Lucara Diamond Corp.

William Lamb – President, Chief Executive Officer and Director John Armstrong – Vice President-Mineral Resources Glenn Kondo – Chief Financial Officer Paul Day – Chief Operating Officer

Des Kilalea – RBC Craig Johnston – Scotia Bank Chris Welch – Pareto Mathew OKeefe – Dundee Capital Market Richard Hatch – RBC Robin Anderson – Scout Capital Edward Sterck – BMO

Thank you, Jamie, and thank you everybody for dialing into the Lucara Q2 results call. With me I have actually almost our full management team, Glenn Kondo is here, our CFO; Paul Day, our Chief Operating Officer; as well as John Armstrong, our VP Mineral Resources.

So we will just jump straight into it. We can actually go to Slide number 3, which really identifies the highlights for the second quarter.

On cash flow and diamond revenues for the second quarter, we achieved total revenues of $38.1 million from the sale of 92,373 carats and that excludes $1.6 million, which was received after the quarter, at quarter end, and with those sales that actually gave us an average of $412 per carat, which if we look at the general sales, which we’ve had previously is an exceptionally good number. With that and including the Exceptional Stone Tender which we closed in – what the start of third quarter so far this year, we’ve actually sold $138.1 million worth of diamond for an average of $662 per carat, which is marginally above sort of the total that we sold for the 2014 full year.

Currently with the proceeds from the Exceptional Stone Tender in July, Lucara sits on cash and receivables of US$130.2 million, and that is U.S. dollars.

Interesting though if you convert that to the current exchange rates we’re looking round about CAD$170 million plus, which is an easier one when you start to look at share process. In terms of the overall operation and cost discipline, the half year dollar per tonne cost currently sitting at just under $50 a tonne compared to our outlook guidance of between $33 and $36 for the full year which is what we still expect to come somewhere in the lower end of that guidance.

And then in terms of the overall dollar per carats we’re looking at a margin there. Again just for the half year, I mean, sorry for the – yes for the half year of $208 per carat, 61%.

Again that doesn’t take into consideration, the $1.6 million received after the quarter-end or any proceeds from the Exceptional Stone Tender, again just reiterating that those diamonds sold in the Exceptional Stone Tender we recovered during the first and second quarter. In terms of our net cash positions, this is at the end – as of the end of the June we add $74 million in the bank that compares to $100 million at the end of 2014, but as you can see with the next bullet point down there we have had sort of outflows of capital $11.6 million on a plant optimization project and we had tax payments that includes payments from the Q4 2014 up $27.1 million and then we paid our semi-annual dividend, third time we paid a dividend now at $6.1 million.

In terms of the overall operating performance, the mining has performed exceptionally well we are ahead in terms of waste mine. And I’ll get those numbers little bit later.

And the tonnes processed [indiscernible] below where we are and we did actually plan lower tone-ish throughput compared to where we were last year, specifically for the integration and commissioning of the new circuits from the – as part of the plant optimization. But that has led to sort of a slightly lower numbers in terms of the diamonds recovered specifically the smaller diamonds and being recovered from the DMS circuits, now that we’ve actually split this and are processing our new found material.

Moving on to Slide 4, in terms of the exploration, the Company’s bulk sampling plant is now almost, or nearing completion. It’s interesting that we were down through sort of the loss 10% I believe it’s the popping between them, excuse me, the popping [ph] between the module, as well as the formal electrical installation.

So that I said that as I said is 90% complete, but anybody is actually working construction, as the loss 10% is always the tedious part of getting over smaller things completed. And we do expect the plant to be commissioned, before the end of the third quarter.

Personally I’m hoping that it will actually happen before the end of August, as things are moving quite well. And you can see from the pictures later on, and we are now just waiting for the approved EIA, an environmental management plan, so we can actually get samples taken and start to get those processed.

I’m sure that somebody would love to know what the timing is on that, because of the odd dealing with government agencies, we are pretty much sitting in their office on a very regular basis, lobbying them. The process that we need to follow with dealing with the DEA, the Department of Environmental Affairs in Botswana is very sort of regulated.

