Lucara Diamond Corp.

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

Des Kilalea - RBC Capital Markets Craig Johnston - Scotia Bank Christopher Welch - Pareto Securities Geordie Mark - Haywood Securities, Inc. Matthew O’Keefe - Dundee Capital Markets Mordechai Yavneh - Focus Capital Management

Thank you, Leanne. Thank you, everybody, for joining our third quarter 2015 results presentation.

With me I have Glenn Kondo, our Chief Financial Officer; as well as, John Armstrong, our VP of Mineral Resources. So we’ll jump straight into the presentation.

It will be the same format as what we have used previously. If we jump to Slide 3, just an overview of the 2015 third quarter highlights.

In terms of cash flow and diamond revenues, through the quarter we sold a little under $91 million worth of diamonds. It was around about 83,000, 84,000 carats for an average carat value of a little under $1,100 a carat.

Total revenues to the end of the third quarter were $158.6 million achieving $560 a carat. And I’ll come back, well, I think must only talk about that quite extensively a little bit later.

Looking at the net cash position, at the end of the third quarter we had $122.7 million U.S. dollars in the bank.

That’s up from $74 million at the end of the second quarter of this year. And that’s primarily driven by a very successful exceptional stone tender in July and then one fairly large regular tender, which is what we normally do in the third quarter.

The company’s - talking about exceptional stone tenders, the company’s second exceptional stone tender is currently in the overall viewing stage and that closes on Thursday next week, November 12. In terms of operational and cost discipline, year-to-date we’re looking at cost of little under $30 a tonne, per ore tonne processed, and that remains very well controlled and marginally below forecast.

We do currently have the guidance of $33 to $36 a ton and as we get into the back-end of the year lot of those costs increase in stripping et cetera will come through. But we do expect to come slightly below of those guidance numbers.

In terms of the third quarter operating margin, based on the $1,100 per carat sold, we’re looking at round about $951 per carat or 88% margin for the quarter. Year-to-date operating margin, this is referencing back to the 560-odd-dollar per carat average.

We’re looking at $429 per carat or 77%. In terms of operating performance, tons processed, this is after the plant optimization sections have now been commissioned and integrated into the fully operating plant.

We were 11% higher than the forecast in terms of tonnes milled recovering a little over 100,000 carats for the period. And I just sort of - there was a little bit of concern after the second quarter, specifically with regards to recovery of some of the finer diamonds.

And if you annualize the 100 carats we’re back on target in terms of where we said we will be at the beginning of the year, so that’s very encouraging. And then, in terms of processing through the last quarter of the year, we have been processing material from the south lobe, again some very interesting recoveries there.

But what we are seeing in the diamonds recovered from the south lobe most probably not as many, but those stones are actually coming out in larger sizes. We’ve seen almost a 5 carat per stone increase in the average stone of those plus 10.8 carats and then that’s very encouraging.

It’s here the - the south lobe actually has larger stone or the plant optimizations sections which we have now integrated, specifically the XRT machine are reducing any breakage or reducing the breakage which we’re seeing and that coming out in the larger average stone size. Moving on to Slide 4, again, on the highlights looking at the explorations, our bulk sample plant is now being commissioned.

We have been testing that with known grade material while we wait for - while we were waiting for authorization from the Department of Environmental Affairs. They’ve now since give us the permits to actually extract material from the BK02 kimberlite and we’ve started with the work there.

I’m having a picture later of the BSP, but we’ve done the vegetation clearing, the top soil clearing. We’re currently just removing some of the concrete [ph] so we can get access to the kimberlites and then from there we should start to process.

Expectation is in November we will start to ground through the plant. I’m looking at having full results most probably early in 2016.

And, following that we were looking at AK12 and then AK11. We’re still waiting for the required permits from the Department of Environmental Affairs before we can actually get in there and start to process.

In terms of the dividend, we have declared an additional $0.02 dividend payment in December. That brings our cumulative dividend for the year to $0.04.

Then I’m sure that there will be questions on the special dividend and while we haven’t actually announced that discussions which we had at the board already around changing our dividend plan through next year, going through a cumulative or a progressive dividend is the word I’m looking for. And I think if shareholders go back and they have a look at the effect that we actually had coming out of the special dividend being paid last year.

All that we really did was created a lot of volatility; people bought in, took the dividend, the $0.04 plus the $0.02, and then sold the stock. And it actually created more negative impact for our long-term shareholders than what we had planned.

We’re looking at altering that to get little bit more stability into the share price and add long-term value to the shareholders through that process. In terms of the overall diamond market, we’ve seen very similar numbers to what everybody else has.

