2023
FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
88ee..
BBoorrrroowwiinnggss
Financial Overview
Current borrowings
Lease liabilities
Other short-term loans
Current loans - Embedded derivatives
Total
Non-current borrowings
Lease liabilities
Other non-current loans
Other non-current loans - Embedded derivatives
Total
Foreign exchange risk
Borrowings exposed to foreign currency risk, based on notional amounts
Interest rate risk
Balances at variable interest rates
Average rate for 2023: 15.9% (2022: 15.7%)
Refer interest rate sensitivity analysis below
Balances at fixed interest rates
Average rate for 2023: 9.8% (2022: 9.8% )
Liquidity risk
Contractual maturities profile, including estimated interest
payments and excluding the impact of netting agreements
Borrowings
Payable within one year
Payable after one year but less than five years
Payable after more than five years
Leases
Payable within one year
Payable after one year but less than five years
Payable after more than five years
Other disclosures in respect of leases
Cash outflow
Low value lease expense
Expense relating to variable lease payments not included in the
measurement of lease liabilities
Non-cash financing recognised
80
31 Dec 2023
31 Dec 2022
US$000
235
-
-
235
-
-
-
-
-
-
70
5,801
522
6,393
33
-
-
33
-
2,066
235
3,838
-
-
-
240
-
-
1,726
168
5,170
-
7,557
-
-
82
34
-
1,390
32
-
-
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
Borrowings - additional Information
Terms and conditions
LEASE LIABILITIES
The lease liabilities consist of the amounts due in respect of the following:
•
•
Mining equipment and plant at Mothae, leased on a monthly basis until May 2024; and
Various lease contracts for office space, office and other equipment used in its operations. Lease terms
vary between 1 and 3 years.
Generally, the Group’s obligations under its leases are secured by the lessor’s title to the leased assets. Certain
lease contracts include extension and termination options.
OTHER LOANS
The prior year loan amounts reflect the balances due to Equigold and IDC. Both loans were settled during the
Cash flow sensitivity analysis for variable rate instruments
current period and the related security has been expunged.
A sensitivity analysis has been prepared to demonstrate the sensitivity to a reasonably possible change in
interest rates, with all other variables held constant through the impact on floating rate interest rates.
A change of 100 basis points in interest rates at the reporting date would have an estimated impact of US$0.01
million (2022: US$0.2 million) before tax on the statement of profit of loss and other comprehensive income.
There would be no effect on the equity reserves other than those directly related to the statement of profit of
Foreign exchange sensitivity analysis
loss and other comprehensive income. The analysis is performed on the same basis as for the prior period.
A sensitivity analysis has been prepared to demonstrate the sensitivity to a reasonably possible change in
foreign exchange rates, with all other variables held constant. A change of 10 percentage points in foreign
comprehensive
exchange rates at the reporting date would have an estimated impact of US$0.0 million (2022: US$0.0 million)
before tax on the statement of profit of loss and other
income. There would be no effect on the
equity reserves other than those directly related to the statement of profit of loss and other comprehensive
income. The analysis is performed on the same basis as for the prior period.
| Lucapa Diamond Company Limited | Annual Report 2023
88ee..
BBoorrrroowwiinnggss
Financial Overview
Current borrowings
Lease liabilities
Other short-term loans
Total
Non-current borrowings
Lease liabilities
Other non-current loans
Total
Foreign exchange risk
Interest rate risk
Current loans - Embedded derivatives
Other non-current loans - Embedded derivatives
Borrowings exposed to foreign currency risk, based on notional amounts
Balances at variable interest rates
Average rate for 2023: 15.9% (2022: 15.7%)
Refer interest rate sensitivity analysis below
Balances at fixed interest rates
Average rate for 2023: 9.8% (2022: 9.8% )
Liquidity risk
Contractual maturities profile, including estimated interest
payments and excluding the impact of netting agreements
Borrowings
Payable within one year
Payable after one year but less than five years
Payable after more than five years
Leases
Payable within one year
Payable after one year but less than five years
Payable after more than five years
Other disclosures in respect of leases
Cash outflow
Low value lease expense
measurement of lease liabilities
Non-cash financing recognised
Expense relating to variable lease payments not included in the
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$000
235
3,838
235
235
-
-
-
-
-
-
-
-
-
-
-
-
-
-
240
1,726
168
5,170
70
5,801
522
6,393
33
33
-
-
-
2,066
7,557
82
34
-
1,390
32
-
-
-
-
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
Financial Report
For the year ended 31 December 2023
FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
FFiinnaanncciiaall IInnssttrruummeennttss aanndd FFiinnaanncciiaall RRiisskk MMaannaaggeemmeenntt ((ccoonnttiinnuueedd))
Borrowings - additional Information
Terms and conditions
LEASE LIABILITIES
•
The lease liabilities consist of the amounts due in respect of the following:
•
Mining equipment and plant at Mothae, leased on a monthly basis until May 2024; and
Various lease contracts for office space, office and other equipment used in its operations. Lease terms
vary between 1 and 3 years.
Generally, the Group’s obligations under its leases are secured by the lessor’s title to the leased assets. Certain
lease contracts include extension and termination options.
OTHER LOANS
The prior year loan amounts reflect the balances due to Equigold and IDC. Both loans were settled during the
Cash flow sensitivity analysis for variable rate instruments
current period and the related security has been expunged.
A sensitivity analysis has been prepared to demonstrate the sensitivity to a reasonably possible change in
interest rates, with all other variables held constant through the impact on floating rate interest rates.
A change of 100 basis points in interest rates at the reporting date would have an estimated impact of US$0.01
million (2022: US$0.2 million) before tax on the statement of profit of loss and other comprehensive income.
There would be no effect on the equity reserves other than those directly related to the statement of profit of
Foreign exchange sensitivity analysis
loss and other comprehensive income. The analysis is performed on the same basis as for the prior period.
A sensitivity analysis has been prepared to demonstrate the sensitivity to a reasonably possible change in
foreign exchange rates, with all other variables held constant. A change of 10 percentage points in foreign
exchange rates at the reporting date would have an estimated impact of US$0.0 million (2022: US$0.0 million)
before tax on the statement of profit of loss and other
income. There would be no effect on the
equity reserves other than those directly related to the statement of profit of loss and other comprehensive
income. The analysis is performed on the same basis as for the prior period.
comprehensive
81
Lucapa Diamond Company Limited | Annual Report 2023 | NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
99..
IInnvveennttoorriieess
Financial Overview
Diamond inventory
Consumables and other inventory
Additional Information
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$000
922
1,429
2,351
1,000
1,359
2,359
During the year, US$6.8 million (2022: US$10.2 million) was recognised as an expense under cost of sales for
inventories carried at net realisable value.
Accounting policy
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the
the inventories, production or
first-in first-out principle, and includes expenditure incurred in
conversion costs and other costs incurred in bringing them to their existing location and condition.
acquiring
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses.
82
Financial Report
For the year ended 31 December 2023
•
•
•
•
•
The
exploration program identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
Overall, the diamond market in 2023 could be
described
as
volatile. Macro-economic
and
geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
The G7 Countries (including the European Union)
announced in December a ban on Russian diamonds
followed by a phase-in of restrictions on the
importation of Russian diamonds and diamond
jewellery from the beginning of 2024. The sanctions
are designed to curb Russia’s ability to continue to
finance the invasion of Ukraine.
2023 Group Highlights
2023 Group highlights include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
100% basis;
Attributable Rough diamond
revenue:
US$48.4 million (A$72.9 million);
Attributable EBITDA: US$8.3 million (A$12.9
million);
63,469 carats recovered on a 100% basis;
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
bearing debt in Q3;
and processed;
Group is debt free after expunging interest-
Mothae set new records for tonnes mined
Lulo Kimberlite Exploration program
th
discovered
its
15
diamondiferous
kimberlite;
option; and
Merlin Diamond Project Feasibility Study
pivoted to
low-cost, small-scale study
Nick Selby appointed CEO and MD.
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
Lulo Alluvial Mine achieved 9% higher
processing volumes for the year compared to
the previous year due to the recent
investment in new plant and fleet;
Mothae set new records for tonnes mined
(up 23% yoy) and processed (up 22% yoy)
following
improvements made
to
the
processing plant in 2022;
The Lulo Kimberlite Bulk Sampling Program
processed a total of 26 samples during the
year, or one every two weeks;
| Lucapa Diamond Company Limited | Annual Report 2023
99..
IInnvveennttoorriieess
Financial Overview
Diamond inventory
Consumables and other inventory
Additional Information
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$000
922
1,429
2,351
1,000
1,359
2,359
During the year, US$6.8 million (2022: US$10.2 million) was recognised as an expense under cost of sales for
inventories carried at net realisable value.
Accounting policy
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the
first-in first-out principle, and includes expenditure incurred in
the inventories, production or
conversion costs and other costs incurred in bringing them to their existing location and condition.
acquiring
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses.
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
2023 Group Highlights
•
Financial Report
For the year ended 31 December 2023
2023 Group highlights include:
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63,469 carats recovered on a 100% basis;
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
Group is debt free after expunging interest-
bearing debt in Q3;
Mothae set new records for tonnes mined
and processed;
t
Lulo Kimberlite Exploration program
n
e
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p
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15
discovered
o
e
v
kimberlite;
e
d
Merlin Diamond Project Feasibility Study
pivoted to
low-cost, small-scale study
option; and
Nick Selby appointed CEO and MD.
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nn
aa
ii
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
•
ii
ll
ii
ll
2
2
0
2
y
r
a
u
n
a
J
1
w
e
i
v
r
e
v
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oo
ss
nn
oo
CC
ee
hh
tt
oo
tt
Lulo Alluvial Mine achieved 9% higher
processing volumes for the year compared to
s
t
n
the previous year due to the recent
e
m
e
PP
v
investment in new plant and fleet;
o
m
yy
tt
y
Mothae set new records for tonnes mined
rr
c
n
ee
e
pp
r
r
(up 23% yoy) and processed (up 22% yoy)
u
a
s
oo
c
i
a
n
c
rr
s
g
PP
n
o
following
the
improvements made
e
p
a
r
s
o
n
Di
F
00
processing plant in 2022;
F
11
The Lulo Kimberlite Bulk Sampling Program
processed a total of 26 samples during the
year, or one every two weeks;
2
2
0
2
r
e
b
m
e
c
e
D
1
3
t
a
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t
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a
a
B
s
a
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s
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i
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d
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to
t
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s
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o
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o
..
i
l
l
i
l
i
l
-
•
•
)
2
(
)
3
1
(
6
3
1
3
3
7
2
5
3
)
5
7
(
4
4
3
1
9
3
)
7
6
(
2
7
1
,
5
)
2
7
6
(
)
2
4
2
(
2
1
2
1,
)
5
6
8
(
1
3
8
1,
6
6
8
,
5
0
1
1
,
3
6
0
7
3
,
3
1
2
1
7
,
9
3
3
6
8
1,
5
8
0
6
,
0
1
9
2
2
,
5
2
)
8
8
8
,
3
(
The
exploration program identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
)
5
7
8
,
3
(
7
3
0
,
3
7
5
0
1,
)
9
2
2
(
)
3
2
2
(
2
4
1
1,
)
0
7
1
(
5
1
5
1,
4
4
6
2
2
3
)
8
1
(
3
3
5
7
1
6
0
9
1
)
7
1
(
6
3
1
9
7
1
5
9
3
2
•
•
2
3
-
-
-
-
,
,
,
,
,
,
,
-
-
-
-
5
2
)
6
(
)
9
(
1)
1
(
6
2
1
3
3
1
1
0
1
5
7
2
1
6
5
4
7
1
1,
)
2
2
2
(
)
7
6
2
(
5
4
9
1,
9
5
3
3
9
7
2
3
3
3
0
2
0
2
4
2
1
6
8
2
5
1
4
5
4
7
1
)
6
6
5
2
(
Overall, the diamond market in 2023 could be
as
described
and
volatile. Macro-economic
geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
7
8
6
9
2
6
0
9
3
3
6
4
8
3
1
6
0
2
5
1
2
0
6
5
1
5
5
5
6
1
0
5
0
1,
1
0
4
0
2
6
9
8
1,
4
2
1
2
4
2
3
1,
)
6
0
1
(
4
1
4
1,
)
4
4
1
(
)
9
2
1
(
)
4
8
(
4
5
1
-
-
-
-
-
-
-
,
,
,
,
,
,
,
,
From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
r
a
e
y
e
h
t
r
a
e
y
e
h
t
r
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i
t
a
c
e
r
p
e
d
i
t
a
c
e
r
p
e
d
The G7 Countries (including the European Union)
announced in December a ban on Russian diamonds
followed by a phase-in of restrictions on the
2
2
importation of Russian diamonds and diamond
0
2
r
e
jewellery from the beginning of 2024. The sanctions
b
m
e
are designed to curb Russia’s ability to continue to
c
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r
e
t
r
i
D
a
o
p
1
m
m
finance the invasion of Ukraine.
3
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83
Lucapa Diamond Company Limited | Annual Report 2023 |
Financial Report
For the year ended 31 December 2023
they are derived from valuation techniques that
include inputs that are not based on observable
Accounting policy
market data.
Recognition and measurement
Items of property plant and equipment are
measured at cost less accumulated depreciation and
accumulated impairment losses.
that
includes expenditure
Cost
is directly
attributable to the acquisition of the asset. The cost
of self-constructed assets includes the cost of
materials and direct labour, any other costs directly
attributable to bringing the asset to a working
condition for its intended use, and the costs of
dismantling and removing the items and restoring
the site on which they are located.
When parts of an item of property plant and
equipment have different useful lives, they are
accounted for as separate items (major components)
of property plant and equipment.
Gains and losses on disposal of an item of property
plant and equipment are determined by comparing
the proceeds from disposal with the carrying
amount of property plant and equipment and are
recognised net within “other
in the
statement of profit or loss and other comprehensive
Subsequent costs
income.
income”
The cost of replacing part of an item of property
plant and equipment is recognised in the carrying
amount of an item if it is probable that the future
economic benefits embodied within the item will
flow to the Group and the cost of the item can be
measured reliably. The carrying amount of the
replaced part is derecognised. All other costs are
recognised in the statement of profit or loss and
income as an expense
other comprehensive
incurred.
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
PPrrooppeerrttyy PPllaanntt aanndd EEqquuiippmmeenntt ((ccoonnttiinnuueedd))
Additional Information
Deferred exploration and evaluation costs
Deferred exploration and evaluation costs represent
the cumulative expenditure incurred in relation to
the Lulo Kimberlite Project, Mothae, Orapa Area F
and Brooking projects on diamond exploration and
evaluation including plant and equipment. The
Company continues to explore for the primary
kimberlite sources of the alluvial diamonds being
recovered on the Lulo concession, evaluate the neck
and other areas of the Mothae kimberlite resource,
explore for kimberlite in Botswana and for lamproite
in Australia.
The Group has a 39% interest in the Project Lulo
Kimberlite Venture (“the JV”), an unincorporated
entity classified as a joint operation that operates
under the terms of a Mineral Investment Contract
entered into between the partners. Accordingly, the
Group’s interest in the assets, liabilities, revenues
and expenses attributable to the JV have been
included in the appropriate line items in the
statements. Deferred
consolidated
exploration and evaluation costs of US$31.4 million
(31 December 2022: US$27.4 million)
in the
schedule above are related to the JV.
financial
Other assets
assets
comprise
furniture &
computer
vehicles,
fittings and office
Other
equipment,
equipment.
Impairment testing
The Group recognised an impairment charge in the
current year in respect of Mothae as per the
Directors’ Report (refer page 39). The following key
assumption averages were used in the value-in-use
model for impairment testing:
•
Ore volume treated: 1.4 Mtpa (2022: 1.4
US$/ carat sold: 823 (2022: 1,351);
Discount rate: 10% (2022: 10%);
ZAR/ US$ exchange rate: 18.8 (2022: 17.0).
The first three assumptions are considered to be
level three fair value measurements in both years as
84
•
Mtpa);
•
•
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
PPrrooppeerrttyy PPllaanntt aanndd EEqquuiippmmeenntt ((ccoonnttiinnuueedd))
Depreciation
Depreciation is recognised in the statement of profit
or loss and other comprehensive income on a
reducing balance basis over the estimated useful
lives of each part of an item of property plant and
equipment.