And so, we do have a fairly good idea of when those permits will be issued to gain because there is a little bit of uncertainty, when it comes into the sort of how quickly they are actually getting done. As I mentioned previously, the semiannual dividend was paid CAD$0.02 on 18 of June.

And then in terms of the overall diamond market there obviously and everybody will say that they are concerned about the markets. And I think if you look to the markets, commodity markets, as they stand at the moment, it’s not a fun-place to be.

And the diamond market is no different. They are growing inventories from the majors De Beers and Alrosa as the stock hold has started to reject goods, because there hasn’t been that associated drop in process, which is what they expect.

And then of course continued liquidities, bankruptcies in India are not sort of helping the overall situation. But in terms – I mentioned that the $400 plus dollars per carat, which we achieved in Q2 and we’ve actually been able to take advantage of where the majors are not producing profits and people are still looking for diamonds.

And we do align our sales in Botswana to be at the same time as the week before, the week – or the week after the De Beers starts down mill [ph]. So we do actually get access to the stockholders and it has proved to be a very solid strategy for us.

So we’ve seen very rebellion processing, not just for our regular goods, but for the loss in exceptional stones, as well. Moving onto Slide 5, we won’t go through all of these numbers, I’m just going to sort of highlight a couple of the important ones and specifically on the waste mined, you can see that that number, third line down has grown quite significantly and compared to where we were at the same time, last year.

We are actually sitting about 20% ahead of the current year’s budget for waste stripped it was a position that we want to sort getting into. We’re not going to continue to push the waste, that’s just the consumption of cash.

But we do want to be in a position where we were ahead of the curve and making more ore available as we sort of brought the Plant Optimization project to completion. In terms of the overall carats recovered 175,000 versus 210,000 and a lot of those carats in differential there is on the finer side.

We’ve seen reduction in the recovery of fine diamond, specifically after the integration of the Plant Optimization streams with the 90 millimeter material being proceeded through the DMS and we’ll touch on that a little bit later. In terms of what we don’t actually show here and it is recorded in the financial result is the carat sold.

So we actually have already sold 199,000 carats this year. Our next sale which will be concluded before the end of September actually the 75,000 carat sale and we’re looking especially with the current status of the market possible consolidating the last two sales of the year gain into a larger puzzle [ph].

And we have seen that the clients that come to tenders want larger volumes again, specifically because they are not getting the diamonds from the – the profit of diamond is too high from other producers. So if we can actually offer larger volumes of diamonds, we get more people attracted to our tenders.

So we’re currently looking at that as well for the fourth quarter of this year. Just moving on to Slide 6, couple of pictures.

We like to add-in sort of not just the size of the hole but if you have a look very closely there are three vehicles parked and just in front of that there’s a whole sort of block of blasted material. That’s our sort of go to material that’s sort of the majority of the south lobe.

It is the material that actually produces the largest but obviously has the high-yield. And we have an active program on thought of monitoring exactly what goes into the process plant, to ensure that we understand how the process plant is going to react and it comes down specifically again to the yield the liberation of individual hard density components as they go through the DMS and how that is actually affecting the efficiency of recovery of the finer [ph] diamonds.

And then obviously sort of what we are looking forward to as we go into the back end of the year, and then I’m sure lot of investors have like talked about expiration results. So I’m having pictures of bulk sampling plants.

The one on the left shows the front-end that is the scrubber and the secondary and tertiary crushes. And then the picture on the right showing the DMS and de-grit.

And sort of just on the other side there which you can't see is the recovery module. And the only thing that we were waiting there was for the x-ray machines to be delivered and installed into that.

So good progress to be made on the BSP, we’re looking forward to that. And moving on to Slide 7.

Again, I’m not going to go through all of the numbers and specifically those are big differences. And if we look at the line one there, the revenues for Q2 or the half-year, last year at $103 million versus $67.8 million, and that’s obviously skewed significantly by the Exceptional Stone Tender which we had in May of last year.

