Executives: William Lamb - President and CEO Glenn Kondo - Chief Financial Officer Paul Day - Chief Operating

Officer
Analysts: Sophie Park - Bank of America Ed Sterck - BMO Capital Markets Richard Hatch - RBC Chris Welch - Pareto Securities Geordie Mark - Hayward Securities Roger Murphy - Dundee

Securities
Operator: Good morning. My name is Sean, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lucara Q1 2016 Results Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session.

[Operator Instructions] I will now turn the conference over to Mr. William Lamb, President and CEO. Please go ahead, sir.

William Lamb: Thank you very much, Sean, and thank you everybody for dialing into Lucara's 2016 Q1 results call. I am going to just jump straight into the slide 3, just before we do that, together on the call with me today I have Glenn Kondo, our Chief Financial Officer; as well as Paul Day, our Chief Operating Officer.

So just looking at the highlights for the quarter and obviously the thing that drives the overall quarter results was the sale, our regular sale 79,000 carats selling for $50.6 million and setting a significant record of $649 per carat. Having a quick read through some of the analyst reports this morning, it was on better mix and actually it wasn’t. The diamonds which we sold were consistent with the same number of single stone excreta that we sold previously. What we did see with that sale was very, very strong processing for the single stones. And we believe that based on the demand in the market for those and lack of good quality stones is really what drove a significant portion of that number.

W: EBITDA for the period of 30.7 another excellent number compared to Q1 2015 where it was 11.9 and earnings per share at $0.05 per share, compared to consensus around about $0.01 and $0.02 per share for 2015 last year. We have our exploration program which is advancing and I’ll touch on that in a couple of slotted time. And then the final conclusion of the transfer of our interest in the Mothae diamond project to the Lesotho and we now have no more involvement in that project, no environment liabilities et cetera. So we have a clean slate as far as that is concerned. Moving onto slide 4, the key performance indicators, I have already touched on the number of these.

I think the outstanding numbers here are the net income with $17.1 million compared to $6 million for Q1 last year, but otherwise everything else sort of running in line with those exceptional sales results of $649 cash compared to where we were last year. Moving onto slide 5 and this really demonstrates our strong financial position. I’m seeing an increase of more than $50 million from this time last year. I will point out that also takes into consideration, the payment all around about $25 to $30 million in dividends over the past year as well as the final payments on our plant optimization project which was completed in July around about $20 million through 2015. One thing that we should also mention here and this is information which is already available in the public, not included in those cash balance results at the end of Q, is the proceeds from the exceptional stone tender, that is where we sold 10 diamonds for $51.3 million.

So that is now sort of flowing into the cash balance and then form debt perspective, still zero debts which we are very proud of and about $50 million Scotia banks facility remained undrawn. Jumping over to the Karowe operating performance on slide 7, in all the one-on-one meetings that I’ve had through this year, I think only one person actually asked me how production was going? And a lot of the questions were centered around the Lesedi La Rona diamond, which I’ll touch on little bit later. But as you can see from those numbers, production through the quarter went very, very well exceeding the tons processed as well as the ore mined. Obviously, as we mined we do get into some difficult situations with a high yield matured in the south lobe, it does change where we’re mining and that’s what we see in the overall grade mined for the quarter and slightly down compared to where we were last year. Waste stripping moving very, very well with a target of between $12 and $14 million tons for the year and us moving $3.3 million tons in the first quarter of 2016.

We’ve already touched on that the costs and the revenue for the diamond sold in the first quarter again very, very good numbers which we are very pleased with. And right at the bottom there ends up the overall operating margin nothing I thing that makes sort of a truly exceptional number is this is for regular tender, and these numbers which we would normally see if we had had an exceptional stone tender in the quarter. And if anybody actually has taken the time to do the math, if you look at the average value for the diamond sold this year the regular tender as well as the exceptional stone tender, we’re currently sitting an excess of $1,200 per carat. So we’re very pleased with the way production and sales are going this year. Moving over onto slide 8, and we just look at the average dollar per carat sold through the full-year 2014, 2015 and 2016.We do believe that the value of the diamond sold in the first quarter is - we would love to able to say it’s purely because of the increase in quality, but I think there is a very strong component there that does bring specific market conditions into consideration.