The estimated useful
lives in the current and
comparative periods are as follows:
Computer equipment: 3-5 years
Office equipment
: 5-10 years
Mine development: Lesser of life of mine or
period of lease
Mine infrastructure and plant facilities: Based on
resources on a unit of production basis
Depreciation methods, useful lives and residual
Mine development
values are reviewed at each reporting date.
•
•
•
•
Once a mining project has been established as
commercially viable and technically
feasible,
expenditure other than that on land, buildings, plant
and equipment is capitalised as Mine development.
Development
includes previously
capitalised
exploration and evaluation costs, pre-production
development
costs,
certain mining
assets,
development
studies
and other
subsurface
expenditure pertaining to that area of interest. On
Financial Report
For the year ended 31 December 2023
recoverable reserves. Exploration assets that are not
available for use are not amortised.
Exploration and evaluation assets are initially
measured at cost and include acquisition of mining
tenements, studies, exploratory drilling, trenching
and sampling and associated activities and an
allocation of depreciation of assets used
in
exploration activities. General and administrative
costs are only included in the measurement of
exploration costs where they are related directly to
operational activities in a particular area of interest.
Deferred exploration and evaluation costs in relation
to an abandoned area are written off in full against
profit or loss in the period in which the decision to
abandon that area is made.
A regular review is undertaken of each area of
interest
to determine the appropriateness of
continuing to carry forward costs in relation to that
Stripping activity assets
area of interest.
Costs associated with removal of waste overburden
are classified as stripping costs. Stripping activities
that are undertaken during the production phase of
a surface mine may create two benefits, being either
the production of inventory or improved access to
the ore to be mined in the future.
completion, development cost is depreciated as per
Where the benefits are realised in the form of
above. If, after having commenced the development
inventory produced in the period, the production
activity, a judgement is made that a development
stripping costs are accounted for as part of the cost
asset is impaired, the appropriate amount is written
of producing those inventories. Where production
Deferred exploration and evaluation
off to profit and loss.
Exploration and evaluation expenditure incurred is
accumulated in respect of each identifiable area of
interest. These costs are only carried forward to the
extent that the right to tenure of each identifiable
area of interest are current, and either the costs are
expected
to be recouped
through successful
development of the area, or activities in the area
stripping costs are incurred and where the benefit is
the creation of mining flexibility and improved
access to ore to be mined in the future, the costs are
recognised as a non-current asset, referred to as a
‘stripping activity asset’ and included as a separate
category of Property plant and equipment, if:
future economic benefits (being improved
access to the orebody) are probable;
the component of the orebody for which access
•
•
have not yet reached a stage that permits reasonable
will be improved can be accurately identified;
assessment of
the existence of economically
and
| Lucapa Diamond Company Limited | Annual Report 2023 Financial Report
For the year ended 31 December 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
PPrrooppeerrttyy PPllaanntt aanndd EEqquuiippmmeenntt ((ccoonnttiinnuueedd))
Additional Information
Deferred exploration and evaluation costs
Deferred exploration and evaluation costs represent
the cumulative expenditure incurred in relation to
the Lulo Kimberlite Project, Mothae, Orapa Area F
and Brooking projects on diamond exploration and
evaluation including plant and equipment. The
Company continues to explore for the primary
they are derived from valuation techniques that
include inputs that are not based on observable
Accounting policy
market data.
Recognition and measurement
Items of property plant and equipment are
measured at cost less accumulated depreciation and
accumulated impairment losses.
kimberlite sources of the alluvial diamonds being
Cost
includes
expenditure
that
is
directly
recovered on the Lulo concession, evaluate the neck
attributable to the acquisition of the asset. The cost
and other areas of the Mothae kimberlite resource,
of self-constructed assets includes the cost of
explore for kimberlite in Botswana and for lamproite
materials and direct labour, any other costs directly
in Australia.
The Group has a 39% interest in the Project Lulo
Kimberlite Venture (“the JV”), an unincorporated
entity classified as a joint operation that operates
attributable to bringing the asset to a working
condition for its intended use, and the costs of
dismantling and removing the items and restoring
the site on which they are located.
under the terms of a Mineral Investment Contract
When parts of an item of property plant and
entered into between the partners. Accordingly, the
equipment have different useful
lives, they are
Group’s interest in the assets, liabilities, revenues
accounted for as separate items (major components)
and expenses attributable to the JV have been
of property plant and equipment.
included in the appropriate line items in the
consolidated
financial
statements. Deferred
exploration and evaluation costs of US$31.4 million
(31 December 2022: US$27.4 million)
in the
schedule above are related to the JV.
Other
assets
comprise
vehicles,
computer
equipment,
furniture & fittings and office
Other assets
equipment.
Impairment testing
The Group recognised an impairment charge in the
current year in respect of Mothae as per the
Directors’ Report (refer page 6). The following key
assumption averages were used in the value-in-use
model for impairment testing:
Ore volume treated: 1.4 Mtpa (2022: 1.4
US$/ carat sold: 823 (2022: 1,351);
Discount rate: 10% (2022: 10%);
ZAR/ US$ exchange rate: 18.8 (2022: 17.0).
The first three assumptions are considered to be
level three fair value measurements in both years as
•
•
•
Mtpa);
•
Gains and losses on disposal of an item of property
plant and equipment are determined by comparing
the proceeds from disposal with the carrying
amount of property plant and equipment and are
recognised net within “other
income”
in the
statement of profit or loss and other comprehensive
Subsequent costs
income.
The cost of replacing part of an item of property
plant and equipment is recognised in the carrying
amount of an item if it is probable that the future
economic benefits embodied within the item will
flow to the Group and the cost of the item can be
measured reliably. The carrying amount of the
replaced part is derecognised. All other costs are
recognised in the statement of profit or loss and
other comprehensive
income as an expense
incurred.
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
PPrrooppeerrttyy PPllaanntt aanndd EEqquuiippmmeenntt ((ccoonnttiinnuueedd))
Depreciation
Financial Report
For the year ended 31 December 2023
Depreciation is recognised in the statement of profit
or loss and other comprehensive income on a
reducing balance basis over the estimated useful
lives of each part of an item of property plant and
equipment.
The estimated useful lives in the current and
•
comparative periods are as follows:
•
•
Computer equipment: 3-5 years
Office equipment
: 5-10 years
Mine development: Lesser of life of mine or
period of lease
Mine infrastructure and plant facilities: Based on
resources on a unit of production basis
•
Depreciation methods, useful lives and residual
Mine development
values are reviewed at each reporting date.
technically
includes previously
Once a mining project has been established as
commercially viable and
feasible,
expenditure other than that on land, buildings, plant
and equipment is capitalised as Mine development.
Development
capitalised
exploration and evaluation costs, pre-production
assets,
development
development
subsurface
expenditure pertaining to that area of interest. On
completion, development cost is depreciated as per
above. If, after having commenced the development
activity, a judgement is made that a development
asset is impaired, the appropriate amount is written
Deferred exploration and evaluation
off to profit and loss.
certain mining
and other
costs,
studies
Exploration and evaluation expenditure incurred is
accumulated in respect of each identifiable area of
interest. These costs are only carried forward to the
extent that the right to tenure of each identifiable
area of interest are current, and either the costs are
expected
through successful
development of the area, or activities in the area
have not yet reached a stage that permits reasonable
the existence of economically
assessment of
to be recouped
recoverable reserves. Exploration assets that are not
available for use are not amortised.
Exploration and evaluation assets are initially
measured at cost and include acquisition of mining
tenements, studies, exploratory drilling, trenching
and sampling and associated activities and an
allocation of depreciation of assets used
in
exploration activities. General and administrative
costs are only included in the measurement of
exploration costs where they are related directly to
operational activities in a particular area of interest.
Deferred exploration and evaluation costs in relation
to an abandoned area are written off in full against
profit or loss in the period in which the decision to
abandon that area is made.
A regular review is undertaken of each area of
interest to determine the appropriateness of
continuing to carry forward costs in relation to that
Stripping activity assets
area of interest.
Costs associated with removal of waste overburden
are classified as stripping costs. Stripping activities
that are undertaken during the production phase of
a surface mine may create two benefits, being either
the production of inventory or improved access to
the ore to be mined in the future.
Where the benefits are realised in the form of
inventory produced in the period, the production
stripping costs are accounted for as part of the cost
of producing those inventories. Where production
stripping costs are incurred and where the benefit is
the creation of mining flexibility and improved
access to ore to be mined in the future, the costs are
recognised as a non-current asset, referred to as a
‘stripping activity asset’ and included as a separate
•
category of Property plant and equipment, if:
•
future economic benefits (being
access to the orebody) are probable;
the component of the orebody for which access
will be improved can be accurately identified;
and
improved
85
Lucapa Diamond Company Limited | Annual Report 2023 | NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
PPrrooppeerrttyy PPllaanntt aanndd EEqquuiippmmeenntt ((ccoonnttiinnuueedd))
•
Financial Report
For the year ended 31 December 2023
the costs associated with the improved access
can be reliably measured.
If all the criteria are not met, the production
stripping costs are charged to the statement of profit
or loss as operating costs. The stripping activity
asset is initially measured at cost, which is the
accumulation of costs directly incurred to perform
the stripping activity that improves access to the
identified component of ore, plus an allocation of
directly attributable overhead costs. If incidental
operations are occurring at the same time as the
production stripping activity, but are not necessary
for the production stripping activity to continue as
planned, these costs are not included in the cost of
the stripping activity asset. If the costs of the
stripping activity asset and the inventory produced
are not separately identifiable, a relevant production
measure is used to allocate the production stripping
costs between the inventory produced and the
stripping activity asset.
is subsequently
The stripping activity asset
amortised over the expected useful life of the
identified component of the orebody that became
more accessible as a result of the stripping activity.
The expected average stripping ratio over the
average life of the area being mined is used to
amortise the stripping activity. As a result, the
stripping activity asset is carried at cost less
amortisation and any impairment losses.
The average life of area cost per tonne is calculated
as the total expected costs to be incurred to mine the
orebody divided by the number of tonnes expected
to be mined. The average life of area stripping ratio
and the average life of area cost per tonne are
recalculated annually
light of additional
in
knowledge and changes in estimates. Changes in the
stripping ratio are accounted for prospectively as a
Right-of-use assets
change in estimate.
impairment
measured at cost, less any accumulated depreciation
losses, and adjusted for any
and
remeasurement of lease liabilities. The cost of right-
of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease
payments made at or before the commencement
date less any lease incentives received. Right-of-use
assets are depreciated on a straight-line basis over
the shorter of the lease term and the estimated
Joint operations
useful lives of the assets.
A joint arrangement in which the Group has direct
rights to underlying assets and obligations for
underlying liabilities is classified as a joint operation.
Interests in joint operations are accounted for by
recognising the Group’s assets (including its share of
any assets held jointly); its liabilities (including its
share of any liabilities incurred jointly); its revenue
from the sale of its share of the output arising from
the joint operation; its share of the revenue from the
sale of the output by the joint operation; and its
expenses (including its share of any expenses
Significant accounting judgements, estimates and
incurred jointly).
assumptions
ASSET USEFUL LIVES AND RESIDUAL VALUES
Property, plant and equipment are depreciated over
its useful life taking into account residual values
where appropriate. The actual useful lives of the
assets and residual values are assessed annually and
may vary depending on a number of factors. In re–
assessing asset useful
factors such as
technological innovation, product life cycles and
maintenance programmes are taken into account.
Residual value assessments consider issues such as
future market conditions, the remaining life of the
asset and projected disposal values.
lives,
assets
the
are
Right-of-use
commencement date of a lease (i.e., the date the
underlying asset is available for use) and are
recognised
at
86
Financial Report
For the year ended 31 December 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
PPrrooppeerrttyy PPllaanntt aanndd EEqquuiippmmeenntt ((ccoonnttiinnuueedd))
VALUATION OF MINERAL PROPERTIES
the company’s reported financial position and
The Group carries the acquisition of its mineral
results, in the following way:
properties at cost less any provision for impairment.
The carrying value of exploration and evaluation
The Group undertakes a periodic review of the
assets, mine properties, property plant and
carrying values of mineral properties and whenever
equipment, and goodwill may be affected due to
events or changes in circumstances indicate that
changes in estimated future cash flows;
their carrying values may exceed their fair value. In
Depreciation and amortisation charges in the
undertaking this review, management of the Group
statement
of profit
or
loss and other
is required to make significant estimates. These
estimates are subject
to various risks and
comprehensive income may change where such
charges are determined using the unit of
uncertainties, which may ultimately have an effect
production method, or where the useful life of
•
•
•
•
•
the related assets change;
Capitalised stripping costs recognised in the
statement of financial position, as either part of
mine properties or inventory or charged to
profit or loss, may change due to changes in
stripping ratios;
Provisions for rehabilitation and environmental
provisions may change where reserve estimate
changes affect expectations about when such
activities will occur and the associated cost of
these activities;
The recognition and carrying value of deferred
income tax assets may change due to changes in
the judgements regarding the existence of such
assets and in estimates of the likely recovery of
such assets.
* The term “production target” is defined to mean a projection or forecast
of the amount of mineral to be extracted from a particular mining tenement
or tenements for a period that extends past the current year and the
forthcoming year.
on the expected recoverability of the carrying values
EXPLORATION AND EVALUATION ASSETS
of the mineral properties and related expenditures.
The Group assesses the carrying value of exploration
and evaluation assets in accordance with the
accounting policy noted above.
The basis of
determining the carrying value involves numerous
estimates and
judgements resulting
from the
assessment of ongoing exploration activities, as per
DEVELOPMENT
the accounting policy note.
Development activities commence after commercial
viability and technical feasibility of the project is
established. Judgement is applied in determining
when a project
is commercially viable and
technically feasible. In exercising this judgement,
management is required to make certain estimates
and assumptions, with inherent uncertainty, as to
MINERAL RESOURCE, ORE RESERVES AND PRODUCTION
the future events.
TARGET* ESTIMATES
Ore reserves and production target estimates are
estimates of
the amount of ore that can be
economically and legally extracted from the mineral
resources of the Group’s mining properties. An ore
reserve is the economically mineable part of a
measured and/ or indicated resource. A production
target may include lower confidence inferred
resources under certain circumstances and if there
are reasonable grounds to do so. Such production
target estimates and changes to them may impact
| Lucapa Diamond Company Limited | Annual Report 2023 NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
PPrrooppeerrttyy PPllaanntt aanndd EEqquuiippmmeenntt ((ccoonnttiinnuueedd))
•
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
PPrrooppeerrttyy PPllaanntt aanndd EEqquuiippmmeenntt ((ccoonnttiinnuueedd))
VALUATION OF MINERAL PROPERTIES
Financial Report
For the year ended 31 December 2023
The Group carries the acquisition of its mineral
properties at cost less any provision for impairment.
The Group undertakes a periodic review of the
carrying values of mineral properties and whenever
events or changes in circumstances indicate that
their carrying values may exceed their fair value. In
undertaking this review, management of the Group
is required to make significant estimates. These
estimates are subject
to various risks and
uncertainties, which may ultimately have an effect
on the expected recoverability of the carrying values
EXPLORATION AND EVALUATION ASSETS
of the mineral properties and related expenditures.
The Group assesses the carrying value of exploration
and evaluation assets in accordance with the
accounting policy noted above.
The basis of
determining the carrying value involves numerous
estimates and
from the
assessment of ongoing exploration activities, as per
DEVELOPMENT
the accounting policy note.
judgements resulting
Development activities commence after commercial
viability and technical feasibility of the project is
established. Judgement is applied in determining
when a project
is commercially viable and
technically feasible. In exercising this judgement,
management is required to make certain estimates
and assumptions, with inherent uncertainty, as to
MINERAL RESOURCE, ORE RESERVES AND PRODUCTION
the future events.