Hardly enough [ph] if you add in the Exceptional Stone Tender there’s a significant difference there, then almost $35 million more being generated in the first quarter. Jumping down, I think, the other important number is the earrings or the adjusted earnings per share, where we had $0.13 last year and we’re sitting on, sorry, essentially where we going if the Exceptional Stone Tender had have occurred at the same time as last year, the US$0.04 per share would actually have been sort of round about US$0.11 per share addition to that.

So again it does show that sort of even in a fairly tough market Lucara actually still had very, very good diamond sales and has actually been able to generate significant revenues to date. When we look at the overall average dollar per carat sold again not including the Exceptional Stone Tender, we’re looking at $340 per carat, again that is the difference between the $540 the Exceptional Stone Tender, which we had last year and then of course, the dollar per carat margin still sitting at $208 per carat.

And really if you think about the revenues generated by the Exceptional Stone Tender bringing it up to over $660 a carat that almost adds another $300 a carat on to that margin, because those diamonds were recovered during the first and second quarter of 2014. Moving on to Slide 8, to the Plant Optimization project, this is now being completed the actual streams which we integrated into the overall process plant were completed we had those commissioned in the back end of June, which was on schedule or still sitting within the approved budget.

With those now being part of the overall process we’ve again seen that the mill is a lot more efficient to liberating sort of individual components not just the diamonds, but the high-density particles, as well. So when we look at old characterization work patch work [ph] which was done during the original exploration, all of the data there.

What we are finding is that the plant is now liberating a significantly larger amount of high density material, specifically because of the crushing circuits which we had and fully more predominantly because of the mill. What that’s doing is it is affecting the efficiency of recovery of the finer diamonds, going through the DMS and then obviously pushing a lot more material into the recovery.

But it’s very – efficiency of the DMS which has resulted in us reducing our guideline because we have a – again sort of anybody you looks a diamond resources knows that is the finite resource. The diamonds that are there just to sort of target the higher value stones you don’t really want to push as much as what you can and potentially through revenue away.

So especially in the – and looking at the current diamond market, this is not a point where you want sort of really start to push things to future resource prematurely. So we are looking at maximizing the recovery of all diamonds liberated.

There is mill going trouble of the rate and we make sure we recover them. And to enable us to do that both from a DMS yield point of view the amount of material that goes to the recovery, as well as from an interparticle relationship within the cycle and we need to still run that at a slower throughput.

But what that has led to, if we now look at the reduced tonnes being processed, the recovery of the largest stone is obviously again contingent on processing the volume of material. So if we are going to process a million tons and produce a thin large stone, if we only process 600,000 we are expecting only six.

And that’s what is a fairly large block in the upper end of the gardens, it’s specifically because, we know that the large stones are there and it is now, when they come out and will they actually come out from the tons, which we are processing this year. In terms of our overall financial position, we are in an exceptionally strong position.

Our Scotia facility at USD$50 million remains undrawn and with the bank balance sitting north of $130 million, we do believe that it’s almost prudent in the current market to actually sort of make sure we can maximize revenue recovery, understand exactly what operating parameters need to be changed in the DMS to ensure that we bring action move forward, as we have been. So just looking at the guidance and I must tell you we already touched on these.

Our revenue guidance we’ve actually sort of mocked that down by about 10% from $230 million to $240 million for the year to between $200 million to $220 million. Hardly enough the amount of free cash flow, which we get from that, specifically because of the reduction in the tax rates in Bulk Sample doesn’t change significantly.

Those revenue numbers are driven by sales of between 350,000 carats and 400,000 carats and previously we were slightly above that to between 400,000 carats and 420,000 carats. And then the big thing is really the tons processed, which really affects the top end of the revenue, going from 2.3 million tons to 2.5 million tons for the year, down to between 2.2 million tons and 2.3 million tons.

And we are already half way through the year $138 million worth of revenue already sold. So I think the market will point a finger to say you’ve been shockingly conservative.

I think in this market if you are over bullish, you are only going to get beat up later on and when you don’t achieve those. We draw the managed expectation, by based on what we actually see coming out of the plant over the next six months.