If we looked at like-for-like quality diamonds, specifically in the finer lower quality diamonds, we seen the exact same decreases and maybe plus or minus 1% or 2%, compared to what the other major producers have seen. I think the one thing that does differentiate Lucara here is.

As we mined more material from the center in the south lobe, we have been able to, and I’ll use the word, sweeten, the tenders which we have because of the introduction of better quality, sometimes larger single stones. And that’s really what enabled us to keep our average dollar per carat relatively stable compared to what we’ve seen by the producers in the diamonds less than 10 point or - I guess, the overall parcel and specific to the regular tenders.

But, I guess, the aspect that we see driving the diamond market going forward are increasing inventories, not just in the polished, estimates that we have now show that polished inventories could sit anywhere at the two-year mark, where historically one year has been the comfortable area. But with the lower volumes of goods being sold by the other major producers, we’re starting to see increases in rough inventories as well, specifically in those low quality categories.

And we believe that those aspects alone are going to take more than the - what the general market believes before they start to iron out. What we have however seen in the exceptional stone tenders and just the attendance which we were seeing at the current exceptional stone tender, the market for larger stones and the value being driven out of those larger stones seems to be exceptionally robust.

Moving on to Slide 5, just an operational review, very similar to what we had this time last year, diamonds down at the end of Q3 and these are tonnes processed by Dilowa [ph] but that to be expected based on the result we had at the end of Q2. Ore mined, obviously very similar gain - big jump there in terms of the waste mines, we are about 1.6 million tonnes ahead in terms of what we had planned to push that, and that’s just given us a lot more flexibility of where we can mine in the pit.

And then, obviously to the rate gain coming out of the result for the second quarter 276,000 versus 316,000 carats year-to-date, but if you look at just here Q3 results 100,000 versus 106,000 that’s for Q4 of where we were last year. So still in terms of our operations demand in the processing plant down in Botswana, doing exactly what we want to do.

Flipping out to Slide 6, just a couple of pictures, things are going to us and we had a very successful investor to us, so I’m sure a number of people on the call, we will be able to reference, what I am talking about. And one-third of the diagram - the large diagram on the right, it actually shows most of the new conveyors, the new XRT building, which is one in the center of the picture, we should now being integrated now running very, very effectively.

But again, sort of one of the things that I view as a constructor for as well machine - operating machine, is how clean the process plant is, and even with all the ore and everything going through there, it generally indicates sort of good housekeeping is a measure of how all the plants is running. In the bottom left hand corner, the Bulk Sample Plant, we mostly processed for 500 tonnes through that plant so far, and this is really on ore grade material, I think it’s important for us to understand exactly how well that plant is working before we start to get the exploration samples through, but when it comes down to, and I’m sure equations will be right about the overall centralization of the plant.

We are actually looking at replacing all the screen takes everything, every time we go into a new samples just making sure that they have no contemplation there. And then, with the exceptional front end of the viewing is currently happening, obviously we’ve got the 336 carat stone is sort of I think, if we look at the quality of the diamonds 83 carat, it’s the one way most people are speaking about in terms of white stones.

But the little pink stone just over 8 carats is creating quite a buzz. And it’s very interesting to see what people believe they can actually see in that stone anywhere from 2 to 3 carat.

And then, of course comes down to the level of expertise, whether it’s going to be an intentional, well that actually set in the color of that stone. So I think one of the things, we do had what the sample of stocking to produce on colored stones, is an additional element to the department, which can be created if both the regular tenders as well as the exceptional tenders.

I did have equation the other day about the payout 12 carats pink stone, which would have covered, it is truly payout, you really have review almost at the close you one stone on you left foot to see, how pink it is, but we’ll - didn’t really qualifies an exceptional stone, and that’s stone will be sold as part of our regular tender in December. Flipping onto the financial highlights on Slide 7, as I mentioned revenues are $158 million for year-to-date to the end of Q3.

We’re looking at EBITDA of $95.3 million, I’m still behind sort of the $125 million we had last year, but at this time, we’ll ready had two exceptional stone tenders last year. And I think, just I did that I mentioned, but like I think this is a good time to speak about what we’ve actually seen in the tenders, everybody also seen diamond process decrease, and we’ve been adding in more larger single quality stones, and I’m sure if we had stones last year, we would have put them into an exceptional stone tender.

But if you are selling $150 million - well, $130 million worth of regular goods, and it is in like-for-like goods where everybody also focus similar qualities and they’ve seen and anywhere up to a 15% to 18% reduction in those. We’ve seen the same amount in May.

And a lot of the large stones or the single stones, which we’ve added into our regular tenders, would have made into an exceptional stone tender using the department of $1,000 per stone cut off of which we used last year. What we’re doing this year, the exceptional stone is generally running at the million dollars club.