TARGET* ESTIMATES
the company’s reported financial position and
•
results, in the following way:
•
•
•
•
The carrying value of exploration and evaluation
assets, mine properties, property plant and
equipment, and goodwill may be affected due to
changes in estimated future cash flows;
Depreciation and amortisation charges in the
statement of profit or
loss and other
comprehensive income may change where such
charges are determined using the unit of
production method, or where the useful life of
the related assets change;
Capitalised stripping costs recognised in the
statement of financial position, as either part of
mine properties or inventory or charged to
profit or loss, may change due to changes in
stripping ratios;
Provisions for rehabilitation and environmental
provisions may change where reserve estimate
changes affect expectations about when such
activities will occur and the associated cost of
these activities;
The recognition and carrying value of deferred
income tax assets may change due to changes in
the judgements regarding the existence of such
assets and in estimates of the likely recovery of
such assets.
* The term “production target” is defined to mean a projection or forecast
of the amount of mineral to be extracted from a particular mining tenement
or tenements for a period that extends past the current year and the
forthcoming year.
Financial Report
For the year ended 31 December 2023
measured at cost, less any accumulated depreciation
and impairment
losses, and adjusted for any
remeasurement of lease liabilities. The cost of right-
of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease
payments made at or before the commencement
date less any lease incentives received. Right-of-use
assets are depreciated on a straight-line basis over
the shorter of the lease term and the estimated
Joint operations
useful lives of the assets.
A joint arrangement in which the Group has direct
rights to underlying assets and obligations for
underlying liabilities is classified as a joint operation.
Interests in joint operations are accounted for by
recognising the Group’s assets (including its share of
any assets held jointly); its liabilities (including its
share of any liabilities incurred jointly); its revenue
from the sale of its share of the output arising from
the joint operation; its share of the revenue from the
sale of the output by the joint operation; and its
expenses (including its share of any expenses
Significant accounting judgements, estimates and
incurred jointly).
assumptions
ASSET USEFUL LIVES AND RESIDUAL VALUES
where appropriate. The actual useful lives of the
assets and residual values are assessed annually and
may vary depending on a number of factors. In re–
assessing asset useful
lives,
factors
such as
technological
innovation, product life cycles and
maintenance programmes are taken into account.
Residual value assessments consider issues such as
future market conditions, the remaining life of the
asset and projected disposal values.
the costs associated with the improved access
can be reliably measured.
If all the criteria are not met, the production
stripping costs are charged to the statement of profit
or loss as operating costs. The stripping activity
asset is initially measured at cost, which is the
accumulation of costs directly incurred to perform
the stripping activity that improves access to the
identified component of ore, plus an allocation of
directly attributable overhead costs. If incidental
operations are occurring at the same time as the
production stripping activity, but are not necessary
for the production stripping activity to continue as
planned, these costs are not included in the cost of
the stripping activity asset. If the costs of the
stripping activity asset and the inventory produced
are not separately identifiable, a relevant production
measure is used to allocate the production stripping
costs between the inventory produced and the
stripping activity asset.
The
stripping activity asset
is subsequently
amortised over the expected useful life of the
identified component of the orebody that became
more accessible as a result of the stripping activity.
The expected average stripping ratio over the
average life of the area being mined is used to
amortisation and any impairment losses.
The average life of area cost per tonne is calculated
as the total expected costs to be incurred to mine the
orebody divided by the number of tonnes expected
to be mined. The average life of area stripping ratio
and the average life of area cost per tonne are
recalculated annually
in
light
of
additional
knowledge and changes in estimates. Changes in the
stripping ratio are accounted for prospectively as a
Right-of-use assets
change in estimate.
Right-of-use
assets
are
recognised
at
the
commencement date of a lease (i.e., the date the
underlying asset is available for use) and are
amortise the stripping activity. As a result, the
Property, plant and equipment are depreciated over
stripping activity asset
is carried at cost
less
its useful life taking into account residual values
Ore reserves and production target estimates are
estimates of the amount of ore that can be
economically and legally extracted from the mineral
resources of the Group’s mining properties. An ore
reserve is the economically mineable part of a
measured and/ or indicated resource. A production
target may
inferred
resources under certain circumstances and if there
are reasonable grounds to do so. Such production
target estimates and changes to them may impact
lower confidence
include
87
Lucapa Diamond Company Limited | Annual Report 2023 | NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
PPrrooppeerrttyy PPllaanntt aanndd EEqquuiippmmeenntt ((ccoonnttiinnuueedd))
Financial Report
For the year ended 31 December 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
Financial Report
For the year ended 31 December 2023
The Group estimates its mineral resource, ore reserves and production targets based on information compiled
by appropriately qualified persons relating to the geological and technical data on the size, depth, shape and
grade of the ore body and suitable production techniques and recovery rates. Such an analysis requires complex
geological judgements to interpret the data. The estimation of ore reserves and production targets are based
upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements and
production costs, along with geological assumptions and judgements made in estimating the size and grade of
the ore body
The Group estimates and reports ore reserves and mineral resources in line with the principles contained in the
Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2012) published by
the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, the Australian Institute
of Geoscientists and Minerals Council of Australia (“JORC Code”).
88
1111..
IInnvveessttmmeenntt iinn AAssssoocciiaattee
Financial Overview
Summarised financial information of SML
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Group’s carrying amount of the investment
Revenue
Cost of sales
Administrative and selling expenses
Fair value adjustments
Finance cost
Profit before tax
Income tax expense
Profit for the period
Total comprehensive income for the period
Group’s share of profit for the period
EBITDA
Contingent liabilities
Capital commitments
Payable within one year
- Approved, not yet contracted
- Approved and contracted
Additional Information
31 Dec 2023
31 Dec 2022
US$000
30,450
28,322
15,856
2,844
40,072
18,281
78,556
(39,914)
(22,079)
(1,831)
14,732
(4,243)
10,489
10,489
4,195
23,637
-
-
31,067
26,034
12,703
10,812
33,586
15,686
80,999
(32,568)
(22,978)
(2,481)
(300)
22,672
(3,523)
19,149
19,149
7,660
35,159
1,094
2,237
1,637
5,209
3,044
The Group has a 40% ownership in SML and has
received in the current year from the Angolan tax
Accounting policy
office that this treatment is correct.
recognised its share of SML’s results since its formal
incorporation in May 2016. The earnings of SML
include fair value adjustments in relation to the
discounting of the financial asset of Lucapa reflected
under note 8c.
Associates are those entities over which the Group is
able to exert significant influence, but which are not
subsidiaries. A joint venture is an arrangement that
The contingent liability in 2022 relates to additional
the Group controls jointly with one or more other
income tax potentially payable following a recent
investors, and over which the Group has rights to a
change to the Angolan Industrial Tax Code in respect
share of the arrangement’s net assets rather than
of the treatment of unreleased foreign exchange
direct rights to underlying assets and obligations for
gains and losses due to movements between the
underlying liabilities.
United States dollar and the Angolan kwanza. SML’s
tax for both years has been recognised based on
external advice obtained. Confirmation has been
Investments in associates and joint ventures are
accounted for using the equity method.
| Lucapa Diamond Company Limited | Annual Report 2023 NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
PPrrooppeerrttyy PPllaanntt aanndd EEqquuiippmmeenntt ((ccoonnttiinnuueedd))
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
1111.. IInnvveessttmmeenntt iinn AAssssoocciiaattee
Financial Overview
Financial Report
For the year ended 31 December 2023
Financial Report
For the year ended 31 December 2023
The Group estimates its mineral resource, ore reserves and production targets based on information compiled
by appropriately qualified persons relating to the geological and technical data on the size, depth, shape and
grade of the ore body and suitable production techniques and recovery rates. Such an analysis requires complex
Summarised financial information of SML
31 Dec 2023
31 Dec 2022
US$000
geological judgements to interpret the data. The estimation of ore reserves and production targets are based
upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements and
production costs, along with geological assumptions and judgements made in estimating the size and grade of
the ore body
The Group estimates and reports ore reserves and mineral resources in line with the principles contained in the
Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2012) published by
the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, the Australian Institute
of Geoscientists and Minerals Council of Australia (“JORC Code”).
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Group’s carrying amount of the investment
Revenue
Cost of sales
Administrative and selling expenses
Fair value adjustments
Finance cost
Profit before tax
Income tax expense
Profit for the period
Total comprehensive income for the period
Group’s share of profit for the period
EBITDA
Contingent liabilities
Capital commitments
Payable within one year
- Approved, not yet contracted
- Approved and contracted
Additional Information
30,450
28,322
15,856
2,844
40,072
18,281
78,556
(39,914)
(22,079)
(1,831)
-
14,732
(4,243)
10,489
10,489
4,195
23,637
-
31,067
26,034
12,703
10,812
33,586
15,686
80,999
(32,568)
(22,978)
(2,481)
(300)
22,672
(3,523)
19,149
19,149
7,660
35,159
1,094
2,237
1,637
5,209
3,044
The Group has a 40% ownership in SML and has
recognised its share of SML’s results since its formal
incorporation in May 2016. The earnings of SML
include fair value adjustments in relation to the
discounting of the financial asset of Lucapa reflected
under note 8c.
The contingent liability in 2022 relates to additional
income tax potentially payable following a recent
change to the Angolan Industrial Tax Code in respect
of the treatment of unreleased foreign exchange
gains and losses due to movements between the
United States dollar and the Angolan kwanza. SML’s
tax for both years has been recognised based on
external advice obtained. Confirmation has been
received in the current year from the Angolan tax
Accounting policy
office that this treatment is correct.
Associates are those entities over which the Group is
able to exert significant influence, but which are not
subsidiaries. A joint venture is an arrangement that
the Group controls jointly with one or more other
investors, and over which the Group has rights to a
share of the arrangement’s net assets rather than
direct rights to underlying assets and obligations for
underlying liabilities.
Investments in associates and joint ventures are
accounted for using the equity method.
89
Lucapa Diamond Company Limited | Annual Report 2023 |
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
IInnvveessttmmeenntt iinn AAssssoocciiaattee ((ccoonnttiinnuueedd))
Financial Report
For the year ended 31 December 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
Any goodwill or fair value adjustment attributable to the Group’s share in the associate or joint venture is not
recognised separately and is included in the amount recognised as investment.
The carrying amount of the investment in associates and joint ventures is increased or decreased to recognise
the Group’s share of the profit or loss and other comprehensive income of the associate and joint venture,
adjusted where necessary to ensure consistency with the accounting policies of the Group.
Unrealised gains and losses on transactions between the Group and its associates and joint ventures are
eliminated to the extent of the Group’s interest in those entities. Where unrealised losses are eliminated, the
underlying asset is also tested for impairment.
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$000
2,329
(413)
167
(127)
1,956
1,710
625
125
(131)
2,329
Asset retirement obligations
The Group recognises a liability for an asset
retirement obligation on long-lived assets when a
present legal or constructive obligation exists, as a
result of past events and the amount of the liability
is reasonably determinable. The obligations are
initially recognised and recorded as a liability based
on estimated future cash flows discounted at a credit
adjusted risk free rate. This is adjusted at each
reporting period for changes to factors including the
expected amount of cash flows required to discharge
the liability, the timing of such cash flows and the
credit
adjusted
risk
free
discount
rate.
Corresponding amounts and adjustments are added
to the carrying value of the related long-lived asset
and amortised or depleted to operations over the life
Environmental liabilities
of the related asset.
Environmental expenditures that relate to current
operations are expensed or
capitalised as
appropriate. Expenditures that relate to an existing
condition caused by past operations and which do
not contribute to current or
future revenue
generation are expensed. Liabilities are recorded
when environmental assessments and/ or remedial
efforts are probable, and the costs can be reasonably
estimated.
1122.. NNoonn--CCuurrrreenntt PPrroovviissiioonnss
Financial Overview
Provision for environmental rehabilitation
At 1January
Increase/ (decrease) during the year
Unwinding of discount rate
Foreign exchange difference
At end of period
Additional Information
The provision for rehabilitation has been recognised
Mothae
in respect of Mothae and Merlin.
The estimate is based on an independent expert’s
report of the expected rehabilitation cost over the
life of the mine and discounted back to present value
using a pre-tax discount rate that reflects current
market assessments. Assumptions
include an
estimated rehabilitation timing of between 7 and 10
years (2022: 10 and 13 years), an annual inflation
rate of 5.9% (2022: 7.5%) and a discount rate of
Merlin
11.1% (2022: 8.7%).
The estimate is based on the Mining Management
Plan for Merlin as approved by the government of
the Northern Territory of Australia and discounted
back to present value using a pre-tax discount rate
that
reflects
current market
assessments.
Assumptions include an estimated rehabilitation
timing of 16 years (2022:17 years), an annual
inflation
rate
of
3.0%
(2022:3.0%)
Accounting policy
and a discount rate of 4.2% (2022: 4.9%).
A provision is recognised if, as a result of a past
event, the Group has a present legal or constructive
obligation that can be estimated reliably, and it is
probable that an outflow of economic benefits will
be required to settle the obligation. Provisions are
determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market
assessments of the time value of money and, when
appropriate, the risks specific to the liability.
90
| Lucapa Diamond Company Limited | Annual Report 2023 NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
IInnvveessttmmeenntt iinn AAssssoocciiaattee ((ccoonnttiinnuueedd))
Any goodwill or fair value adjustment attributable to the Group’s share in the associate or joint venture is not
recognised separately and is included in the amount recognised as investment.
The carrying amount of the investment in associates and joint ventures is increased or decreased to recognise
the Group’s share of the profit or loss and other comprehensive income of the associate and joint venture,
adjusted where necessary to ensure consistency with the accounting policies of the Group.
Unrealised gains and losses on transactions between the Group and its associates and joint ventures are
eliminated to the extent of the Group’s interest in those entities. Where unrealised losses are eliminated, the
underlying asset is also tested for impairment.
Financial Report
For the year ended 31 December 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
Financial Report
For the year ended 31 December 2023
1122.. NNoonn--CCuurrrreenntt PPrroovviissiioonnss
Financial Overview
Provision for environmental rehabilitation
At 1 January
Increase/ (decrease) during the year
Unwinding of discount rate
Foreign exchange difference
At end of period
Additional Information
The provision for rehabilitation has been recognised
Mothae
in respect of Mothae and Merlin.
The estimate is based on an independent expert’s
report of the expected rehabilitation cost over the
life of the mine and discounted back to present value
using a pre-tax discount rate that reflects current
market assessments. Assumptions
include an
estimated rehabilitation timing of between 7 and 10
years (2022: 10 and 13 years), an annual inflation
rate of 5.9% (2022: 7.5%) and a discount rate of
Merlin
11.1% (2022: 8.7%).
The estimate is based on the Mining Management
Plan for Merlin as approved by the government of
the Northern Territory of Australia and discounted
back to present value using a pre-tax discount rate
that
assessments.
current market
Assumptions include an estimated rehabilitation
timing of 16 years (2022:17 years), an annual
(2022:3.0%)
inflation
Accounting policy
and a discount rate of 4.2% (2022: 4.9%).
reflects
3.0%
rate
of
A provision is recognised if, as a result of a past
event, the Group has a present legal or constructive
obligation that can be estimated reliably, and it is
probable that an outflow of economic benefits will
be required to settle the obligation. Provisions are
determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market
assessments of the time value of money and, when
appropriate, the risks specific to the liability.
31 Dec 2023
31 Dec 2022
US$000
2,329
(413)
167
(127)
1,956
1,710
625
125
(131)
2,329
Asset retirement obligations
The Group recognises a liability for an asset
retirement obligation on long-lived assets when a
present legal or constructive obligation exists, as a
result of past events and the amount of the liability
is reasonably determinable. The obligations are
initially recognised and recorded as a liability based
on estimated future cash flows discounted at a credit
adjusted risk free rate. This is adjusted at each
reporting period for changes to factors including the
expected amount of cash flows required to discharge
the liability, the timing of such cash flows and the
credit
rate.
Corresponding amounts and adjustments are added
to the carrying value of the related long-lived asset
and amortised or depleted to operations over the life
Environmental liabilities
of the related asset.
discount
adjusted
free
risk
Environmental expenditures that relate to current
operations are expensed or
capitalised as
appropriate. Expenditures that relate to an existing
condition caused by past operations and which do
not contribute to current or
future revenue
generation are expensed. Liabilities are recorded
when environmental assessments and/ or remedial
efforts are probable, and the costs can be reasonably
estimated.