In terms of the overall ore mined that hasn’t changed it’s between 2.5 tonnes and 2.8 tonnes, stockpiling the low grade material. Waste mined, as I mentioned, we are already ahead of the schedule there, but we want to maintain that 20%, as we move forward, it’s not a comfort barrier for us.

And we do expect to come within the operating cost guidance, most probably at the lower end of the $33.00 to $36.00 per tonne processed. And the Plant Optmization project, as we said we have now pretty much completed that with $20 million, which remain to be spent during 2015 and we are slightly under the budget on that one there.

In terms of overall sustaining capital, which includes the payments of – most probably half of the mill relining machine are between US$7 million and US$8 million, or US$7.5 million and $US 8.5 million for the year. We’re still sort of maintaining that, we expect to come within that.

And then with the Bulk Sample Plant now being almost complete we know that those numbers are very, very solid. And now it’s just the sampling and processing which is required and we expect to come within our guidance of between $7 million and $8 million for the year for our overall exploration program.

So that actually concludes the slide. If I can hand it back to you Jamie for the question-and-answer period.

Good morning William and team. A couple of questions please.

The first is, this difficulty in recovering all the malls, was that unforeseen? And the second is given that you are guiding to lower production or throughput rather than mining, should we now no longer expect the second large stone or Exceptional Stone Tender in H2?

Thanks.

Okay. Thanks, Des.

John for the first one, we knew that there was going to be – the reason why we did the Plant Optimization project, is because we knew that we’re going to a high-yield, hence the splitting out, I'm not putting in another DMS plant. If we had to put another DMS plant-in, I think, then it would be a very different story and so the optimization or the inclusion of XRT machines, the optimization of recovery of the largest stone that actually has gone exceptionally well for us.

A good number of the Exceptional Stones which we sold in July were actually recovered by those XRT machines. So I think a checkmark there.

And we upgraded the recovery plant specifically to be able to handle the increase in high-yield material. And but what wasn’t foreseen is the amount of newer density material, which actually seems to – it doesn’t separate, I’m going to talk slightly technically, it doesn’t separate high up in the starting [ph].

It actually separates close to the spigot [ph]. But because there’s a lot of it, it actually starts to interact with the separation process.

So we’re all actually going through a strict or a faced approach of changing operating parameters and seeing way we can actually operate to better improve the overall efficiency. But to answer your question, most of it was accepted.

There seems to be anomalous areas of the resource, obviously, a lot of material which we’d love to process, which has now affected the actual separation efficiency of that material. So we don’t want to have liberated diamonds and push them out of the tailing, even though the diamonds which we are recovering from the DMS are the lower-value diamonds.

I think it’s prudent at a momentum just to manage the resource properly. But that obviously leads…

[Indiscernible]

Go ahead [ph].

So before going on to – so you say that it will be in the medium term, the lower guidance and the medium term. Can you give us some idea what the process will be or the timing will be make to get back up to a higher throughput or maybe you don’t.

And again the reason why we said the medium term is and we’ve taken samples those are actually at the laboratory, not even had some preliminary information before the end of next week. Once we have that information we can surely then guide a little bit of that in terms of in we are going to go back up to the 2.5 million tonnes per annum well that’s going be, and possibly re-looking at the financials how we actually best maximize revenue from the mine and then all comes down to sort of maximizing profits and if that means sort of reducing the throughputs and paying the taxes maybe that’s the strategy, as well.

But I think we got to understand what the test work telling us on what the nature of the new density material is before we can actually give a definite on sort of how long it’s actually going to take.

Okay.

And then coming back to your question on the Exceptional Stone Tender, what we’ve – again I’m not just pointing out and if we look at 2013, 2014, and 2015, the bottom cut off criteria [ph], which we’ve had for selecting stones to go into the Exceptional Stone Tender has continuous been moving up. So for us now to wait until we had enough stones with a bottom value of the $1 million, especially with the reduced tonnage.

It does effect, we actually have an Exceptional Stone Tender. And we have internally discussed as stones are recovered, unless of course they are truly Exceptional.