With those stones between $1 million and $500,000 are now going into the regular tenders. But when we start to look at six months to even 18 months down the line and the diamond market now starts this year come back we’ll see what the outcome is from the generic marketing, which to be doing over the Christmas season and the Chinese New Year.

As diamond plants to start the increase, I think the expectation within the Karowe is that, we are keep the same increases in the regular goods, but because you’ve got such a large components or higher value goods in May. The diamond price appreciation, which other to see, we would most probably see a greater percentage in that, because the quality of diamond, which we have been putting into the regular tenders.

I’m just sorry, a bit of diversion I’m coming back to the financial highlights. Earnings per share, year-to-date putting a $0.15 versus $0.17 last year, so not very much in - and gain the rest of the fact already speak for themselves, and the big numbers there, the operating margins of $429 of carat.

I think that is still hitting in the right direction, especially where more material now being mined from the south lobe. Just jumping on to Slide 8, the status of plant optimization, so XRT machines have continued to perform well, what we are actually seeing is an increased recovery of diamond still stuck in the kimberlite.

And we’ll have a 30 millimeter diamond with sort of 8 or 10 millimeter - sorry a 30 millimeter particle with a 8 or 10 millimeter sort of diamond sticking out of it. Interestingly enough, if we didn’t have the XRT technology those would have ended up on the tailings done, because the average density of those particles when process through a DMS plant, would have ended up going to the flow direction.

So the XRT’s are actually producing more than what we had expected and more interestingly the actually when recover diamonds, which are not supposed to be there, and in the formal site selection, which we see through just general screening and efficiencies. In tends to recovery the overall fine diamonds, which we noted as a concern in Q2, we’ve seen an improvement in those and that’s been driven by changes, which we’ve made in the DMS plant, which treat the amount of 8 millimeter material as well as potential modifications we’ve made in the recovery plant on the XRT circuits.

I’m looking at the tonnes processed, we were 11% higher than the previous quarter, and as I mentioned earlier diamond recovery is now sitting at in excess of 100,000 carat for the quarter, which if we continue through that as we expect to where we were at beginning of the year with guidance of 400,000 carat for the year. I’m talking about guidance that has been on Slide 9, that has remained unchanged, we still looking at revenues of $200 million to $220 million from the sale of 350,000 to 400,000 carats.

Tonnes of ore between 2.2 and 2.3 million tonnes, waste gained a fairly large number, if we look at the waste but we do expect on - back end of 2018 that waste number just stop to drop open the strip ratio, drops up quite quickly from onwards, but waste mined this year sitting at the maximum 2.5 million tonnes. Operating guidance costs per tonne, keeping that between $33 and $36 per tonne, in terms of plant optimization capital totaled with $55 million, we spent $35 of that last year, we’re expecting to spend the remaining $20 this year.

It does look back, we are coming slightly underneath that number. So again another projects well executed by the team down in Botswana.

In terms of sustaining capital, we have the more relining machine, which is going in part of that money being spent this year. And we’re still sitting at guidance from the top of the year between $7.5 million and $8.5 million for sustaining capital.

On the exploration side, Bulk Sample plant is not commissioned that plant coming into run about $5 million mark, all which $2 million of spent last year. But the total exploration budget to get up to - these are the processing of the BK02 material before the end of the year, somewhere between $7 million and $8 million, and we are on track for that.

Leanne, that concludes the presentation.

Good morning, everybody. Thank you very much for the presentation.

William, and maybe Glenn, the costs in constant U.S. dollars, I mean, I’m trying to find out to what extent was the weak currency a major contributor in good costs performance?

And then, just a kind of broader question on marketing strategy, we saw Petra hold back about 10% by value of diamonds in the sale they’ve just finished. Is that something you would look at on where the mine maybe holding back if you thought prices weren’t good enough?

Des, thanks for the question. On to the diamond sales and diamond marketing question first, and I’ll hand over to Glenn on to the question about constant U.S.

dollars for the OpEx. I think, one of the things that Lucara has is, Steve, our marketing and sales or Marketing Operations Manager down in Gaborone, who looks after the sales.

He call it a, quote following, and we've seen is one of the values that Lucara actually has that we always sold everything, the last time we actually withheld a parcel because we didn’t think it was worth what the market was offering was in December 2012. So, one of the things that we do believe is holding goods back doesn’t really benefits us in terms of first of all the number of clients that come to our tenders, but also the values which we’re getting for our stones are going to at market value.

Waiting for the market to be improved doesn’t really sort of add value, because if you look at what everybody else is doing they seem to be selling the larger high quality goods. And what they’re left with is lower quality larger volume to which they then struggle to sell at the end of the day.