91
Lucapa Diamond Company Limited | Annual Report 2023 |
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
NNoonn--CCuurrrreenntt PPrroovviissiioonnss ((ccoonnttiinnuueedd))
Significant accounting judgements, estimates and assumptions
Financial Report
For the year ended 31 December 2023
Included in liabilities at the end of each reporting period is an amount that represents an estimate of the cost to
rehabilitate the land upon which the Group has carried out its exploration and evaluation for mineral resources.
Provisions are measured at the present value of management's best estimate of the costs required to settle the
obligation at the end of the reporting period. Actual costs incurred in future periods to settle these obligations
could differ materially from these estimates. Additionally, future changes to environmental laws and regulations,
life of mine estimates, and discount rates could affect the carrying amount of this provision.
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
1133.. SShhaarree CCaappiittaall aanndd SShhaarree--BBaasseedd PPaayymmeennttss
Financial Overview
Listed securities
Movement in ordinary shares (ASX code: LOM)
On issue at beginning of period
On issue at end of period
Unlisted securities
On issue at beginning of period
On issue at end of period
Additional Information
Movement in unlisted options (A$0.08 exercise price; expire 30 July 2025)
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2023
Number
US$000
1,439,559,875
1,439,559,875
154,230
154,230
5,000,000
5,000,000
-
-
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled
to one vote per share at meetings of the Company.
SShhaarree--bbaasseedd ppaayymmeennttss
Share-based payment recognised
Profit or Loss
Director and employee options
Non-cash financing and investing activities
Share issue expenses
Loan funding
Deferred exploration and evaluation costs
Weighted average remaining contractual life of share options and
performance rights in issue (years)
Weighted average Lucapa share price during the period/ year (A$)
31 Dec 2023
31 Dec 2022
US$000
741
-
-
-
741
70
-
-
-
70
1.82
0.039
3.52
0.061
92
| Lucapa Diamond Company Limited | Annual Report 2023 Financial Report
For the year ended 31 December 2023
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Significant accounting judgements, estimates and assumptions
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Financial Overview
Included in liabilities at the end of each reporting period is an amount that represents an estimate of the cost to
rehabilitate the land upon which the Group has carried out its exploration and evaluation for mineral resources.
Provisions are measured at the present value of management's best estimate of the costs required to settle the
obligation at the end of the reporting period. Actual costs incurred in future periods to settle these obligations
could differ materially from these estimates. Additionally, future changes to environmental laws and regulations,
life of mine estimates, and discount rates could affect the carrying amount of this provision.
Listed securities
Movement in ordinary shares (ASX code: LOM)
On issue at beginning of period
On issue at end of period
Unlisted securities
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2023
Number
US$000
1,439,559,875
1,439,559,875
154,230
154,230
Movement in unlisted options (A$0.08 exercise price; expire 30 July 2025)
On issue at beginning of period
On issue at end of period
5,000,000
5,000,000
-
-
Additional Information
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled
to one vote per share at meetings of the Company.
SShhaarree--bbaasseedd ppaayymmeennttss
Share-based payment recognised
Profit or Loss
Director and employee options
Non-cash financing and investing activities
Share issue expenses
Loan funding
Deferred exploration and evaluation costs
Weighted average remaining contractual life of share options and
performance rights in issue (years)
Weighted average Lucapa share price during the period/ year (A$)
31 Dec 2023
31 Dec 2022
US$000
741
-
-
-
741
70
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70
1.82
0.039
3.52
0.061
93
Lucapa Diamond Company Limited | Annual Report 2023 |
Financial Report
For the year ended 31 December 2023
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Rough diamond revenue: US$102.2 million
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average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
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Diamond market
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Financial Report
For the year ended 31 December 2023
the transactions are treated as vested irrespective of
whether the market or non-vesting condition is
satisfied, provided that all other performance and/
or service conditions are satisfied.
Where the terms of an equity-settled award are
modified, as a minimum an expense is recognised as
if the terms had not been modified. In addition, an
expense is recognised for any increase in the value of
the transaction as a result of the modification, as
measured at the date of modification.
Where an equity-settled award is cancelled, it is
treated as if it had vested on the date of cancellation,
and any expense not yet recognised for the award is
recognised immediately. However, if a new award is
substituted for the cancelled award and designated
as a replacement award on the date that it is granted,
the cancelled and new award are treated as if they
were a modification of
the original award, as
described in the previous paragraph.
The amounts carried under share-based payment
reserves are allocated to share capital when
underlying shares are issued upon the conversion of
options or rights, and to accumulated income/ losses
DETERMINATION OF FAIR VALUES
upon the expiry of option or rights.
the Black-Scholes or binomial option pricing models.
Measurement
inputs
include share price on
measurement date, exercise price of the instrument,
expected volatility (based on weighted average
historic volatility adjusted for changes expected due
to publicly available information), weighted average
expected life of the instruments (based on historical
experience and general option holder behaviour),
expected dividends, and the risk-free interest rate
(based on government bonds). Service and non-
market performance conditions attached to the
transactions are not
taken
into account
in
determining fair value.
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Accounting policy
Share capital
Equity instruments,
including preference shares,
issued by the Company are recorded at the proceeds
received. Incremental costs directly attributable to
the issue of equity instruments are recognised as a
Share based payments
deduction from equity, net of any tax effects.
The fair value of options and rights granted is
measured using the Black-Scholes or binomial
option pricing models, taking into account the terms
and conditions upon which the instruments were
granted. The fair value is recognised in employee
benefits expense together with a corresponding
increase in equity (share-based payment reserve),
over the period in which the service and, where
applicable, the performance conditions are fulfilled.
The cumulative expense recognised at each
reporting date until the vesting date reflects the
extent to which the vesting period has expired and
the Group’s best estimate of the number of equity
instruments that will ultimately vest. The expense or
credit in profit or loss for a period represents the
movement in cumulative expense recognised as at
the beginning and end of that period.
not taken into account when determining the grant
date fair value of awards, but the likelihood of the
conditions being met is assessed as part of the
Group’s best estimate of the number of equity
instruments that will ultimately vest. Market
performance conditions are reflected within the
grant date fair value.
Any other conditions attached to an award, but
without an associated service requirement, are
considered to be non-vesting conditions. Non-
vesting conditions are reflected in the fair value of an
award and lead to an immediate expensing of an
award unless there are also service and/ or
performance conditions.
No expense is recognised for awards that do not
ultimately vest because non-market performance
and/ or service conditions have not been met. Where
awards include a market or non-vesting condition,
Service and non-market performance conditions are
The fair value of options issued is measured using
| Lucapa Diamond Company Limited | Annual Report 2023
Financial Report
For the year ended 31 December 2023
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diamondiferous kimberlites during the year
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smaller-scale pathway to development;
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Advanced the exploration projects in Angola,
Australia and Botswana;
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for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
Overall, the diamond market in 2023 could be
described
as
volatile. Macro-economic
and
geopolitical
factors contributed to weakness in
-
-
-
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
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impacted by inflation especially in the world’s
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largest market, the United States. Strong demand
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2023 Group Highlights
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achieved;
Rough diamond revenue: US$102.2 million
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(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
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EBITDA: US$23.4 million (A$36.3 million) on
c
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100% basis;
Attributable Rough diamond
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c
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63,469 carats recovered on a 100% basis;
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the year and a total of 30,585 carats;
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Mothae recovered a total of 32,884 carats;
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Repatriation of US$7.9 million (A$11.9
b
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NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
SShhaarree CCaappiittaall aanndd SShhaarree--bbaasseedd PPaayymmeennttss ((ccoonnttiinnuueedd))
Financial Report
For the year ended 31 December 2023
Accounting policy
Share capital
Equity instruments, including preference shares,
issued by the Company are recorded at the proceeds
received. Incremental costs directly attributable to
the issue of equity instruments are recognised as a
Share based payments
deduction from equity, net of any tax effects.
The fair value of options and rights granted is
measured using the Black-Scholes or binomial
option pricing models, taking into account the terms
and conditions upon which the instruments were
granted. The fair value is recognised in employee
benefits expense together with a corresponding
increase in equity (share-based payment reserve),
over the period in which the service and, where
applicable, the performance conditions are fulfilled.
The cumulative expense recognised at each
reporting date until the vesting date reflects the
extent to which the vesting period has expired and
the Group’s best estimate of the number of equity
instruments that will ultimately vest. The expense or
credit in profit or loss for a period represents the
movement in cumulative expense recognised as at
the beginning and end of that period.
Service and non-market performance conditions are
not taken into account when determining the grant
date fair value of awards, but the likelihood of the
conditions being met is assessed as part of the
Group’s best estimate of the number of equity
instruments that will ultimately vest. Market
performance conditions are reflected within the
grant date fair value.
Any other conditions attached to an award, but
without an associated service requirement, are
considered to be non-vesting conditions. Non-
vesting conditions are reflected in the fair value of an
award and lead to an immediate expensing of an
award unless there are also service and/ or
performance conditions.
No expense is recognised for awards that do not
ultimately vest because non-market performance
and/ or service conditions have not been met. Where
awards include a market or non-vesting condition,
the transactions are treated as vested irrespective of
whether the market or non-vesting condition is
satisfied, provided that all other performance and/
or service conditions are satisfied.
Where the terms of an equity-settled award are
modified, as a minimum an expense is recognised as
if the terms had not been modified. In addition, an
expense is recognised for any increase in the value of
the transaction as a result of the modification, as
measured at the date of modification.
Where an equity-settled award is cancelled, it is
treated as if it had vested on the date of cancellation,
and any expense not yet recognised for the award is
recognised immediately. However, if a new award is
substituted for the cancelled award and designated
as a replacement award on the date that it is granted,
the cancelled and new award are treated as if they
were a modification of the original award, as
described in the previous paragraph.
The amounts carried under share-based payment
reserves are allocated to share capital when
underlying shares are issued upon the conversion of
options or rights, and to accumulated income/ losses
DETERMINATION OF FAIR VALUES
upon the expiry of option or rights.
inputs
The fair value of options issued is measured using
the Black-Scholes or binomial option pricing models.
Measurement
include share price on
measurement date, exercise price of the instrument,
expected volatility (based on weighted average
historic volatility adjusted for changes expected due
to publicly available information), weighted average
expected life of the instruments (based on historical
experience and general option holder behaviour),
expected dividends, and the risk-free interest rate
(based on government bonds). Service and non-
market performance conditions attached to the
transactions are not
in
determining fair value.
into account
taken
95
Lucapa Diamond Company Limited | Annual Report 2023 |
Financial Report
For the year ended 31 December 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
SShhaarree CCaappiittaall aanndd SShhaarree--bbaasseedd PPaayymmeennttss ((ccoonnttiinnuueedd))
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The Company measures the cost of equity-settled transactions by reference to the fair value of the equity
instruments at the date at which they are granted. Where required, the fair value of options granted is measured
using valuation models, taking into account the terms and conditions as set out above. The accounting estimates
and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts
of assets and liabilities within the next annual reporting period, but may impact expenses and reserves.
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
1144.. CCoommmmiittmmeennttss aanndd CCoonnttiinnggeenncciieess
Operating lease commitments iro mining and exploration rights
Minimum lease payments under non-cancellable operating lease
agreements
Payable within one year
Payable after one year but less than five years
Payable after more than five years
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$000
126
285
-
411
1,130
-
160
553
845
1,558
2,928
-
31 Dec 2023
31 Dec 2022
US$000
5,848
74,053
1,493
1,493
154,230
(4,775)
(76,895)
72,560
(36,259)
(36,259)
7,210
113,952
5,875
5,875
154,230
(5,501)
(40,652)
108,077
(12,172)
(12,172)
The Group did not have any contingent liabilities as at 31 December 2023 (2022: Nil).
Capital commitments
Payable within one year
Approved, not yet contracted
Approved and contracted
Contingencies
1155.. PPaarreenntt EEnnttiittyy IInnffoorrmmaattiioonn
Current assets
Total assets
Current liabilities
Total liabilities
Share capital
Reserves
Accumulated losses
Loss for the period
Total comprehensive loss for the period
Contingent liabilities
Guarantees issued in favour of suppliers of subsidiaries
1,639
1,353
96
| Lucapa Diamond Company Limited | Annual Report 2023
Financial Report
For the year ended 31 December 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
SShhaarree CCaappiittaall aanndd SShhaarree--bbaasseedd PPaayymmeennttss ((ccoonnttiinnuueedd))
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The Company measures the cost of equity-settled transactions by reference to the fair value of the equity
instruments at the date at which they are granted. Where required, the fair value of options granted is measured
using valuation models, taking into account the terms and conditions as set out above. The accounting estimates
and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts
of assets and liabilities within the next annual reporting period, but may impact expenses and reserves.
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
1144.. CCoommmmiittmmeennttss aanndd CCoonnttiinnggeenncciieess
Operating lease commitments iro mining and exploration rights
Minimum lease payments under non-cancellable operating lease
agreements
Payable within one year
Payable after one year but less than five years
Payable after more than five years
Capital commitments
Payable within one year
Approved, not yet contracted
Approved and contracted
Contingencies
The Group did not have any contingent liabilities as at 31 December 2023 (2022: Nil).
1155.. PPaarreenntt EEnnttiittyy IInnffoorrmmaattiioonn
Current assets
Total assets
Current liabilities
Total liabilities
Share capital
Reserves
Accumulated losses
Loss for the period
Total comprehensive loss for the period
Contingent liabilities
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$000
126
285
-
411
1,130
-
160
553
845
1,558
2,928
-
31 Dec 2023
31 Dec 2022
US$000
5,848
74,053
1,493
1,493
154,230
(4,775)
(76,895)
72,560
(36,259)
(36,259)
7,210
113,952
5,875
5,875
154,230
(5,501)
(40,652)
108,077
(12,172)
(12,172)
Guarantees issued in favour of suppliers of subsidiaries
1,639
1,353
97
Lucapa Diamond Company Limited | Annual Report 2023 |
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
1166.. RReellaatteedd PPaarrttyy DDiisscclloossuurreess
Financial Overview
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Share-based payments
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$
1,615,313
77,456
324,716
2,017,485
1,462,836
79,587
37,363
1,579,786
Other related party transactions
The following payments, relating to office rent and associated
costs were made to entities associated with director Miles
Kennedy:
Kennedy Holdings (WA) Pty Ltd
-
12,654
Amount payable to director Miles Kennedy for reimbursement of
travel, accommodation, food and other expenses incurred on behalf
of the Company*
Loan facility agreement with an entity associated with non-
executive Director Ross Stanley:
Finance cost for period
Amount paid to previous Director Stephen Wetherall for services
supplied in respect of the Group's cutting & polishing business
(from 1 August 2023)
62,611
-
-
69,684
103,554
-
Summarised financial information of subsidiaries with non-controlling interests
*Relates to an amount approved by the Board payable to Mr Kennedy for expenses incurred in the conduct of his role as non-executive
Chairman of the Company since September 2017. Mr Kennedy previously took the view that until such time as the Group had repaid substantial
amounts of debt owing to three different entities, he would not make any claim for reimbursement of Company-related expenses.
Additional Information
Individual Directors’ and executives’ compensation disclosures
Information regarding individual Directors' and executives' compensation and some equity instruments
disclosures as required by Corporations Regulations 2M.3.03 is provided in the remuneration report section of
the Directors’ report. Apart from the details disclosed in this note, no Director has entered into a material contract
with the Company since the end of the previous financial year and there were no other material contracts
Key management personnel and director transactions
involving Director’s interests at period-end.
A number of key management persons, or their related parties, hold positions in other entities that result in them
having control or significant influence over the financial or operating policies of those entities. A number of these
entities transacted with the Company in the reporting period. The terms and conditions of the transactions with
management persons and their related parties were no more favourable than those available, or which might
reasonably be expected to be available, on similar transactions to non-director related entities on an arm’s length
basis.