What we must surely do is from now to the end of the year we will actually just include them in the regular tenders. So they’re still going to be sold, we don’t want to end the year with an entry [ph] of stone missed our guidance, we couldn’t sell or didn’t sell because we were waiting for more stones at that bottom cut off [ph].

So we are currently looking at we will see how recovery of Exceptional Stone goes between now and most probably the end of the October and at that point we will either make decision on whether to sell them in a regular tender or to have safer Exceptional Stone Tender. What we have, again as I mentioned, having a large of volume of diamonds to sell, attracts a lot more clients.

And that is true for the Exceptional Stones as well. If we only had five stone, we definitely are not going to get the number of clients which we would want to come down view and bid the process that we believe we can achieve on those stones.

Thanks William.

Thanks Des.

Hi, guys, thanks for taking my call. First question just in regards to the dividend and I guess your strategy going forward.

Given how strong in your working capital position is that’s around $170 million in cash from receivables. Just wondering what your thoughts are on: A) of the dividend policy going forward and then B) obviously with the issues in the plant maybe not looking right now, but looking at six months kind of where you see the growth opportunities within the company.

Thanks, Craig. It is a very interesting question and sort of if you run back to your screen and have a look at how rated is, it’s both things are we also take into consideration when we now look at Lucara fits into sort of the global market and then sort of if there is any uncertainty and how we would actually approach our dividend policy.

What we have discussed internally is whether we actually got any overall benefit last year from paying the special dividend. And what we’ve seen is that there was an increase in buying ahead of special dividends and a significant amount of selling afterwards, which doesn’t really add to what we wanted in terms of the attraction of long-term shareholders.

So there’s a strong possibility that we’ve thought to look more at a progressive dividend policy versus the special dividend policy. I’m not going to make any claims to what is going to be now.

I think there’s bit of discussion which has to happen, between managements and the Board, before you make a definite claim there. But what we do know is that we will continue to pay the dividends because we believe that’s what sort of a company should do, we’re not going to just continue to sort of build our cash balance.

I think there is model [ph], therefore for going back to our shareholders. In terms of the overall growth opportunities and we are looking very strongly at the organic side of things.

And I'm sure that if you asked any other producing diamond company whether they are looking at sort of potential for mergers, and acquisitions and growth opportunities, and it’s the same as what we do. It is a very, very small universe, we understand exactly where everybody is, what they’re doing.

Hardly enough that we sit in a slightly stronger position having a fairly large Canadian cash balance. So if people do start to sort of fault on the development project, is that an opportunity for us?

I think it’s too early to say there, but we do continue to look at all potential growth opportunities. I think the next one for us is, let’s get above Sample Plant finished, get the service in place, and start to process that material and see whether we can do it organically in Botswana while looking at all other opportunities.

Okay, great, that’s very helpful. And probably more question for Glenn, just I know previously with the guidance beforehand you had mentioned a tax rate in and around 35%, 36% this year.

Just wondering with the reduced guidance if you could update us and where you think the tax rate will be coming into year?

Yes. Craig, if you take the top end of our revised guidance I would say that reducing the tax number by about – within 3% to 5% will be a reasonable target.

So it does a quite a lot of contribution to the overall cash flows.

Okay, great. And that’s it from me.

Thanks, guys.

Good morning, gentlemen. I wonder if you could just give us a bit more detail on the sort of size distribution of the diamond sold in Q2, particularly relating to sort of where the ore was sourced and the portion of north, south and since lobe material was processed.

And just a follow-up question then to Glenn about the capitalization of strip material if we could expect sort of similar mines in Q3 coming up? Thanks.

Hi Chris can you put your phone [ph] on mute.

Sure.

Thank you. I will now just give a bit of feedback.

In terms of where the overall mined, it is important also to remember that we hadn’t yet integrated the specific parts of XRT streams into the overall production facility. So we were still constrained by what material we could actually process.

I think that the split is surely round about 30% top load and 30% from the stockpile, which is lot of the softer material on ore. The fragmented material from the center and the north with the rates being from the north and center most probably fairly similar to what we had and processed during the first quarter.