And with the fairly rough time that the diamond market had last year, diamonds that were being sold were the single stones, mainly because those are the ones where they could or the cutters could still generate a margin. So when we look at the volume of singles which we produced on the regular basis, because of lack of the availability of those stones, because they had been sold through last year. We do believe that that was one of the components that lead to very, very high demand for the single stones and as such giving a much higher average dollar per carat in Q1 2016. On this slide, I’ll just quickly talk about the sales purchase which we’re going forward through with the Lesedi La Rona diamond. Even though it is - we do have a slide a little bit later on, I think when we talk about sales, so we have actually started the road show for showcasing the 1,109 carat Lesedi La Rona, we had been– we had an event in Botswana, we showcased the two key business officials there and government officials.

We then moved to Singapore, Hong Kong, Dubai and we are in New York for a dollar event this week. This certainly will be on display and if anybody saw the Sotheby's press release this morning, they put sort of their specific dates out there as well as the timing for the final option of this stone. So the stone will actually be on public display in New York, Thursday, Friday, Saturday and sort of part of Sunday, before it moves off to Europe for the next round of events. We are seeing very, very strong interest in the stone, not necessarily just form the diamond sector, but from probably collectors as well. The final sale of the Lesedi will culminate in a live auction in London on the 29 of June of this year.

So I think another sort of full exciting time for Lucara shareholders as well as the diamond market. In that we are exploring alternative routes, specifically for these two exceptional stones. Moving onto slide 9, CSR and Health and Safety, and very, very good safety sets through the year. We’ve now exceeded our one year without a Lost Time Injury. We are currently sitting at about 1.5 million LTI free hours, and the focus on starts still remains very, very strongly on the Health and Safety of our employees.

In terms of overall environmental and social, Lucara is very proud to have received the Prospectors and Developers award for environmental and social responsibility at the PDAC this year. I think it does talk to sort of a lot of the programs are environmental stewardship and what we’re doing in country and how we communicate, negotiate and I think work with the local communities. And just sort of the picture there, the picture on the bottom left is one of the market financed grants for brick works. We actually have a business consultant who lives in at Letlhakane, who monitors the progress and actually the demand for what is producing is so high, but the availability of working capital to get access to the materials et cetera for them to actually meet the demand is starting, so we’re working with them to make sure that their businesses all success and the way we’ve actually approached it is, it’s a grant. We do expect the money to be paid back into the fund and so that money can then flow out to other individuals who have great business ideas.

Also one of the programs that we work with the local district council was the building of - the upgrade, I guess the demolishing and building up a completely new abattoir in that Letlhakane in the area last stock is key to sort of I think a lot of the population and with the district counsel improvement in health of the facilities, veterinary services et cetera and that was handed over to the district counsel for commissioning and operations early in August of - I mean April of this year. But quickly moving over to exploration, as most of you will be aware we were awarded two prospecting licenses in September 2014. BK02 kimberlites in the Block A and we have four kimberlites in Block E. So the BK02 sample is where we started, it’s around about 60 km away from the current mining operation and that processing is now being completed. We are just going through final order process, we’ve processed about 1,500 tons of tailings, just to confirm the efficiency of the process trying to be busy with recovery tailings and we do expect results from the BK02 kimberlites to be out sort of fairly soon.

The next sample which we have - or the next kimberlites, which we’re sampling is AK12, you can see the diagram on slide 12, in the middle there. The entire sample of 5,000 tons has already been transported to the bulk sample plants at the Karowe mine site and as soon as BK02 is completed, we’ll send a tile to plant and get on to the next sample and then that will be followed by AK11. We’re trenching there at the movement, just to see the differed kimberlites, so we can actually stop the sample there as soon as we can. And, we think what we’ll be doing is a lot a market dominant work is being done, concurrently with the bulk sampling and the material so we’ve actually got a lot of exploration data to understand exactly what the resources may contain. Moving onto product excellence on slide 13, I think I don’t really have to go through the exceptional stone tender.