98
Financial Report
For the year ended 31 December 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
1177.. GGrroouupp IInnffoorrmmaattiioonn
Subsidiaries
The consolidated financial statements of the Group include the following subsidiaries:
31 Dec 2023
31 Dec 2022
Lucapa Diamonds (Botswana) (Proprietary) Limited
Incorporated in Botswana
Equity interest held
Australian Natural Diamonds Pty Ltd
Incorporated in Australia
Equity interest held
Brooking Diamonds Pty Ltd
Incorporated in Australia
Equity interest held
Heartland Diamonds Pty Ltd
Incorporated in Australia
Equity interest held
Mothae Diamonds (Pty) Ltd
Incorporated in the Kingdom of Lesotho
Equity interest held
Lucapa (Mauritius) Holdings Limited
Incorporated in Mauritius
Equity interest held
Mothae Diamonds (Pty) Ltd
Assets and liabilities at the end of the period
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Profit or loss and cash flow items for the period
Revenue
Loss for the period
Total comprehensive loss for the period
Cash flows (used in)/ from operating activities
Cash flows used in investing activities
Dividends paid to non-controlling interests
%
100
100
100
100
70
100
5,084
2,436
7,430
58,211
27,999
(27,282)
(19,841)
330
(687)
-
%
100
100
100
100
70
100
4,826
21,414
8,912
50,647
23,350
(15,907)
(11,678)
(823)
(1,086)
-
31 Dec 2023
31 Dec 2022
US$000
| Lucapa Diamond Company Limited | Annual Report 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
Financial Report
For the year ended 31 December 2023
1177.. GGrroouupp IInnffoorrmmaattiioonn
Subsidiaries
The consolidated financial statements of the Group include the following subsidiaries:
31 Dec 2023
%
31 Dec 2022
%
Lucapa Diamonds (Botswana) (Proprietary) Limited
Incorporated in Botswana
Equity interest held
Australian Natural Diamonds Pty Ltd
Incorporated in Australia
Equity interest held
Brooking Diamonds Pty Ltd
Incorporated in Australia
Equity interest held
Heartland Diamonds Pty Ltd
Incorporated in Australia
Equity interest held
Mothae Diamonds (Pty) Ltd
Incorporated in the Kingdom of Lesotho
Equity interest held
Lucapa (Mauritius) Holdings Limited
Incorporated in Mauritius
Equity interest held
100
100
100
100
70
100
100
100
100
100
70
100
Summarised financial information of subsidiaries with non-controlling interests
Mothae Diamonds (Pty) Ltd
Assets and liabilities at the end of the period
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Profit or loss and cash flow items for the period
Revenue
Loss for the period
Total comprehensive loss for the period
Cash flows (used in)/ from operating activities
Cash flows used in investing activities
Dividends paid to non-controlling interests
31 Dec 2023
31 Dec 2022
US$000
5,084
2,436
7,430
58,211
27,999
(27,282)
(19,841)
330
(687)
-
4,826
21,414
8,912
50,647
23,350
(15,907)
(11,678)
(823)
(1,086)
-
99
1166.. RReellaatteedd PPaarrttyy DDiisscclloossuurreess
Financial Overview
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Share-based payments
Other related party transactions
The following payments, relating to office rent and associated
costs were made to entities associated with director Miles
Kennedy:
Kennedy Holdings (WA) Pty Ltd
Amount payable to director Miles Kennedy for reimbursement of
travel, accommodation, food and other expenses incurred on behalf
of the Company*
Loan facility agreement with an entity associated with non-
executive Director Ross Stanley:
Finance cost for period
Amount paid to previous Director Stephen Wetherall for services
supplied in respect of the Group's cutting & polishing business
(from 1August 2023)
Financial Report
For the year ended 31 December 2023
31 Dec 2023
31 Dec 2022
US$
1,615,313
77,456
324,716
1,462,836
79,587
37,363
2,017,485
1,579,786
62,611
-
-
103,554
12,654
69,684
-
-
*Relates to an amount approved by the Board payable to Mr Kennedy for expenses incurred in the conduct of his role as non-executive
Chairman of the Company since September 2017. Mr Kennedy previously took the view that until such time as the Group had repaid substantial
amounts of debt owing to three different entities, he would not make any claim for reimbursement of Company-related expenses.
Additional Information
Individual Directors’ and executives’ compensation disclosures
Information regarding individual Directors' and executives' compensation and some equity instruments
disclosures as required by Corporations Regulations 2M.3.03 is provided in the remuneration report section of
the Directors’ report. Apart from the details disclosed in this note, no Director has entered into a material contract
with the Company since the end of the previous financial year and there were no other material contracts
Key management personnel and director transactions
involving Director’s interests at period-end.
A number of key management persons, or their related parties, hold positions in other entities that result in them
having control or significant influence over the financial or operating policies of those entities. A number of these
entities transacted with the Company in the reporting period. The terms and conditions of the transactions with
management persons and their related parties were no more favourable than those available, or which might
reasonably be expected to be available, on similar transactions to non-director related entities on an arm’s length
basis.
Lucapa Diamond Company Limited | Annual Report 2023 |
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
1188.. OOtthheerr SSiiggnniiffiiccaanntt AAccccoouunnttiinngg PPoolliicciieess
Financial Report
For the year ended 31 December 2023
•
•
•
2023-1 Amendments
to AASs–
AASB
Amendments to AASB 107 and AASB 7-
Disclosures of Supplier Finance Arrangements;
to Australian
AASB 2023-3 Amendments
Accounting Standards – Disclosure of Non-
current Liabilities with Covenants: Tier 2; and
AASB 2023-5 Amendments
to Australian
Accounting Standards – Lack of Exchangeability.
The requirements of these standards are currently
being reviewed, but it is not currently expected to
have a material impact on the Group’s financial
judgements, estimates
Significant accounting
statements.
and assumptions
The preparation of financial statements requires
management to make judgements, estimates and
assumptions that affect the application of accounting
policies and reported amounts of assets, liabilities,
income and expenses. Actual results may differ from
and underlying
those
assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in
the period in which the estimate is revised and in any
future periods affected.
estimates. Estimates
Judgements made by management in the application
of Australian Accounting Standards that have
significant effect on the financial statements and
estimates with a significant risk of material
adjustment in the next year are discussed where
relevant in the individual notes above.
Management discusses with
the
development, selection and disclosure of the Group’s
critical accounting policies and estimates and the
application of these policies and estimates.
the Board
The financial statements have been prepared using
consistent accounting policies to those used for the
New or revised accounting policies
prior year, except as set out below.
The Group has applied the following standards and
amendments for the first time for the annual
•
reporting period commencing 1 January 2022:
•
•
•
•
•
•
•
Standards
– Disclosure
AASB 17 Insurance Contracts;
to Australian
AASB 2021-2 Amendments
of
Accounting
Accounting Policies and Definition of Accounting
Estimates;
AASB 2021-5 Amendments
to Australian
Accounting Standards – Deferred Tax related to
Assets and Liabilities arising from a Single
Transaction;
to Australian
AASB 2022-1 Amendments
Accounting Standards – Initial Application of
AASB 17 and AASB 9 – Comparative Information;
AASB 2022-6 Amendments to AASs – Non-
current Liabilities with Covenants;
AASB 2022-7 Editorial Corrections to AASs and
Repeal of Superseded and Redundant Standards;
AASB 2022-8 Amendments to AASs – Insurance
Contracts – Consequential Amendments; and
AASB 2023-2 Amendments to AASB 112–
International Tax Reform Pillar Two Model
Rules.
The adoption of these standards has not resulted in
any material changes to the Group’s financial
statements.
The following new/ amended standards have been
•
issued, but are not yet effective:
•
•
AASB 2020-1 Amendments
to Australian
Accounting Standards – Classification of
Liabilities as Current or Non-current;
AASB 2014-10 Amendments to AASs – Sale or
Contribution of Assets between an Investor and
its Associate or Joint Venture;
AASB 2022-5 Amendments to AASs–Lease
Liability in a Sale and Leaseback;
100
Financial Report
For the year ended 31 December 2023
exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in
foreign currencies at
the reporting date are
retranslated to the functional currency at the foreign
exchange rate at that date.
Foreign exchange
differences arising on retranslation are recognised
in the statement of profit or loss and other
comprehensive income.
The assets and liabilities of foreign operations,
including goodwill and fair value adjustments
arising on acquisition, are translated to US dollars at
foreign exchange rates ruling at the reporting date.
The income and expenses of foreign operations are
translated to US dollars
at exchange
rates
approximating the foreign exchange rates ruling at
the dates of the transactions. Foreign exchange
differences arising on retranslation are recognised
directly in a separate component of equity.
When a foreign operation is disposed of in part or in
full, the relevant amount in equity is transferred to
the statement of profit or
loss and other
comprehensive income.
Foreign exchange gains and losses arising from a
monetary item receivable from or payable to a
foreign operation, the settlement of which is neither
planned nor likely in the foreseeable future, are
considered to form part of the net investment in a
foreign operation and are recognised directly in
equity.
Impairment
Financial assets
A financial asset is assessed at each reporting date to
determine whether there is a risk of default. A
financial asset is considered to be impaired if
objective evidence indicates that one or more events
have had a negative effect on the estimated future
cash flows of that asset.
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
OOtthheerr SSiiggnniiffiiccaanntt AAccccoouunnttiinngg PPoolliicciieess ((ccoonnttiinnuueedd))
Principles of consolidation
The Group financial statements consolidate those of
the Company and all its subsidiaries as at the end of
the period. The Company controls a subsidiary if it is
exposed, or has rights, to variable returns from its
involvement with the subsidiary and has the ability
to affect those returns through its power over the
subsidiary.
All
transactions and balances between Group
companies are eliminated
on
consolidation,
including
unrealised
gains
and
losses on
transactions between Group companies.
Where unrealised losses on intra-group asset sales
are reversed on consolidation, the underlying asset
is also tested for
impairment
from a group
perspective. Amounts reported in the financial
statements of subsidiaries have been adjusted
where necessary to ensure consistency with the
accounting policies adopted by the Group.
Profit or loss and other comprehensive income of
subsidiaries acquired or disposed of during the year
are recognised from the effective date of acquisition,
or up to the effective date of disposal, as applicable.
Non-controlling interests, presented as part of
equity, represent the portion of a subsidiary’s profit
or loss and net assets that is not held by the Group.
The Group attributes total comprehensive income or
loss of subsidiaries between the owners of the
parent and the non-controlling interests based on
Functional and presentation currency
their respective ownership interests.
An entity’s functional currency is the currency of the
primary economic environment in which it operates.
All items included in the financial statements of
entities in the Group are measured and recognised in
the functional currency of the entity. The Group’s
presentation currency is US dollars, which is also the
Foreign currency transactions and balances
functional currency of the Company.
Transactions in foreign currencies are translated to
the respective functional currencies of the Group at
| Lucapa Diamond Company Limited | Annual Report 2023 Financial Report
For the year ended 31 December 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
1188.. OOtthheerr SSiiggnniiffiiccaanntt AAccccoouunnttiinngg PPoolliicciieess
•
•
•
The financial statements have been prepared using
AASB
2023-1 Amendments
to AASs–
consistent accounting policies to those used for the
New or revised accounting policies
prior year, except as set out below.
The Group has applied the following standards and
amendments for the first time for the annual
reporting period commencing 1 January 2022:
AASB 17 Insurance Contracts;
AASB 2021-2 Amendments
to Australian
Accounting
Standards
– Disclosure
of
Accounting Policies and Definition of Accounting
Estimates;
AASB 2021-5 Amendments
to Australian
Accounting Standards – Deferred Tax related to
Assets and Liabilities arising from a Single
Transaction;
Amendments to AASB 107 and AASB 7-
Disclosures of Supplier Finance Arrangements;
AASB 2023-3 Amendments
to Australian
Accounting Standards – Disclosure of Non-
current Liabilities with Covenants: Tier 2; and
AASB 2023-5 Amendments
to Australian
Accounting Standards – Lack of Exchangeability.
The requirements of these standards are currently
being reviewed, but it is not currently expected to
have a material impact on the Group’s financial
Significant accounting
statements.
judgements, estimates
and assumptions
The preparation of financial statements requires
management to make judgements, estimates and
AASB 2022-1 Amendments
to Australian
assumptions that affect the application of accounting
Accounting Standards – Initial Application of
policies and reported amounts of assets, liabilities,
AASB 17 and AASB 9 – Comparative Information;
income and expenses. Actual results may differ from
AASB 2022-6 Amendments to AASs – Non-
those
estimates. Estimates
and underlying
current Liabilities with Covenants;
assumptions are reviewed on an ongoing basis.
AASB 2022-7 Editorial Corrections to AASs and
Revisions to accounting estimates are recognised in
Repeal of Superseded and Redundant Standards;
the period in which the estimate is revised and in any
AASB 2022-8 Amendments to AASs – Insurance
future periods affected.
Judgements made by management in the application
of Australian Accounting Standards that have
significant effect on the financial statements and
estimates with a significant risk of material
adjustment in the next year are discussed where
relevant in the individual notes above.
Management discusses with
the Board
the
development, selection and disclosure of the Group’s
critical accounting policies and estimates and the
application of these policies and estimates.
Contracts – Consequential Amendments; and
AASB 2023-2 Amendments to AASB 112–
International Tax Reform Pillar Two Model
Rules.
statements.
The adoption of these standards has not resulted in
any material changes to the Group’s financial
The following new/ amended standards have been
issued, but are not yet effective:
AASB 2020-1 Amendments
to Australian
Accounting Standards – Classification of
Liabilities as Current or Non-current;
AASB 2014-10 Amendments to AASs – Sale or
Contribution of Assets between an Investor and
its Associate or Joint Venture;
AASB 2022-5 Amendments to AASs–Lease
Liability in a Sale and Leaseback;
•
•
•
•
•
•
•
•
•
•
•
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
OOtthheerr SSiiggnniiffiiccaanntt AAccccoouunnttiinngg PPoolliicciieess ((ccoonnttiinnuueedd))
Principles of consolidation
Financial Report
For the year ended 31 December 2023
The Group financial statements consolidate those of
the Company and all its subsidiaries as at the end of
the period. The Company controls a subsidiary if it is
exposed, or has rights, to variable returns from its
involvement with the subsidiary and has the ability
to affect those returns through its power over the
subsidiary.
All transactions and balances between Group
consolidation,
companies are eliminated on
losses on
including unrealised
transactions between Group companies.
gains
and
Where unrealised losses on intra-group asset sales
are reversed on consolidation, the underlying asset
is also tested for
impairment from a group
perspective. Amounts reported in the financial
statements of subsidiaries have been adjusted
where necessary to ensure consistency with the
accounting policies adopted by the Group.
Profit or loss and other comprehensive income of
subsidiaries acquired or disposed of during the year
are recognised from the effective date of acquisition,
or up to the effective date of disposal, as applicable.
Non-controlling interests, presented as part of
equity, represent the portion of a subsidiary’s profit
or loss and net assets that is not held by the Group.
The Group attributes total comprehensive income or
loss of subsidiaries between the owners of the
parent and the non-controlling interests based on
Functional and presentation currency
their respective ownership interests.
An entity’s functional currency is the currency of the
primary economic environment in which it operates.
All items included in the financial statements of
entities in the Group are measured and recognised in
the functional currency of the entity. The Group’s
presentation currency is US dollars, which is also the
Foreign currency transactions and balances
functional currency of the Company.
Transactions in foreign currencies are translated to
the respective functional currencies of the Group at
exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in
foreign currencies at the reporting date are
retranslated to the functional currency at the foreign
exchange rate at that date. Foreign exchange
differences arising on retranslation are recognised
in the statement of profit or loss and other
comprehensive income.
The assets and liabilities of foreign operations,
including goodwill and fair value adjustments
arising on acquisition, are translated to US dollars at
foreign exchange rates ruling at the reporting date.
The income and expenses of foreign operations are
translated
to US dollars at exchange rates
approximating the foreign exchange rates ruling at
the dates of the transactions. Foreign exchange
differences arising on retranslation are recognised
directly in a separate component of equity.
When a foreign operation is disposed of in part or in
full, the relevant amount in equity is transferred to
loss and other
the statement of profit or
comprehensive income.
Foreign exchange gains and losses arising from a
monetary item receivable from or payable to a
foreign operation, the settlement of which is neither
planned nor likely in the foreseeable future, are
considered to form part of the net investment in a
foreign operation and are recognised directly in
equity.
Impairment
Financial assets
A financial asset is assessed at each reporting date to
determine whether there is a risk of default. A
financial asset is considered to be impaired if
objective evidence indicates that one or more events
have had a negative effect on the estimated future
cash flows of that asset.