And then Glen you want to make comments on the white stripping?

Yes, Chris we are ahead, in terms of the white stripping. If you look at our overall guidance, I would say that will be marginally lower in terms of the overall waste capitalization that’s done in the first half.

And again, just to confirm that the operating cost of guidance per tonne at $33 to $36 per tonne. That’s a full cash cost, including waste stripping, as well.

Brilliant, thanks guys.

Thanks Chris.

Thanks, good morning, good production quarter, but I have to – I want to revisit the mill issues and plant issues. So just to be clear, so it’s not as simple as that having additional DMS capacity – there is a – is that correct?

I think, look, that is a potential solution, but from what we’ve seen just based on the preliminary, I guess, sort of, material being processed through the process plant. Having a DMS would actually help, it just means that you split and you see the much lower tonnage into it.

But it doesn’t necessarily address the core. And that’s the reason why we’ve actually taken the samples, the samples at labs, because we’ve got labs at – or samples at supplies as well all magnetic material.

What it does – what we have seen is that a lot of the higher density material does seem to be magnetic it might be a simple process of removing that ahead of us. Then actually Mike told a lot of other problems.

But it’s a little bit early to say exactly what the final solution is going to be. Adding DMS capacity would definitely help.

But adding DMS is also a significant power draw, as well as DMS because of the ferrous silicon, etcetera, is an increase in the operating cost. So we’re looking at the full picture of where do – we benefit from recovering the fine diamonds with making sure that whatever system we actually put in isn’t going to cost more than what those diamonds are worth.

Right, okay and can you give a little maybe you did already, but can you give a little bit of guidance on the timing of working out this problem and potential cost of fixing it maybe a range.

And again, for me to sort of stick my neck out and give a range, I think, where we are at the moment the plant can continue to run and generate significant revenues. So we’re not going to be running a loss of any other comp.

Before we actual – until we actually get the results from any test work, it’s going to be the results from those pits, which actually will determine which process is going to be best and which unit process. And I’ll give you an example, if we wanted to put an extra eight machine, its eight months delivery.

If you want to go from magnetic separation it could be three to four months, maybe four and a half. A DMS plant a lot quicker, if there are other people that are building plants and with fine stones doing away and now it’s probably and sort of all putting in screens from the same manufacturer to get those screens may take a little bit longer than what we would expect.

So I’m sorry Matt, it’s too difficult to even give you a range, as while we had in the medium term. But again if you go back and you have look at the numbers, it doesn’t take many large stones, as we saw in the – with the Exceptional Stone Tender to maintain sort of a very, very healthy margin for the plant even running at a reduced throughput.

Okay, that’s fair. And then on the Exceptional Stone Tender, so you’ve had one this year, we’ve been expecting maybe just one more in 2015.

I think again, we’ve put in a lot of emphasis on having the Exceptional Stone Tender. But if we were selling [ph], I guess, from my perspective its bit of – its marketing, people get to see exactly what those stones would.

But if we actually have a look at the results, which we have got from the sale, we’ve most probably sold – and I’m going to look to John, you might actually have the number, but I don’t think so. We most probably sold if we use the criteria that we used in 2013 of $250,000 as the bottom cut-off for a stone.

This year already, including the Exceptional Stone Tender we almost sold 40 stones with the value north of – if not more with the value north of $250,000. So we could already have had two or three Exceptional Stone Tenders.

So it’s a criteria which we use for selecting those tenders. And we may actually see, if we don’t have enough stones for a tender where we can actually have $1 million to bottom cut off, it’s worthwhile just making sure that we still have the revenue in the [indiscernible] selling them as part of the regular production.

Sure, sure. I see, and then just a final question on the diamond pricing for your sort of regular goods and on Exceptional Stone, now you’ve benefited from some of the higher prices, it sounds like you benefit from somewhat higher prices being push trying to push to by De Beers and others, but are you seeing or expecting price pressure on your regular run of mine as well.

I think the entire market should be expecting a little bit of cost pressure. And I was in New York a couple of weeks ago and chatting to people in [indiscernible] they estimate that polished inventory currently sits anywhere from 18 months to two years worth of inventory.