What a lot of people ask is why was the 374 carat stone not sold as part of the tender? And I think if we look at volatility which we saw last year, in a $68 million tender and in a $30 million tender. We’re trying to sort of dial out that volatility and have more an average price across the exceptional stone tenders around about between $40 million and $50 million. So the 374 carat stone still sits in the wallet and we haven’t yet decided when that one will be sold, but it is a process of understanding exactly what is available in the market, what the financial situation is of the buyers and then managing the volatility of our sales. But just in terms of the operations, we did recover 800 carat stones during the quarter compared to 6 last year. And a total of 165 stones greater than 10.8.

Moving onto last slide, slide 14 and this is just a reiteration of our guidance. We still expect on the regular tender to sell between $200 million, $220 million worth of diamonds and again that does not include the sale of the two truly exceptional diamonds. And that really comes from the sale of 340,000 to 380,000 carats. In terms of the tons processed between 2.2 million to 2.4 million and we will mine a little bit more than that between 3 and 3.5. Again with the really low grade material going onto our loss of mine stuff for processing at the back end of the life of mine.

Waste mining 13 to 14 million tons this year of which we rate down 3.3. Operating cost and I think when we look at the results from the first quarter. We do expect to come in underneath us so there may be an adjustment for our guidance in the midyear especially in terms of the overall costs to process tons through the process plants. In terms of our capital expenditure, we are moving forward a large diamond recovery, we do expect that to be completed somewhere around about September, October of this year. And this takes the current top size of the plant from 60 millimeters up to between 80 millimeters and 90 millimeters in size.

And then sort of the mega diamond recovery, we’ve now gotten in sort of lot more engineering on exactly what is entailed to install this. The final delivery of the machine is obviously sort of taking - I can ask Paul to comment on this one, but I think the demand which we are seeing or the manufacturers the XRT machines are seeing has actually increased far significantly, since the discovery of our stones. And although the actual mega diamond recovery XRT machines is not on the critical part, we do only expect this project to be completed most probably in the third quarter of 2017.

Paul Day: That’s what we are looking at William, yes.

William Lamb: In terms of our exploration budget, again the numbers which we have for those capital projects, $ 15 million to $18 million, we do expect to come still in those numbers.

In terms of sustaining capital, about a year ago we said that we expected to - on an ongoing basis to be between 7 million and 8 million. We actually sold within that number, they are two exceptional items which are included in the $11 million for this year, one of them is the final payments for a more relining machine at $1.5 million and we’re consolidating all of our office space in the Diamond Technology Park in Gaborone and there is an additional 1.5 profit. In terms of overall sustaining capital for direct on mine activities, we’re still looking at around about 8 million. Exploration cost, we do expect to spend up to $7 million on the processing of the sample suite the Botswana plant Maida [ph] and pending an eventual resolution from the Department of environmental affairs on our drilling permits, drilling as well on those kimberlites and which we have. But we’ve also started contracts going out and we do expect mobilization to start fairly soon and this is for our deep drilling.

So the indication resource for the Karowe asset at the moment goes down to the 400 meters and we all be doing about 10,000 meter drill program this year and that is to extend the indicated from 400 down to 600 meters, which gives us efficient indicated resource for ongoing either potential push backs or underground mining studies and that’s really where we trending for this year. I’m going to hand it back over to Sean, if there are any specific questions on the presentation or what we see in the diamond markets, feel free to raise those during the question-and-answer session. Thank you very much Sean.

Operator: [Operator Instructions] Your first question comes from Sophie Park with Bank of America. Your line is now open.

Sophie Park: Good afternoon everybody. Just one question from me, you’ve described in the press release, you auctioning less Lesedi La Rona in June this year. Looking to a 113 current stone, do you have a timeline on when you hope to sell it and are you able to discuss how much you hope to sell it for?

William Lamb: So, I’ll answer the second question first and - no, I think the biggest challenge for any of these stones is - especially for the Lesedi La Rona because of the historical significance putting on an average value that anybody would pay for a normal white stone is potentially not the best way to value it. So I’ve told all the media that it will sell for what somebody is willing to pay for it. I think Sotheby's do have an estimate in their press release, where they talk about the stone selling for an excess of $70 million that would be the Lesedi stone.