101
Lucapa Diamond Company Limited | Annual Report 2023 |
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
OOtthheerr SSiiggnniiffiiccaanntt AAccccoouunnttiinngg PPoolliicciieess ((ccoonnttiinnuueedd))
Financial Report
For the year ended 31 December 2023
An impairment loss in respect of a financial asset
measured at amortised cost is calculated as the
difference between its carrying amount, and the
present value of the estimated future cash flows
discounted at the original effective interest rate.
Individually significant financial assets are tested for
impairment on an individual basis. The remaining
financial assets are assessed collectively in groups
that share similar credit risk characteristics.
impairment
losses are recognised
All
in the
statement of profit or loss and other comprehensive
income.
An impairment loss is reversed if the reversal can be
related objectively to an event occurring after the
impairment loss was recognised. For financial assets
measured at amortised cost
is
recognised in the statement of profit or loss and
Non-financial assets
other comprehensive income.
the reversal
The carrying amounts of the Group’s non-financial
assets, other than inventories, are reviewed at each
reporting date to determine whether there is any
indication of impairment. If any such indication
exists, the asset’s recoverable amount is estimated.
The recoverable amount of an asset or cash-
generating unit is the greater of its value in use and
its fair value less costs to sell. In assessing value in
use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate
that reflects current market assessments of the time
value of money and the risks specific to the asset.
For the purpose of impairment testing, assets are
grouped together into the smallest group of assets
that generates cash inflows from continuing use that
are largely independent of the cash inflows of other
assets or groups of assets (the “cash-generating
unit”).
An impairment loss is recognised if the carrying
amount of an asset or its cash-generating unit
exceeds its recoverable amount. Impairment losses
are recognised in the statement of profit or loss and
other comprehensive income. Impairment losses
102
recognised in respect of cash-generating units are
allocated first to reduce the carrying amount of any
goodwill allocated to cash-generating units (group of
units) and then, to reduce the carrying amount of the
other assets in the unit (group of units) on a pro rata
basis.
Impairment losses recognised in prior periods are
assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An
impairment loss is reversed if there has been a
change in the estimates used to determine the
recoverable amount. An impairment loss is reversed
only to the extent that the asset’s carrying amount
does not exceed the carrying amount that would
have been determined, net of depreciation or
amortisation, if no impairment loss had been
Significant accounting judgements, estimates and
recognised
assumptions
impairment
indicative of
The Group assesses impairment at the end of each
reporting year by evaluating specific conditions that
may be
triggers.
Recoverable amounts of relevant assets are
reassessed using calculations which incorporate
including estimating
various key assumptions,
diamond prices, foreign exchange rates, production
levels & recoverable diamonds, operating costs,
capital requirements & its eventual disposal and
latest life of mine plans.
Future cash flows expected to be generated by the
assets are projected, taking into account market
conditions and the expected useful lives of the
assets. The present value of these cash flows,
determined using an appropriate discount rate, is
compared to the current net asset value and, if lower,
the assets are impaired to the present value. If the
information to project future cash flows is not
available or could not be reliably established,
management uses the best alternative information
available to estimate a possible impairment.
Financial Report
For the year ended 31 December 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
OOtthheerr SSiiggnniiffiiccaanntt AAccccoouunnttiinngg PPoolliicciieess ((ccoonnttiinnuueedd))
Goods and services tax/ value added tax
Revenues, expenses and assets are recognised net of
the amount of goods and services tax (“GST”) or
value added tax (“VAT”), except where the amount of
GST or VAT incurred is not recoverable from the
used in making the measurements. Classifications
are reviewed at each reporting date and transfers
between
levels are determined based on a
reassessment of the lowest level of input that is
significant to the fair value measurement.
taxation authority, it is recognised as part of the cost
For
recurring
and non-recurring
fair value
of acquisition of an asset or as part of an item of
measurements, external valuers may be used when
expense. Receivables and payables are stated with
internal expertise is either not available or when the
valuation is deemed to be significant. Where there is
a significant change in fair value of an asset or
liability from one period to another, an analysis is
undertaken, which includes a verification of the
major inputs applied in the latest valuation and a
comparison, where applicable, with external sources
Rounding of amounts
of data.
The company is of a kind referred to in ASIC
Legislative Instrument 2016/191, relating to the
‘rounding off’ of amounts in the financial statements.
Amounts in the financial statements have been
rounded off in accordance with the instrument to the
nearest thousand dollars, or in certain cases, the
nearest dollar.
the amount of GST or VAT included.
The net amount of GST and VAT recoverable from, or
payable to, the taxation authority is included as part
of receivables or payables.
Cash flows are included in the statement of cash
flows on a gross basis. The GST and VAT component
of cash flows arising from investing and financing
activities which is recoverable from, or payable to,
the taxation authority is classified as operating cash
Determination of fair values
flows.
When an asset or liability, financial or non-financial,
is measured at
fair value for recognition or
disclosure purposes, the fair value is based on the
price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction
between market participants at the measurement
date; and assumes that the transaction will take
place either in the principal market or,
in the
absence of a principal market,
in the most
advantageous market.
Fair value is measured using the assumptions that
market participants would use when pricing the
asset or liability, assuming they act in their economic
best interests. For non-financial assets, the fair value
measurement is based on its highest and best use.
Valuation techniques that are appropriate in the
circumstances and for which sufficient data are
available to measure fair value, are used, maximising
the use of relevant observable
inputs and
minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are
classified into three levels, using a fair value
hierarchy that reflects the significance of the inputs
| Lucapa Diamond Company Limited | Annual Report 2023 Financial Report
For the year ended 31 December 2023
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
OOtthheerr SSiiggnniiffiiccaanntt AAccccoouunnttiinngg PPoolliicciieess ((ccoonnttiinnuueedd))
An impairment loss in respect of a financial asset
recognised in respect of cash-generating units are
measured at amortised cost is calculated as the
allocated first to reduce the carrying amount of any
difference between its carrying amount, and the
goodwill allocated to cash-generating units (group of
present value of the estimated future cash flows
units) and then, to reduce the carrying amount of the
discounted at the original effective interest rate.
other assets in the unit (group of units) on a pro rata
Individually significant financial assets are tested for
basis.
impairment on an individual basis. The remaining
Impairment losses recognised in prior periods are
financial assets are assessed collectively in groups
assessed at each reporting date for any indications
that share similar credit risk characteristics.
that the loss has decreased or no longer exists. An
All
impairment
losses are recognised
in the
statement of profit or loss and other comprehensive
income.
An impairment loss is reversed if the reversal can be
related objectively to an event occurring after the
impairment loss was recognised. For financial assets
measured at amortised cost
the reversal
is
recognised in the statement of profit or loss and
Non-financial assets
other comprehensive income.
The carrying amounts of the Group’s non-financial
assets, other than inventories, are reviewed at each
reporting date to determine whether there is any
indication of impairment. If any such indication
exists, the asset’s recoverable amount is estimated.
The recoverable amount of an asset or cash-
generating unit is the greater of its value in use and
its fair value less costs to sell. In assessing value in
use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate
that reflects current market assessments of the time
value of money and the risks specific to the asset.
For the purpose of impairment testing, assets are
grouped together into the smallest group of assets
that generates cash inflows from continuing use that
are largely independent of the cash inflows of other
assets or groups of assets (the “cash-generating
unit”).
An impairment loss is recognised if the carrying
amount of an asset or its cash-generating unit
exceeds its recoverable amount. Impairment losses
are recognised in the statement of profit or loss and
other comprehensive income. Impairment losses
impairment loss is reversed if there has been a
change in the estimates used to determine the
recoverable amount. An impairment loss is reversed
only to the extent that the asset’s carrying amount
does not exceed the carrying amount that would
have been determined, net of depreciation or
amortisation, if no impairment loss had been
Significant accounting judgements, estimates and
recognised
assumptions
The Group assesses impairment at the end of each
reporting year by evaluating specific conditions that
may be
indicative of
impairment
triggers.
Recoverable amounts of relevant assets are
reassessed using calculations which incorporate
various key assumptions,
including estimating
diamond prices, foreign exchange rates, production
levels & recoverable diamonds, operating costs,
capital requirements & its eventual disposal and
latest life of mine plans.
Future cash flows expected to be generated by the
assets are projected, taking into account market
conditions and the expected useful lives of the
assets. The present value of these cash flows,
determined using an appropriate discount rate, is
compared to the current net asset value and, if lower,
the assets are impaired to the present value. If the
information to project future cash flows is not
available or could not be reliably established,
management uses the best alternative information
available to estimate a possible impairment.
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
OOtthheerr SSiiggnniiffiiccaanntt AAccccoouunnttiinngg PPoolliicciieess ((ccoonnttiinnuueedd))
Goods and services tax/ value added tax
Financial Report
For the year ended 31 December 2023
Revenues, expenses and assets are recognised net of
the amount of goods and services tax (“GST”) or
value added tax (“VAT”), except where the amount of
GST or VAT incurred is not recoverable from the
taxation authority, it is recognised as part of the cost
of acquisition of an asset or as part of an item of
expense. Receivables and payables are stated with
the amount of GST or VAT included.
The net amount of GST and VAT recoverable from, or
payable to, the taxation authority is included as part
of receivables or payables.
Cash flows are included in the statement of cash
flows on a gross basis. The GST and VAT component
of cash flows arising from investing and financing
activities which is recoverable from, or payable to,
the taxation authority is classified as operating cash
Determination of fair values
flows.
When an asset or liability, financial or non-financial,
is measured at fair value for recognition or
disclosure purposes, the fair value is based on the
price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction
between market participants at the measurement
date; and assumes that the transaction will take
place either in the principal market or, in the
absence of a principal market,
in the most
advantageous market.
Fair value is measured using the assumptions that
market participants would use when pricing the
asset or liability, assuming they act in their economic
best interests. For non-financial assets, the fair value
measurement is based on its highest and best use.
Valuation techniques that are appropriate in the
circumstances and for which sufficient data are
available to measure fair value, are used, maximising
the use of relevant observable
inputs and
minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are
classified into three levels, using a fair value
hierarchy that reflects the significance of the inputs
used in making the measurements. Classifications
are reviewed at each reporting date and transfers
between
levels are determined based on a
reassessment of the lowest level of input that is
significant to the fair value measurement.
recurring and non-recurring
For
fair value
measurements, external valuers may be used when
internal expertise is either not available or when the
valuation is deemed to be significant. Where there is
a significant change in fair value of an asset or
liability from one period to another, an analysis is
undertaken, which includes a verification of the
major inputs applied in the latest valuation and a
comparison, where applicable, with external sources
Rounding of amounts
of data.
The company is of a kind referred to in ASIC
Legislative Instrument 2016/191, relating to the
‘rounding off’ of amounts in the financial statements.
Amounts in the financial statements have been
rounded off in accordance with the instrument to the
nearest thousand dollars, or in certain cases, the
nearest dollar.
103
Lucapa Diamond Company Limited | Annual Report 2023 |
NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
1199.. EEvveennttss SSuubbsseeqquueenntt ttoo RReeppoorrttiinngg DDaattee
Financial Report
For the year ended 31 December 2023
DDiirreeccttoorr’’ss DDeeccllaarraattiioonn
Financial Report
For the year ended 31 December 2023
On 25 January 2024, Lucapa notified shareholders of the proposed share consolidation of 5 shares to 1. If the
proposed consolidation is approved by shareholders at the general meeting, the number of ordinary LOM shares
on issue will reduce from 1,439,559,875 to 287,911,975.
No other matters or circumstances have arisen since the end of the financial period, which significantly affected
or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of
the Group in subsequent financial periods.
1.
In the opinion of the Directors of Lucapa Diamond Company Limited:
a.
the financial statements and notes, and the remuneration report in the Directors’ Report, as set
out on pages 4 to 72, are in accordance with the Corporations Act 2001, including:
i. giving a true and fair view of the Group’s financial position as at 31 December 2023 and
of its performance for the financial period ended on that date; and
ii. complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001;
b.
the financial report also complies with International Financial Reporting Standards as disclosed
in the Statement of compliance on page 29; and
c. Subject to the uncertainty outlined in the Directors’ report and basis of measurement sections,
there are reasonable grounds to believe that the Group will be able to pay its debts as and when
they become due and payable.
2. The Directors have been given the declarations required by section 295A of the Corporations Act 2001
for the financial year ended 31 December 2023.
Signed in accordance with a resolution of the Directors.
MILES KENNEDY
Chairman
Dated this 28th FEBRUARY 2024
104
| Lucapa Diamond Company Limited | Annual Report 2023 NNootteess ttoo tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
1199.. EEvveennttss SSuubbsseeqquueenntt ttoo RReeppoorrttiinngg DDaattee
DDiirreeccttoorr’’ss DDeeccllaarraattiioonn
Financial Report
For the year ended 31 December 2023
Financial Report
For the year ended 31 December 2023
On 25 January 2024, Lucapa notified shareholders of the proposed share consolidation of 5 shares to 1. If the
proposed consolidation is approved by shareholders at the general meeting, the number of ordinary LOM shares
on issue will reduce from 1,439,559,875 to 287,911,975.
No other matters or circumstances have arisen since the end of the financial period, which significantly affected
or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of
the Group in subsequent financial periods.
1.
In the opinion of the Directors of Lucapa Diamond Company Limited:
a.
the financial statements and notes, and the remuneration report in the Directors’ Report, as set
out on pages 36 to 104, are in accordance with the Corporations Act 2001, including:
i. giving a true and fair view of the Group’s financial position as at 31 December 2023 and
of its performance for the financial period ended on that date; and
ii. complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001;
b.
the financial report also complies with International Financial Reporting Standards as disclosed
in the Statement of compliance on page 61; and
c. Subject to the uncertainty outlined in the Directors’ report and basis of measurement sections,
there are reasonable grounds to believe that the Group will be able to pay its debts as and when
they become due and payable.
2. The Directors have been given the declarations required by section 295A of the Corporations Act 2001
for the financial year ended 31 December 2023.
Signed in accordance with a resolution of the Directors.
MILES KENNEDY
Chairman
Dated this 28th FEBRUARY 2024
105
Lucapa Diamond Company Limited | Annual Report 2023 | IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt
Financial Report
For the year ended 31 December 2023
Independent Auditor’s Report
To the members of Lucapa Diamond Company Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Lucapa Diamond Company Limited (“Lucapa” or “the Company”) and its
subsidiaries (“the Group”), which comprises the consolidated statement of financial position as at 31 December
2023, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the Group's financial position as at 31 December 2023 and of its financial
performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we
comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatements. Our responsibilities
under those standards are further described as in the Auditor's Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and
Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Material Uncertainty related to Going Concern
We draw attention to Note 1 in the financial statements, which indicates that the Group incurred a net loss of
US$17.2 million during the year ended 31 December 2023 and incurred cash outflows of US$2.9 million from
operating activities with a net decrease of US$5.5 million in cash and cash equivalent for the year then ended.
As stated in Note 1, these events or conditions indicate that a material uncertainty exists that may cast significant
doubt on the company’s ability to continue as a going concern. Our opinion is not modified in respect of this
matter.
106
Financial Report
For the year ended 31 December 2023
•
•
•
•
•
The
exploration program identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
Overall, the diamond market in 2023 could be
described
as
volatile. Macro-economic
and
geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
The G7 Countries (including the European Union)
announced in December a ban on Russian diamonds
followed by a phase-in of restrictions on the
importation of Russian diamonds and diamond
jewellery from the beginning of 2024. The sanctions
are designed to curb Russia’s ability to continue to
finance the invasion of Ukraine.
2023 Group Highlights
2023 Group highlights include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
100% basis;
Attributable Rough diamond
revenue:
US$48.4 million (A$72.9 million);
Attributable EBITDA: US$8.3 million (A$12.9
million);
63,469 carats recovered on a 100% basis;
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
bearing debt in Q3;
and processed;
Group is debt free after expunging interest-
Mothae set new records for tonnes mined
Lulo Kimberlite Exploration program
th
discovered
its
15
diamondiferous
kimberlite;
option; and
Merlin Diamond Project Feasibility Study
pivoted to
low-cost, small-scale study
Nick Selby appointed CEO and MD.