I mean that’s primarily driven by just the volume of rock [ph] that is now in the markets the fact that the volume of sales is not what it used to be, but also that the manufactures have become a lot more efficient. I mean if you go to India and you see the guys actually doing laser scanning of 0.75 millimeter diamond, they’re getting a lot more diamonds out from the rocks [ph] than what they used to.

So that obviously sort of add into this overall volume of diamonds available. You look at what is happening then on the rough supply and this building inventory as well.

So if you have nothing flowing out the end, two bubbles are now developing. It’s actually consuming a lot of the available money which would normally be used for buying pressure on your rough.

So I think the entire market needs to sort of be a little bit open minded in terms of where the rough diamond parts are going to be going in a short-term. So yes, we do expect to see sort of continued downward pressure on the process of regular goods.

Okay, thanks very much.

Thanks, Matt.

Thanks and good morning, guys. Thanks for the call.

Just actually what’s the plan. I'm sorry if I missed this.

Glenn can just tell us how much your exploration must have been year-to-date and also how much should we book into the income statement for expiration for the reminder of the year please? Thanks.

Yes. So we’ve said that in terms of Bulk Sample Plant that we would spend $5 million on that.

And if you look at our MD&A we’ve shown that we’ve spent $2.4 million so far. So we do have final payments that are coming through as we close that project.

So I’m very comfortable to keep $5 million in terms of overall capital. The program is starting in the backend of the year.

So the overall P&L cost that we have to forecast in terms of operating cost is $3 million. And I'm still very comfortable on keeping that range we might be slightly under it, but that’s a very good number to use, Richard.

Cool. Thanks, Glenn

Hello, you said that the reduction of the processing in your guidance doesn’t necessarily mean that your profit for the year is effective because of you are attacking [ph] Botswana. Could you please comment on that again?

Whether I should expect or…

Okay. I'm just going to hand over Robin to Glenn, our CFO.

Just the question I'm think, even though we’re still going to be banking sort of large amount of cash how it’s actually you are thinking that?

Yes, so in our overall MD&A with the profit we had in our initial guidance, we are showing tax of about roughly 34%, if you take the top end of what we’ve guided recently at the $220 level then that drops depending capital expenditures that you make during the year, because they are immediately detectable. We’ll see a decrease in tax rates between 3% to 5% and that’s across the entire taxable income line.

So the overall drop for our cash flow is quite considerable in terms of overall cash savings. It’s really the way the tax system works in Botswana.

So the tax rates calculated as percentage of profit over turnover. So that’s why you won’t see as much accretion in terms of the cash drop compared to the revenue got [indiscernible] revenue guidance that we’re showing.

Okay, thank you. And then maybe we’ll go down to the stuff there but for how long have you known that there’s a problem with the Plant Optimization or upgrade in terms of finding smaller stones.

And when do you expect it to run like it should again.

So if we look at when we started to integrate the XI [ph] season splits the material essentially only thing mine is material through to the DMS. That only occurred sort of like in June.

To sort of rush out and so we’ve got a problem there with sort of a significant number of operational things which we could adjust to see where we could sort of be able to handle this high density material. So we’ve really only been focusing on the finite diamond recoveries since July of this year.

So that’s really only about between four and five weeks. And as I mentioned, because we’ve got samples which are currently at labs we’ve got samples for magnetic testing at different suppliers.

Until we actually have the results from those to make a statement of when the plant is actually going to be running at full stream again it’s too early to tell.

Okay. Yes, that was all I had thank you.

Thanks Robin.

Hi, gentlemen. I think most of my questions have been asked already.

But just a couple more here. First, if we look at down price expectations in all market [indiscernible], et cetera, given that the efforts within the plants have increased to I guess to regain the recoveries in the smaller end of the spectrum on a like-for-like, should we expect slightly lower average realized diamond prices in second half of the year.

Actually Ed we much probably go the other way. If we are not recovering and selling the funds the average dollar per carat almost probably increased.