So that’s kind of where we sit with that one. In terms of the 813, we have actually looked at processes we spoke to some people and we were still busy finalizing the sale of the 800.

Sophie Park: And do you hope to sell it half this year, half in the next, so is that sort of [indiscernible] together this point in time?

William Lamb: I think, we most probably look to sort of job based offer this year. I think the biggest challenge which we sit with this, having a stone of that size in inventory and knowing what the mine is historically produced recovering another one. From our perspective money in the bank at the moment is most probably more valuable than sort of having an inventory of large stones.

Sophie Park: Okay, thanks very much.

Operator: Your next question comes from Cody Kwong, BMO Capital Markets. Your line is now open.

Ed Sterck: Hi, it’s actually Ed Sterck here, I’m using Cody’s line. William, just some questions, I’m afraid it’s an old time fire alarm practice here, I missed the beginning of the call.

The dollar price achieved during the quarter of just around $650 a carat, are you effectively including in your regular sales now more diamonds which otherwise have gone through the special diamond in tender?

William Lamb: Ed, what I mentioned was that, the mix of diamonds sold was no different to what we sold last year. I’ll be honest that sort of management of Lucara were actually quite astounded by what people were willing to pay for the single stones. So if you look at the numbers that most people had in terms of the estimates of what we should have sold for, that is actually what our number was as well. $18 million of the difference between what we sold it for and where our reserved price was from the single stones. So when we look at what people were actually able to sell through 2015, nobody was actually buying the final goods, the low quality goods.

The only thing that [indiscernible] and everybody else could actually sell and if you read their financial statements and MD&A, they actually say that. They sold the large stones because those were the ones where the cuts could actually still make margin. So when we look at, what available in any other sales which people of had early this year. From our understanding and our investigation there were very few single stones. So the demand for single stones was extremely high.

But if you look at the mix that we sold in December last year to what we sold this year there were no increase in the number of single stones, there was no increase in the very high-value stones. There was all very consistent with what we had based on the reserved price to diamonds sold in 2015.

Ed Sterck: So, just to kind of [indiscernible] the fact that you’re saying that the other producers through selling single stones last year almost effectively, they sold down their inventory, their working inventory of single stones and you guys benefited from that in this quarter?

William Lamb: That’s what we believe, yes.

Ed Sterck: Okay, thank you. And then just - you just made a statement that you’ll probably sell the second large diamond this year.

And you made the statement that money in the bank now is worth more than the diamonds in inventory. I guess that takes the question, what is the proposed use of that or what are the proposed uses of that money in the bank then?

William Lamb: I think where we sit at the moment, it's a bit of debate, will it go out of a dividend, instead of going back to board and ask for that a share buyback, that would be a first-time which we go to them. But when we look at the potential underground developments and I can almost sort of - if anybody wants, we can hand over to Glenn and he can talk about the tax payments. Underground developments in Botswana, even where we sit at the moment is not going to be an inexpensive exercise. Spending money now, giving it back to shareholders, will they be available for us when we need money in 4 or 5 years’ time.

But also when we look at the sale of those stones and start to spend a bit a capital upfront. How does that actually affect our tax rate? So there is a number of iterations which we are looking at doing. The big question that I think a lot of people would want to know is well, the strength of our currency in terms of where the share price is as well as the cash balance, what are the opportunities for M&A. And again we are with the same as all other diamonds producers we see exactly what is out there. And with what we are producing at the moment, to find something which isn’t going to dilute our current shareholder is very, very difficult.

And that's what we look at the other uses of the capital.

Ed Sterck: Okay, thank you. Then just a final question, you mentioned that there’s some drilling permits which were outstanding and that you're hoping to reach a resolution. I didn’t quite catch what the problem was that requires resolution and exactly which - where the drillings premise to be deployed?

William Lamb: So these are the exploration drilling permits, for us to be able to do delineation drilling at BK02, AK11 and AK12. The Departments of environmental affairs, - I cannot say this not to you after pointing a finger, they don't seem to be communicating across what the Gaborone office says, what the [indiscernible] office says et cetera.