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
Lulo Alluvial Mine achieved 9% higher
processing volumes for the year compared to
the previous year due to the recent
investment in new plant and fleet;
Mothae set new records for tonnes mined
(up 23% yoy) and processed (up 22% yoy)
following
improvements made
to
the
processing plant in 2022;
The Lulo Kimberlite Bulk Sampling Program
processed a total of 26 samples during the
year, or one every two weeks;
| Lucapa Diamond Company Limited | Annual Report 2023 Financial Report
For the year ended 31 December 2023
•
•
•
•
•
The
exploration program identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
Overall, the diamond market in 2023 could be
described
as
volatile. Macro-economic
and
geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
The G7 Countries (including the European Union)
announced in December a ban on Russian diamonds
followed by a phase-in of restrictions on the
importation of Russian diamonds and diamond
jewellery from the beginning of 2024. The sanctions
are designed to curb Russia’s ability to continue to
finance the invasion of Ukraine.
2023 Group Highlights
2023 Group highlights include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
100% basis;
Attributable Rough diamond
revenue:
US$48.4 million (A$72.9 million);
Attributable EBITDA: US$8.3 million (A$12.9
million);
63,469 carats recovered on a 100% basis;
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
bearing debt in Q3;
and processed;
Group is debt free after expunging interest-
Mothae set new records for tonnes mined
Lulo Kimberlite Exploration program
th
discovered
its
15
diamondiferous
kimberlite;
option; and
Merlin Diamond Project Feasibility Study
pivoted to
low-cost, small-scale study
Nick Selby appointed CEO and MD.
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
Lulo Alluvial Mine achieved 9% higher
processing volumes for the year compared to
the previous year due to the recent
investment in new plant and fleet;
Mothae set new records for tonnes mined
(up 23% yoy) and processed (up 22% yoy)
following
improvements made
to
the
processing plant in 2022;
The Lulo Kimberlite Bulk Sampling Program
processed a total of 26 samples during the
year, or one every two weeks;
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial report of the current period. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. We have determined the matters described below to be key audit matters to be communicated
in our report.
•
2023 Group Highlights
•
2023 Group highlights include:
•
•
•
•
to
the
•
•
•
•
revenue:
Key Audit Matters
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
100% basis;
Attributable Rough diamond
Investment in Associate
US$48.4 million (A$72.9 million);
Refer to Note 11
Attributable EBITDA: US$8.3 million (A$12.9
Key Audit Matter
The Group has 40% ownership in Sociedade
million);
Mineira Do Lulo Lda in Angola (“SML”) and
63,469 carats recovered on a 100% basis;
has recognised its share of SML’s result
since its formal incorporation in May 2016 as
Lulo recovered 5 +100 carat diamonds for
disclosed
financial
in note 11
statements. This investment was recorded
the year and a total of 30,585 carats;
using equity method under AASB 128
Mothae recovered a total of 32,884 carats;
in Associates and Joint
Investments
Ventures.
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
Group is debt free after expunging interest-
bearing debt in Q3;
Mothae set new records for tonnes mined
and processed;
Lulo Kimberlite Exploration program
Deferred Exploration and Evaluation Cost
Refer to Note 10 Property Plant and Equipment
diamondiferous
15
discovered
its
Key Audit Matter
kimberlite;
the Group has
At 31 December 2023,
evaluation
and
exploration
significant
Merlin Diamond Project Feasibility Study
expenditure of $33.9 million which has been
pivoted to
low-cost, small-scale study
capitalised. As
the carrying value of
exploration and evaluation expenditures
option; and
represents a significant asset of the Group, we
Nick Selby appointed CEO and MD.
considered it necessary to assess whether
facts and circumstances existed to suggest
In 2023, Lucapa continued to achieve the growth
that the carrying amount of this asset may
objectives against its goals:
exceed its recoverable amount. Management
of the Group considered whether there were
any indicators of impairment.
We considered it as a key audit matter due
to its significance.
•
•
•
•
•
•
th
•
•
Lulo Alluvial Mine achieved 9% higher
processing volumes for the year compared to
The Group capitalises exploration and
the previous year due to the recent
evaluation expenditure in line with AASB 6
Exploration for and Evaluation of Mineral
investment in new plant and fleet;
Resources. The assessment of each asset’s
Mothae set new records for tonnes mined
future viability requires significant judgement.
(up 23% yoy) and processed (up 22% yoy)
following
the
improvements made
processing plant in 2022;
The Lulo Kimberlite Bulk Sampling Program
processed a total of 26 samples during the
year, or one every two weeks;
to
Financial Report
For the year ended 31 December 2023
•
•
The
exploration program identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
•
•
How our audit addressed the key audit matter
Our audit work included, but was not restricted to, the
following:
• We verified Lucapa’s percentage holding in SML.
• We reviewed the current year financial statements of
SML and performed detailed tests of the key areas.
How our audit addressed the key audit matter
Our audit work included, but was not restricted to, the
following:
• We obtained the latest audited accounts of the
Overall, the diamond market in 2023 could be
Associate and compared with the amount record in
described
as
and
volatile. Macro-economic
the Group’s financial statements.
• We reviewed subsequently adjustments to the
geopolitical
factors contributed to weakness in
investment for Lucapa’s share of SML’s profit or loss
diamond prices, especially in the smaller-sized
and other comprehensive income.
rough diamonds as well as an imbalance between
• We evaluate the impairment assessment of the
supply and demand. The market for large, high-
carrying value by reviewing ASX announcement
regarding performance of the Associate.
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
• We obtained evidence that the Group has valid rights
to explore in the areas represented by the capitalised
lack in demand.
exploration and evaluation expenditures by obtaining
valid contracts giving the Group rights to explore, for a
From October to December, some Indian diamond
sample of capitalised exploration costs;
manufacturers imposed a two-month moratorium
• We enquired with management and reviewed budgets
on rough diamond purchases in an attempt to bring
to ensure that substantive expenditure on further
stability to an oversupplied market.
exploration for and evaluation of the mineral resources
in the Group’s area of interest were planned;
The G7 Countries (including the European Union)
reviewed
announcements made and reviewed minutes of
announced in December a ban on Russian diamonds
directors’ meetings to ensure that the company had
followed by a phase-in of restrictions on the
not decided to discontinue activities in any of its areas
importation of Russian diamonds and diamond
of interest; and
jewellery from the beginning of 2024. The sanctions
are designed to curb Russia’s ability to continue to
finance the invasion of Ukraine.
• We enquired with management to ensure that the
enquired with management,
• We
107
Lucapa Diamond Company Limited | Annual Report 2023 |
2023 Group Highlights
•
2023 Group highlights include:
•
•
•
•
•
•
•
•
•
•
•
•
•
to
There is a risk that amounts are capitalised
which no longer meet the recognition criteria
of AASB 6.
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
Impairment of PPE
EBITDA: US$23.4 million (A$36.3 million) on
Refer to Note 10 Property Plant and Equipment
100% basis;
Key Audit Matter
As at 31 December 2023, the Group has
Attributable Rough diamond
revenue:
property, plant and equipment amounting to
US$48.4 million (A$72.9 million);
it’s Mothae
related
US$2.4 million
operations (Mothae PPE). This has been
Attributable EBITDA: US$8.3 million (A$12.9
dropped from US$15.3 million from last year.
million);
Mothae has incurred a loss of US$27.3 million
during the year ended 31 December 2023 due
63,469 carats recovered on a 100% basis;
to the global inflationary environment’s impact
Lulo recovered 5 +100 carat diamonds for
on material
inputs, supply chain and
the year and a total of 30,585 carats;
processing constraints. An impairment of
US$14.5 million in respect of Mothae has
Mothae recovered a total of 32,884 carats;
been charged to the income statement.
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
The assessment of the recoverable amount
requires significant judgment, in particular
dividends;
relating to estimated cash flow projections and
Group is debt free after expunging interest-
discount rates.
bearing debt in Q3;
judgment, market
the
Due
Mothae set new records for tonnes mined
environment and significance to the Group’s
and processed;
financial statements, this is considered to be a
key audit matter.
Lulo Kimberlite Exploration program
diamondiferous
its
15
discovered
Going Concern
Refer to Note 1 - Basis of Preparation
kimberlite;
Key Audit Matter
Merlin Diamond Project Feasibility Study
The Group has an after-tax loss of US$17.2
pivoted to
low-cost, small-scale study
million for the full year ended 31 December
2023 (2022: after-tax loss of US$15.1 million).
option; and
Nick Selby appointed CEO and MD.
level of
to
th
In addition, the Group incurred cash outflows
of US$2.9 million from operating activities with
In 2023, Lucapa continued to achieve the growth
a net decrease of US$5.5 million in cash and
objectives against its goals:
cash equivalent for the year then ended.
•
Lulo Alluvial Mine achieved 9% higher
Under AASB101: Presentation of Financial
processing volumes for the year compared to
Statements, the directors of the Group are
required to assess the appropriateness of the
the previous year due to the recent
preparation of the financial report on a going
investment in new plant and fleet;
concern basis.
Mothae set new records for tonnes mined
(up 23% yoy) and processed (up 22% yoy)
following
the
improvements made
processing plant in 2022;
The Lulo Kimberlite Bulk Sampling Program
processed a total of 26 samples during the
year, or one every two weeks;
to
•
•
108
Financial Report
For the year ended 31 December 2023
•
How our audit addressed the key audit matter
Our audit work included, but was not restricted to, the
following:
of
•
•
•
•
the
the
the
• Checked
management’s
• Assessed
• Reviewed
reasonableness of
impairment
assessment of Mothae PPE in accordance with
AASB 136 Impairment of Assets.
Group had not decided to proceed with development
of a specific area of interest, yet the carrying amount
of the exploration and evaluation asset was unlikely to
be recovered in full from successful development or
sale.
The
exploration program identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
accuracy
the mathematical
Improved safety performance at both
management’s computation of the value in use.
Diamond market
operations.
• We have critically evaluated management’s
methodologies in preparing impairment model and
documented basis for key assumptions.
Overall, the diamond market in 2023 could be
key
assumptions such as diamond price, Carat
described
as
and
volatile. Macro-economic
quantities, discount rate etc by evaluating underlying
geopolitical
factors contributed to weakness in
data and work on other audit areas.
diamond prices, especially in the smaller-sized
financial statements.
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
• Reviewed adequacy of the related disclosures in the
• Obtained management’s assessment of the going
concern basis of preparation by reviewing future
From October to December, some Indian diamond
plans and tested cash flow projections prepared by
manufacturers imposed a two-month moratorium
the Group for consistency with our understanding of
planned activities;
on rough diamond purchases in an attempt to bring
• Held discussions with management as to any future
stability to an oversupplied market.
plans and tested the forecasted cash flows for the
twelve month period from the date of signing the
The G7 Countries (including the European Union)
financial statements for mathematical accuracy;
announced in December a ban on Russian diamonds
• Compared forecast expenditure against actual levels
followed by a phase-in of restrictions on the
of expenditure for the 2023 financial year and
importation of Russian diamonds and diamond
obtaining explanations for any significant variances;
jewellery from the beginning of 2024. The sanctions
are designed to curb Russia’s ability to continue to
finance the invasion of Ukraine.
How our audit addressed the key audit matter
Our audit work included, but was not restricted to, the
following:
Financial Report
For the year ended 31 December 2023
•
•
•
•
•
The
exploration program identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
Overall, the diamond market in 2023 could be
described
as
volatile. Macro-economic
and
geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
The G7 Countries (including the European Union)
announced in December a ban on Russian diamonds
followed by a phase-in of restrictions on the
importation of Russian diamonds and diamond
jewellery from the beginning of 2024. The sanctions
are designed to curb Russia’s ability to continue to
finance the invasion of Ukraine.
2023 Group Highlights
2023 Group highlights include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
100% basis;
Attributable Rough diamond
revenue:
US$48.4 million (A$72.9 million);
Attributable EBITDA: US$8.3 million (A$12.9
million);
63,469 carats recovered on a 100% basis;
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
bearing debt in Q3;
and processed;
Group is debt free after expunging interest-
Mothae set new records for tonnes mined
Lulo Kimberlite Exploration program
th
discovered
its
15
diamondiferous
kimberlite;
option; and
Merlin Diamond Project Feasibility Study
pivoted to
low-cost, small-scale study
Nick Selby appointed CEO and MD.
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
Lulo Alluvial Mine achieved 9% higher
processing volumes for the year compared to
the previous year due to the recent
investment in new plant and fleet;
Mothae set new records for tonnes mined
(up 23% yoy) and processed (up 22% yoy)
following
improvements made
to
the
processing plant in 2022;
The Lulo Kimberlite Bulk Sampling Program
processed a total of 26 samples during the
year, or one every two weeks;
| Lucapa Diamond Company Limited | Annual Report 2023
Financial Report
For the year ended 31 December 2023
•
•
•
•
•
The
exploration program identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
Overall, the diamond market in 2023 could be
described
as
volatile. Macro-economic
and
geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
The G7 Countries (including the European Union)
announced in December a ban on Russian diamonds
followed by a phase-in of restrictions on the
importation of Russian diamonds and diamond
jewellery from the beginning of 2024. The sanctions
are designed to curb Russia’s ability to continue to
finance the invasion of Ukraine.
2023 Group Highlights
2023 Group highlights include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
100% basis;
Attributable Rough diamond
revenue:
US$48.4 million (A$72.9 million);
Attributable EBITDA: US$8.3 million (A$12.9
million);
63,469 carats recovered on a 100% basis;
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
bearing debt in Q3;
and processed;
Group is debt free after expunging interest-
Mothae set new records for tonnes mined
Lulo Kimberlite Exploration program
th
discovered
its
15
diamondiferous
kimberlite;
option; and
Merlin Diamond Project Feasibility Study
pivoted to
low-cost, small-scale study
Nick Selby appointed CEO and MD.
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
Lulo Alluvial Mine achieved 9% higher
processing volumes for the year compared to
the previous year due to the recent
investment in new plant and fleet;
Mothae set new records for tonnes mined
(up 23% yoy) and processed (up 22% yoy)
following
improvements made
to
the
processing plant in 2022;
The Lulo Kimberlite Bulk Sampling Program
processed a total of 26 samples during the
year, or one every two weeks;
2023 Group Highlights
•
2023 Group highlights include:
Financial Report
For the year ended 31 December 2023
•
•
•
disclosures in the financial statements.
The Group’s planned future activities are dependent on
funding from amounts received from SML and other sources.
These factors indicate existence of material uncertainty related
to going concern which has been emphasised in the audit
report.
The
exploration program identified 6
• Obtained representations from management and the
diamondiferous kimberlites during the year
directors as to the adequacy of cash resources; and
taking the total to 15;
• Assessed the adequacy and completeness of related
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
•
•
the use of
revenue:
Other Information
The Group has prepared cash flow projections
which include recovery of loan from associate.
These projections are used to support the
sufficiency of working capital.
This area is a key audit matter due to the
nature of the business, and the current
financial position. Should it be inappropriate
for the financial statements to be prepared on
the going concern basis the values of certain
assets and liabilities as set out in the financial
statements might be significantly different. As
such,
the going concern
assumption
requires proper and due
consideration.
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
100% basis;
Attributable Rough diamond
US$48.4 million (A$72.9 million);
Attributable EBITDA: US$8.3 million (A$12.9
million);
63,469 carats recovered on a 100% basis;
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
Group is debt free after expunging interest-
bearing debt in Q3;
Mothae set new records for tonnes mined
and processed;
Lulo Kimberlite Exploration program
diamondiferous
15
discovered
kimberlite;
Merlin Diamond Project Feasibility Study
pivoted to
low-cost, small-scale study
option; and
Nick Selby appointed CEO and MD.
The directors are responsible for the other information. The other information comprises the Review of
Operations and Directors Report and other information included in the Group’s annual report for the year ended
31 December 2023 but does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this auditor's
report, we conclude that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.
its
th
Overall, the diamond market in 2023 could be
as
described
and
volatile. Macro-economic
geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
Responsibilities of Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
•
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
The G7 Countries (including the European Union)
announced in December a ban on Russian diamonds
followed by a phase-in of restrictions on the
importation of Russian diamonds and diamond
jewellery from the beginning of 2024. The sanctions
are designed to curb Russia’s ability to continue to
finance the invasion of Ukraine.