So at that point is sliding the plant down, just try and make sure that you didn’t lease the funds.

Yes, as I said, yes. But again if we ignore that the market conditions we are recovering all the funds and we were busy sort of changing trends is to make sure we can actually get that.

The reason while we’ve actually dropped the guidance is because and the number of carat sold is because we are currently not recovering all of the funds. So that’s what we are going through the test working everything else.

It’s one of those things that because we have the three different lobes within the Kimberlite path and the past few days we have actually had mine coal factor, in excess of unity, which is it’s not what we’ve experiencing in other areas. We still believe that the recovery of the fine diamonds, we are going to fit that anywhere from 70% to 90% of those ones, which if you go back and you must probably wouldn’t have the data, but it’s a very small component of the overall revenue.

I would say that if we looked at the average dollar per carat for Q1 that’s a solid where would that lower than the 400 plus. If you are going to modulate that is a number of round about 340 to 350.

Okay, thank you. That was very helpful.

And then just asking on the question of free loads, I think previously talked about the northern being effectually mined out by the middle of this year moving into the Centurion and Southern lobes for the rest of the year. Is that still where we stand?

And there is obviously still material left in the north lobe and it requires a significant push back. And if you have a look at the diagram on sort of Page 6, the north lobe is obviously the deepest section of the put there.

And actually access more material, there has got to be a big push back on the other side there. I don’t know, Paul you want to comment on sort of access of – increased access to north lobe material?

Yes, sure. Look we have about one or two benches, so probably about half a month’s with production, left in the north lobe from the top one.

And then the residual of the north lobe will be accessed when the top two gets downs to that level to be where 2018.

Okay, fantastic. So for the remainder of 2015, is it going to be actually mining out a month and a half or so northern lobe?

And then moving in assumption of the Southern lobe its actually and even blends of the whole fray.

And so we will mine some all from the north lobe in 2015, as it is the lower value or we actually have the processing it within the year.

I got it. Okay, thank you, Gentlemen.

Yes, it is onto the question and the material for the rest of the year is going to be full from Centurion South.

Okay.

Thank you.

Yes, just coming back again to the plant changes, so you are going to be mining the same amount of all and you are ahead on waste stripping, but you are going to be processing less for a period that is you still have an – quite sure for how long. So should we be thinking in terms of reduced mining rate or reduced stripping rate from here on?

And then just a question that I was just thinking – in the admin accounts, why did salaries and benefits go down quite significantly some of huge amount of money in the scheme of things, but between six months 2014 and six months 2015.

And the through 2014, we actually allocated $1 million to bonuses on that. That’s where a large portion of that went based on the performance through the previous year.

Okay. Thanks, William.

And for your other question, I think we have a solid stick to the plan in terms of mining the waste, obviously, not that the accelerated rate which we had for the first. I'm [indiscernible] just mine according to plan in terms of the marketing conditions both on the ore and on the waste.

Okay. So you will be kind of have stock pile about 100,000 tons or something like that at all.

Yes. I gives us additional flexibility in terms of where we can actually from open ups additional phases in the [indiscernible] which again if we look at sort of how the plant react to certain top of material it gives us the opportunity to do maybe a little bit of inter planning, et cetera, [indiscernible].

Thank you.

Thanks, [indiscernible].

Thanks.

Thanks, Jamie. Again, thank you very much everybody for dialing into our Q2 results call.

I think where we look at the numbers specifically the revenue generated the value we got from the Exceptional Stone. Lucara remains sort of one of those companies where our clients come to because they know and understand the value and quality of our goods.

And I think we’ve sort of seem very, very strong processing in our diamonds through the first half of year. And I think we will continue to work on those relationships, the large stones obviously contributing a significant portion to our overall revenue.

And it’s again sort of one of the resources which we believe and we continue to see on a daily basis just beautiful stones being produced. So I think the dropping guidance is sort of something which we’re going to manage going forward.

Again, we’ve been known to be conservative when we start to look at these numbers, and again, for asset comes to been able to deliver on what we’ve said. But again, thank you very much everybody.

Thanks, Jamie.