So they have actually asked now for a community consultation process for the drilling, so now that that's complete, we are all hoping that we would actually get resolution from them and the permits will be issued.

Ed Sterck: Okay, thank you.

William Lamb: Thanks, Ed.

Operator: And your next question comes from Richard Hatch with RBC. Your line is now open.

Richard Hatch: Good morning. The mix coming with me sorry about that [indiscernible] when you see me that. Just a question and if you're seeing a strong diamond prices for the south lobe in particular and some of the other lobes as well, are you considering releasing enough[indiscernible] statement in which you will increase the value of those stones if you're seeing better prices or is it just simply as you explain to Ed’s question just more of a one off situation that you're were saying because of the extinguish their supply of inventory as they stay.

William Lamb: Richard, what we're doing with the 10,000 meter drilling program that will form part of a resource update. So we're planning on putting out an update in resource statement.

If you have a look at what is currently available on SEDAR under 42-101 document, it still talks to $413 a carat for diamonds from the south lobe and that was completed at the end of 2013 released in February 2014. So what we’ve seen with the diamond values, even if you exclude the recent regular tender is a much higher diamond price. Yes, we do need to put an update resource statement out and that is currently in progress and will do that in concurrent - concurrently with the results which we get from the deep drilling.

Richard Hatch: Okay. And as the guidance is to when that may happen, what are we expecting late this year or early 2017, something like that?

William Lamb: That's pretty close.

The drilling, the 10,000 meter drill program will run all the way into the third quarter taking all the data stimulating and getting the independent report done. I think we most probably only get that out early Q1 2017.

Richard Hatch: Okay, thanks. And then just on cost, you came in as you know to the well below your guidance, I mean do you - what have you on your cost guidance, do you think that you're being conservative in what you are giving to the market at $33.5, $36.6 a ton?

William Lamb: Of course, haven’t we always been conservative. Yeah, I think where we are trending at the moment and sort of I have to give this to Paul Day, what they have done on site is, they have really focused on the overall availability of the process plant and we definitely see that in the increase in tons processed as well as the reduction in overall operating cost.

So it is actually one of those areas where we do have control over, I think the numbers which we have are relatively conservative. Based on more what we sold to the backend of last year as we now brought the additional streams from the plant optimization project into the mix, so without having a lot of data, the year or two of operating numbers from the full process plant. We were a little bit more conservative when we put those numbers out. We do expect to have an adjustment to the operating guidance the midyear.

Richard Hatch: Okay.

Alright, thanks. Sorry to keep asking questions, I’ll ask one more and let someone else have a go. Just in terms of the large stone and recovery and the mega diamond recovery. How much did you spend in the quarter and how much is outstanding?

Paul Day: Yeah, so for the mega diamond recovery, we still that bulk of the cost coming through, so very, very little cost in Q1. Where you will start to see those coming through Richard is more towards the second and third quarter when we start to spend money on ordering.

Richard Hatch: Okay. So how much did you spend in Q1?

Paul Day: Just around - in terms of both projects is roughly 1.5 million, it is included in the MD&A you will see a guide line there.

Richard Hatch: Okay. Thanks, Day.

Paul Day: Okay.

Operator: And your next question comes from Chris Welch with Pareto Securities. Your line is now open.

Chris Welch: Morning, Glenn. I just like to get a bit more in how the plant is operating essentially when you’re feeding into the south lobe. I mean, the tons treated was significantly increasing past the preceding quarter.

I just want to know, is it just the full benefit of having the plant fully bided [indiscernible] or we were sort of yield, increasing yield, is that being fully overcome, should we be looking for potentially high throughput rates going forward. And is that going to have positive impacts on operating costs?

William Lamb: I think if we look at mix that was processed through the quarter. In the backend I'm looking at Paul, so he might jump in here. At the backend of the quarter there was a more or a greater proportion of [indiscernible] material processed which does go through the plant quite easily. I do think that the plant is getting a handle on how they actually process the high yield.