Lulo Alluvial Mine achieved 9% higher
processing volumes for the year compared to
the previous year due to the recent
investment in new plant and fleet;
Mothae set new records for tonnes mined
(up 23% yoy) and processed (up 22% yoy)
following
the
improvements made
processing plant in 2022;
The Lulo Kimberlite Bulk Sampling Program
processed a total of 26 samples during the
year, or one every two weeks;
to
109
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Lucapa Diamond Company Limited | Annual Report 2023 |
2023 Group Highlights
•
Financial Report
For the year ended 31 December 2023
2023 Group highlights include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
revenue:
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
The
exploration program identified 6
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
diamondiferous kimberlites during the year
with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can
taking the total to 15;
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of the financial report.
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
•
100% basis;
Attributable Rough diamond
US$48.4 million (A$72.9 million);
Attributable EBITDA: US$8.3 million (A$12.9
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
million);
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
63,469 carats recovered on a 100% basis;
the Group’s internal control.
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
Group is debt free after expunging interest-
bearing debt in Q3;
Mothae set new records for tonnes mined
and processed;
Lulo Kimberlite Exploration program
diamondiferous
15
discovered
kimberlite;
Merlin Diamond Project Feasibility Study
pivoted to
low-cost, small-scale study
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
option; and
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
Nick Selby appointed CEO and MD.
Overall, the diamond market in 2023 could be
as
described
and
volatile. Macro-economic
geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Group to cease to continue as a going concern.
• Obtained sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
and related disclosures made by the directors.
its
th
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards.
•
From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
The G7 Countries (including the European Union)
announced in December a ban on Russian diamonds
followed by a phase-in of restrictions on the
importation of Russian diamonds and diamond
jewellery from the beginning of 2024. The sanctions
are designed to curb Russia’s ability to continue to
finance the invasion of Ukraine.
Lulo Alluvial Mine achieved 9% higher
processing volumes for the year compared to
the previous year due to the recent
investment in new plant and fleet;
Mothae set new records for tonnes mined
(up 23% yoy) and processed (up 22% yoy)
following
the
improvements made
processing plant in 2022;
The Lulo Kimberlite Bulk Sampling Program
processed a total of 26 samples during the
year, or one every two weeks;
to
•
•
110
Financial Report
For the year ended 31 December 2023
•
•
•
•
•
The
exploration program identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
Overall, the diamond market in 2023 could be
described
as
volatile. Macro-economic
and
geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
The G7 Countries (including the European Union)
announced in December a ban on Russian diamonds
followed by a phase-in of restrictions on the
importation of Russian diamonds and diamond
jewellery from the beginning of 2024. The sanctions
are designed to curb Russia’s ability to continue to
finance the invasion of Ukraine.
2023 Group Highlights
2023 Group highlights include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
100% basis;
Attributable Rough diamond
revenue:
US$48.4 million (A$72.9 million);
Attributable EBITDA: US$8.3 million (A$12.9
million);
63,469 carats recovered on a 100% basis;
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
bearing debt in Q3;
and processed;
Group is debt free after expunging interest-
Mothae set new records for tonnes mined
Lulo Kimberlite Exploration program
th
discovered
its
15
diamondiferous
kimberlite;
option; and
Merlin Diamond Project Feasibility Study
pivoted to
low-cost, small-scale study
Nick Selby appointed CEO and MD.
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
Lulo Alluvial Mine achieved 9% higher
processing volumes for the year compared to
the previous year due to the recent
investment in new plant and fleet;
Mothae set new records for tonnes mined
(up 23% yoy) and processed (up 22% yoy)
following
improvements made
to
the
processing plant in 2022;
The Lulo Kimberlite Bulk Sampling Program
processed a total of 26 samples during the
year, or one every two weeks;
| Lucapa Diamond Company Limited | Annual Report 2023 Financial Report
For the year ended 31 December 2023
•
•
•
•
•
The
exploration program identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
Overall, the diamond market in 2023 could be
described
as
volatile. Macro-economic
and
geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
The G7 Countries (including the European Union)
announced in December a ban on Russian diamonds
followed by a phase-in of restrictions on the
importation of Russian diamonds and diamond
jewellery from the beginning of 2024. The sanctions
are designed to curb Russia’s ability to continue to
finance the invasion of Ukraine.
2023 Group Highlights
2023 Group highlights include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
100% basis;
Attributable Rough diamond
revenue:
US$48.4 million (A$72.9 million);
Attributable EBITDA: US$8.3 million (A$12.9
million);
63,469 carats recovered on a 100% basis;
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
bearing debt in Q3;
and processed;
Group is debt free after expunging interest-
Mothae set new records for tonnes mined
Lulo Kimberlite Exploration program
th
discovered
its
15
diamondiferous
kimberlite;
option; and
Merlin Diamond Project Feasibility Study
pivoted to
low-cost, small-scale study
Nick Selby appointed CEO and MD.
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
Lulo Alluvial Mine achieved 9% higher
processing volumes for the year compared to
the previous year due to the recent
investment in new plant and fleet;
Mothae set new records for tonnes mined
(up 23% yoy) and processed (up 22% yoy)
following
improvements made
to
the
processing plant in 2022;
The Lulo Kimberlite Bulk Sampling Program
processed a total of 26 samples during the
year, or one every two weeks;
We have audited the Remuneration Report included on pages 47-51 of the directors' report for the year ended
31 December 2023.
In our opinion the Remuneration Report of Lucapa Diamond Company Limited for the year ended 31 December
2023 complies with section 300A of the Corporations Act 2001.
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
revenue:
2023 Group Highlights
•
2023 Group highlights include:
•
•
•
•
•
•
•
•
•
•
•
•
•
Report on the Remuneration Report
Responsibilities
Elderton Audit Pty Ltd
Opinion on the Remuneration Report
Full Year Group production guidance
achieved;
Rough diamond revenue: US$102.2 million
(A$154.3 million) on a 100% basis at an
average price of US$2,458 per carat;
EBITDA: US$23.4 million (A$36.3 million) on
100% basis;
Attributable Rough diamond
US$48.4 million (A$72.9 million);
Attributable EBITDA: US$8.3 million (A$12.9
million);
63,469 carats recovered on a 100% basis;
Lulo recovered 5 +100 carat diamonds for
the year and a total of 30,585 carats;
Mothae recovered a total of 32,884 carats;
Repatriation of US$7.9 million (A$11.9
million) in capital loan repayments and SML
dividends;
Group is debt free after expunging interest-
Sajjad Cheema
bearing debt in Q3;
Director
Mothae set new records for tonnes mined
and processed;
Perth
Lulo Kimberlite Exploration program
diamondiferous
15
discovered
kimberlite;
Merlin Diamond Project Feasibility Study
pivoted to
low-cost, small-scale study
option; and
Nick Selby appointed CEO and MD.
28 February 2024
its
th
In 2023, Lucapa continued to achieve the growth
objectives against its goals:
•
•
•
Lulo Alluvial Mine achieved 9% higher
processing volumes for the year compared to
the previous year due to the recent
investment in new plant and fleet;
Mothae set new records for tonnes mined
(up 23% yoy) and processed (up 22% yoy)
following
the
improvements made
processing plant in 2022;
The Lulo Kimberlite Bulk Sampling Program
processed a total of 26 samples during the
year, or one every two weeks;
to
Financial Report
For the year ended 31 December 2023
•
•
•
The
exploration program identified 6
diamondiferous kimberlites during the year
taking the total to 15;
The Merlin Diamond Project Feasibility
Study advanced throughout the year before
pivoting the study to focus on a low-cost
smaller-scale pathway to development;
Advanced the exploration projects in Angola,
Australia and Botswana;
Continued to generate additional margins
for both operations from the cutting and
polishing partnership; and
Improved safety performance at both
Diamond market
operations.
•
•
Overall, the diamond market in 2023 could be
as
described
and
volatile. Macro-economic
geopolitical
factors contributed to weakness in
diamond prices, especially in the smaller-sized
rough diamonds as well as an imbalance between
supply and demand. The market for large, high-
quality and exceptional rough diamonds felt less
price pressure and mainly remained robust. In the
retail market, diamond jewellery demand was weak,
impacted by inflation especially in the world’s
largest market, the United States. Strong demand
from Chinese consumers failed to materialise during
the year, due to a slowing economy, which added to
lack in demand.
From October to December, some Indian diamond
manufacturers imposed a two-month moratorium
on rough diamond purchases in an attempt to bring
stability to an oversupplied market.
The G7 Countries (including the European Union)
announced in December a ban on Russian diamonds
followed by a phase-in of restrictions on the
importation of Russian diamonds and diamond
jewellery from the beginning of 2024. The sanctions
are designed to curb Russia’s ability to continue to
finance the invasion of Ukraine.
111
Lucapa Diamond Company Limited | Annual Report 2023 |
additional ASX
information
Additional ASX Information
Capital Structure
Ordinary Share Capital
289,141,849 ordinary fully paid shares held by 3,234 shareholders.
Substantial shareholders
As at 15 March 2024, substantial shareholder notices had been lodged
with ASX by the following shareholders:
NUMBER OF
HOLDERS
NUMBER OF
SHARES
FULLY PAID ORDINARY SHARES
NUMBER HELD
HOLDERS
% OF ISSUED
CAPITAL
to
1,000
to
5,000
191
991
3.347,106
100.266
Ilwella Pty Ltd
Regal Funds
Management Pty Ltd
Shadbolt Future Fund
(Tottenham) Pty Ltd
Tazga Two Pty Ltd as trustee
For Tazga Two Trust
61,394,405(1)
16,932,101 (2)
64,000,000(1)
55,007,014(1)
7.62%
5.86%
5.02%
5.35%
to
10,000
644
4,846,376
10,001
to
100,000
1,129
37,694,024
100,001 and above
279
243,154,117
SPREAD
1
1,001
5,001
As at 15 March 2024 there were 1,054 fully paid ordinary shareholders
holding less than a marketable parcel.
Note:
(1) Disclosed on a pre-consolidation basis
(2) Disclosed on a post-consolidation basis
Voting rights
Ordinary Shares
On a show of hands, every member present in person or by proxy
shall have one vote and upon a poll each share shall have one vote.
Options and Performance Rights
Options and performance rights carry no voting rights and convert to
one ordinary share upon exercise.
The Company announced the completion of the share consolidation on 12
March 2024. The table above reflects the substantial shareholder notices
lodged with ASX at the date of this report. Further, the above details may
not reconcile to the information in the Top 20 holders of quoted securities
list as the shares may be held across multiple associated holdings or if
updated substantial shareholder notices have not been required to be
lodged with ASX.
On-market buy-back
There is no current on-market buy back.
113
Lucapa Diamond Company Limited | Annual Report 2023 | Additional ASX Information
Top 20 holders of quoted securities
FULLY PAID ORDINARY SHARES
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
TAZGA TWO PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
SHADBOLT FUTURE FUND (TOTTENHAM) PTY LTD
SAFDICO INTERNATIONAL LIMITED
PONDEROSA INVESTMENTS (WA) PTY LTD
UBS NOMINEES PTY LTD
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
BNP PARIBAS NOMINEES PTY LTD
MR KENNETH JOSEPH HALL
ALL-STATES FINANCE PTY LIMITED
BNP PARIBAS NOMS PTY LTD
ASHANTI INVESTMENT FUND PTY LTD
PULLINGTON INVESTMENTS PTY LTD
SUI HEE LEE
SITUATE PTY LTD
GREGORACH PTY LTD
MR ALEXANDER JAMES WENTWORTH HILL
MR BARNABY COLMAN CADDICK
Unlisted option holders
There is 1 holder of 1,000,000 $0.40 unlisted options expiring 30 July 2025.
There are 10 holders of 7,102,574 performance rights with various expiry dates
There are 9 holders of 2,080,560 performance rights expiring 31 December 2026
There are 9 holders of 1,975,053 performance rights expiring 30 June 2028
114
NUMBER
HELD
27,223,230
20,530,081
17,402,520
11,432,476
10,813,155
9,921,918
9,678,534
6,200,000
5,045,878
4,821,293
4,400,000
4,260,000
3,897,481
2,880,000
2,840,050
2,800,000
2,752,667
2,413,382
2,400,000
2,360,000
% OF ISSUED CAPITAL
9.42%
7.10%
6.02%
3.95%
3.74%
3.43%
3.35%
2.14%
1.75%
1.67%
1.52%
1.47%
1.35%
1.00%
0.98%
0.97%
0.95%
0.83%
0.83%
0.82%
154,072,665
53.29%
| Lucapa Diamond Company Limited | Annual Report 2023 Corporate Directory
Registered Office & Principal Place of Business
34 Bagot Road, Subiaco Western Australia 6008
Contact Details
Phone: +61 8 9381 5995
E-mail: general@lucapa.com.au
Internet: www.lucapa.com.au
Directors (as at 31 Dec 2023)
Miles Kennedy: Non-Executive Director, Chairman
Ross Stanley: Non-Executive Director
Nick Selby: Managing Director/ Chief Executive Officer
Company Secretary
Mark Clements
Share Registry
Automic Pty Ltd
Level 2
267 St Georges Terrace, Perth
Western Australia 6000
Share Trading Facilities
The Company’s ordinary shares are listed on the Australian Securities
Exchange (Code: LOM) The Home exchange is Perth.
Auditor
Elderton Audit Pty Ltd
Level 32
152 St Georges Terrace, Perth
Western Australia 6000
115
Lucapa Diamond Company Limited | Annual Report 2023 | Definitions and Abbreviations
A$
AIFRS
AGM
ASX
Australian dollar
Australian International Financial Reporting Standards
Annual general meeting of shareholders
Australian Securitues Exchange
Attributable
Attributable ownership in projects based on Lucapa’s % shareholding. This is a non-AIFRS measure
AusND
Brooking
EBITDA
Endiama
Equigold
ESG
GoL
GTD Index
JIBAR
Australian Natural Diamonds Pty Ltd (Lucapa 100% held; registered in Australia)
Brooking Pty Ltd
Earnings before interest, taxation, depreciation & amortisation and other non- trading items EBITDA is a
non-AIFRS measure
Endiama E.P. (Angola’s national diamond mining company)
Equigold Pte Ltd (registered in Singapore)
Environmental, Social and Governance
Government of the Kingdom of Lesotho
GTD Consulting Overall Rough Diamond Price Index
Johannesburgh Interbank Agreed Rate
June half, the half year or H1
The six months ended 30 June
LTI
Lost time injury
Lucapa, the Company or LOM
Lucapa Diamond Company Limited (ASX code: LOM)
MB
Merlin
Mothae
Mtpa
New Azilian
Orapa
Rosas & Petalas
QX 20XX
Safdico
SFD
SML
Specials
the Board
the Group
the IDC
Mining block
Merlin Diamond Project, owned by AusND
Mothae Diamonds (Pty) Ltd, registered in Lesotho (Shareholding: Lucapa 70% and GoL 30%). For AIFRS
reporting, Mothae’s results are consolidated
Million tonnes per annum
New Azilian Pty Ltd
Orapa Area F, Botswana
Rosas & Petalas S.A. (Private venture partner in Lulo, registered in Angola)
Reference to one of the quarter periods in a calendar year
Safdico International, a subsidiary of Graff International
Size frequency distribution
Sociedade Mineira Do Lulo Lda, registered in Angola (Shareholding: Lucapa 40%, Endiama 32% and Rosas &
Petalas 28%). For AIFRS reporting, SML’s results are included on an equity accounted basis
Diamonds individually weighing in excess of 10.8 carats
The Lucapa Board of Directors
The Company, its subsidiaries and associates
the Industrial Development Corporation of South Africa Limited
the Second Half or H2
The six months ended/ ending 31 December
VK
US$
Z Star
Volcaniclastic kimberlite
United States dollar
Z Star Mineral Resource Consultants Pty Ltd
ZAR, R or Rand
South African rand
116
| Lucapa Diamond Company Limited | Annual Report 2023 Lucapa Diamond Company
ACN 111 501 663
Lucapa Diamond Company
ACN 111 501 663
34 Bagot Road,
Subiaco WA 6008
34 Bagot Road,
Subiaco WA 6008
Tel: +61 8 9381 5995
Fax: +61 8 9380 9314
Email: general@lucapa.com.au
Tel: +61 8 9381 5995
Fax: +61 8 9380 9314
www.lucapa.com.au
Email: general@lucapa.com.au
www.lucapa.com.au