They have been going through programs with a taste of just what the maximum is that the plant can process and then they have also been putting some blending practice in place, when they do get a high yield there, they try to sort of manage what goes through the plant. So in my view the plant is running exceptionally well with the constraints which we see from some of the very high yield material.

Paul Day: That's right, William. The team has done a lot of work on also optimizing the combination circuit, really getting a grip on the material. In terms of going forward obviously we're mining deeper and the ore will get harder.

So I think our target move throughput for the year should be retained.

William Lamb: Excellent.

Chris Welch: Brilliant, thank you and just, what we’re seeing more buoyant prices, is there any opportunity, where we still got relatively high strip ratio to focus more on that and process some of the low-grade ore inventory that you’ve got?

William Lamb: That is something which we look at, especially with some of the south lobe material which was minded right at the beginning, which may actually contain sort of a proportion of large diamonds. I think what we are looking at the moment is primarily maintaining or achieving a full understanding of just exactly what the plant can actually achieve in terms of the overall process. And then we’ll start to look at how much flexibility we actually have in what the - if we are significantly ahead while we process some lower grade higher value material.

I think that is still need to be determined.

Chris Welch: Great and a final somewhat cheeky question, with the progressive dividend that we’ve got in place and the above expectation results, are we looking at progressing it - acceleration the progression of the dividend in the near term?

William Lamb: Does a cheeky question actually require an answer? It’s - the discussions which we’ve had at the board - the reason why we are calling it a progressive dividend is, yes, we’ve almost probably thought accelerated. It’s still not going to happen this year. And then I guess the question is in 2017 do we go $0.08 or do we go $0.10? Those are the things, which we still have to do internally and I mentioned sort of earlier a share buyback, all of those things are potential uses of our capital. But to talk for the Board at this point in terms of the progression of the dividend is a bit difficult.

Chris Welch: Brilliant, thanks for that. Have a good day.

William Lamb: Thanks, Chris.

Operator: And your next question comes from Geordie Mark with Hayward Securities. Your line is now open.

Geordie Mark: Hey, good morning, afternoon. Paul, solid quarter. Good start to the year, that makes and exceptional first quarter. I think just a couple of questions on process you’ve been using on the sales, if I can. As noted, obviously, processing rates are really high.

I was just wondering if you can go down - fabulous job - talk about the blend in Q1 and then how you see that between lobes and also how you see that migrating for the remainder of the year. And two, given the very strong performance on cost, you see cost on the per ton basis migrating higher Q2 are related [ph] processing cost on a per ton basis or a combination of processing and mining, given what’s going to happen with the yield. I’ll wait for everybody and then I’m going to move to the next question.

William Lamb: Okay. So in terms of the overall production mix, we are looking at round about 78% from the south lobe, 22% from the center.

And obviously, that is a mix of both direct from the pits as well as some stockpiled material. We don’t expect that to be significantly different through the back-end of the year. I think when we looked at, I think we were speculating around about a 73% to 75% south lobe for the year. So I think at the back-end, there might be more center lobe material coming into the process front. In terms of what we expect for the overall operating costs, when we bring on the large diamond recovery, we do know that the tons are going to drop quite significantly.

I think we’ve got a couple of weeks set aside for the integration of that. And if you’re not processing anything, but just still incurring your fixed costs, that will be one of the quarters where we’ll see a significant jump-up in the overall operating costs. So when we look at the revision to the guidance, we don’t expect to bring it all the way back down to 25, 28. It’s still going to drop, but we need to take into consideration those already planned downtime periods for the integration of these changes, which we are doing. So we do think that the cost will remain fairly static round about $30 a ton, $31 for the year, depending on sort of how long it takes for the integration all those specific units.

Geordie Mark: Okay, that’s great. Thank you. And in terms of sales, now that you sort of augmented your May and June standard tender sales into one sale in June, can you give us a guidance in terms of how many carats are likely to be under the net versus Q1. And on top of that, for the Q1 sales data, given obviously the special performance above your reserves, can you give any indications in terms of like-for-like valuations or value differences between Q4 and Q1 sales?

William Lamb: Okay. So number one, the reason, why we’ve actually combined the sales in Q2 is we just get so much more traction in terms of the number of clients that come because of volume of diamonds being sold is higher.

So we are expecting to sell between 90,000 to 100,000 carats in the sale in June. And really, that’s just the combination of what we would have sold anyway in the two split sales. When we look at the difference in pricing, if I ignore the stones larger than 10.8, in some categories, we might have only seen a 3% or 4% difference in pricing versus where we were in Q4 2015. In some other areas, they were - as soon as you got into the course of stones, there was most probably a slightly higher improvement in those numbers. I think it’s always going to be difficult because one stone from the - and I’m talking specifically about the larger stones those ones who always have the highest level of volatility, and that’s why we generally talk about just increases in the stones below 10.8.

And if memory serves me correctly, we were almost only about 4% above the sales value for those stones compared to 2014 - 2015 Q4.

Geordie Mark: Okay. Thanks. I’ll leave it for now and come back in queue. Cheers.

William Lamb: Thanks, Geordie.

Operator: And your next question comes from Roger Murphy with Dundee Securities. Your line is now open.

Roger Murphy: Thank you. Hi, William.

Just wanted to ask you a bit more about your investigations into putting an exceptional - I think you said mega recovery circuits. Presumably you’re doing that because you believe that those are the potential for stones larger than Lesedi La Rona and just wanted you to talk about more about that and what impact that has on your marketing of stones which. I think, if I’m right, the second largest stone mine ever your implying by investing, potentially in a larger recovery circuit that they may be bigger stones in actual mine.

William Lamb: Okay. So, what I have an, sort of we need to put price to these kind of raw material, but what I have to say that a number of the meetings, the 374 carat stone which was recovered the day after the Lesedi La Rona is actually part of the original stone.

So we were looking at something which is most probably closer to 1,500 carats. Now to identify where that was actually broken whether it was in placement, whether it was in blasting, whether was in the processing, nobody is really going to be able to tell, that has broken long a very well defined growth pattern with really shows the weakness in the stone. There is also an area about the source of the I guess diamond, where its natural resources between those two stones. There was really a significant area of weakness. But I think if you look at the risk reward that's going to cost us maybe $15 million for the mega diamond and recovery circuits, but if it does actually pop out of the stone which is large or even the same size, so what we are doing is only after the mode, do we actually separate material out which is 60 millimeters and above.

Putting the mega diamond recovery in which is essentially directly off to the primary crusher, we will still go down to sort of within the size range which is processed post the mode. So we have got a significant overlap. So I don’t think it’s because we are suddenly targeting 5,000 carat stones. The circuit goes in because it can be installed ahead of the mode to recover something similar to what we have now before it hits the mode. So it’s more of a process of preserving value with the potential upside that we’ve got a circuit which can recover something which is larger.

Roger Murphy: Okay. Now that’s great. Thank you.

William Lamb: Thanks, Roger.

Operator: You have another question from the line of Cody Kwong, BMO Capital Markets.

Your line is open.

Ed Sterck: Hi. It’s Ed again. Just a question on the auction of the Lesedi La Rona diamond, I just wanted to confirm - versus your normal auctions - more of the normal sale of your normal stones where you pay the commission. I presume in this case being sold by Sotheby’s it’s the normal auction process whereby the buyer pays the auction house fees.

William Lamb: We’ve obviously Ed negotiated a special deal with Sotheby’s which I’m not going to disclose, but essentially sort of a significant portion of everything that is paid for the stones still comes through to Lucara.

Ed Sterck: Okay. Thank you.

Operator: And your final question comes from Geordie Mark with Hayward Securities. Your line is now open.

William Lamb: Geordie?

Operator: If your line is on mute, please unmute. And there are no further questions. Mr. Lamb, I turn the conference back to you, sir.

William Lamb: Thanks, Sean.

So I’d just like to thank everybody for attending the call. I think obviously at Lucara, we are very excited for what is still to come through the year and we look forward to keeping everybody updated on the sales process for the diamonds which we have. Thank you very much.

Operator: And this concludes today’s conference. You may now disconnect.

William Lamb: Thanks, Sean.