So, we don’t actually plan on withholding any goods, it’s not part of the strategy which we’ve got. I think the one benefit that we do have is with the reduction in volumes of goods which the - specifically in the DTC sightholders are not taking from De Beers.

When they’re down in Botswana, we seem to see an increase in the number of DTC sightholders that attend our sales. So as we we’re seeing the regular buyers from maybe two years ago who are now running into the same financial issues as what some of the smaller players are.

We are now replacing those with much larger players and it’s interesting to see how many new clients we’ve actually brought in and that number I think sits at 57. And that’s just since the beginning of the year.

And I guess going into the start of 2015, one of our greatest risks is whether we are going to get the same traction as what we had in Antwerp by doing all of our sales in Botswana. And I think it’s been a great success story based on not just the offering which we have at the tenders, but also the people that we have down there who are driving those sales.

Thanks William. Then William, can I just put in a righter question before Glenn answers?

Yes.

I think that the producers need to change production strategy on bottom catch that maybe they’re just trying to connect too many of these small kind of brown sugar diamonds that should be left in the ground and throw out to the tail, so that’s part of the problem.

And what, I guess there is most probably two answers to that. They will always be a market for those and it’s primarily where the whole Indian cutting work started.

I think that’s down to the producers to determine whether it’s economic to recover those. A lot of the times the circuit which they need to run whether it’d be hoppers or gliming-roll-discovery [ph] into DMN, the cost of running that circuit versus the actual revenue generated from the recovery of those diamonds, the margin is exceptionally small.

But I think one of the things which people also take into consideration is that diamonds in kimberlites are a different finite resource and the volume of those kimberlites out there, new finds et cetera is very limited. So maximize the volume of diamonds you can get out now, because as the CEO for De Beers said on BBC a couple of weeks ago, from 2018 they do believe that supply demand fundamental will start to change.

It’s not going to be a rapid drop off. But if you look at the number of new recoveries, the number of mines we’re getting to the late end of their life, both are now starting to increase with supply starting to decrease.

So, I think people are looking at just making sure that they can get the maximum number of carats. But I do believe that there need to be an economic decision made around the recovery of those carats as well.

Thank you.

Yes, Des, in terms of the dollar, the impact of the devaluing [indiscernible]. In terms of our cost price from $33 to $36 per tonne, I think that can have an impact of roughly $2 to $2.5 per tonne.

The other offset to that, I suppose is when we look at the overall waste stripping. Well, probably where we are today in terms of keeping the optionality in terms of overall mining will be on the high-end of the waste mining which is a good thing for us.

So, that will compensate in terms of having a high - pushing back dollar per tonne as well. The other thing we have to look at when we look at the dollar per tonne is the overall tonnes milled that we’re forecasting this year, is down from guidance, previous guidance.

So, that again has an impact of pushing up the overall dollar per tonne ore process. I think if you look at it in terms of cost, what we’re forecasting is the impact of pull is anywhere between 7% to 10% depending on where you end up at end of the year.

So that’s why we are forecasting to be at the lower guidance or just below guidance.

Thanks, Glenn.

Hi guys. Thanks for taking my questions here.

Going back to the dividend policy that William you mentioned earlier, any sense of timing we can get in terms of when you think you’ll announce a change to the dividend policy and even the extent of the change you think.

It’s pretty of a leading question. So, I will give you at the board meeting sort of yesterday to finalize the numbers which happen at the public domain was a topic of discussion.

What we’ve also look at it the timing of at least getting much of the revenues in full for 2015 before we start to sort of say, hey, look, we’re going to increase the dividend we’re going to change this, we’re going to change that if we look at adding in sort of other aspects to it. So, it’s a difficult question to answer without giving too much away.

We would hope to have some kind of announcement before the end of the year to give the optionality of how soon we could actually then launch into that in 2016.

Okay. Now, that’s fair, thanks William.

And then not to harp on the operating cost too much, but just kind of looking at numbers year-to-date at 2944 versus guidance of 33 to 36 of the one quarter ago thinking that in order to even to get to the low end of the $33 a tonne you’re going to have pretty marginally higher cost in Q4. Is there anything in terms of like additional stripping color you can provide or any kind of one-time items that will drive it higher in Q4 or is there just being conservative on a cost run, because you don’t know what’s coming in.

Yes. Craig, it’s just two things.

But I think we’ll be slightly higher on the waste mining that we do on keeping that optionality, because in a very good position for next year. So, that will add slightly to the cost.

We do have a little bit more maintenance that we’re going to do in November. But again I do believe we’re beyond both side of that guidance numbering could be as well.

Okay. Thanks Glenn.

And just a couple more on the - there is a comment in the MD&A on the specials recovery and it being 34% higher than 2014, can you just speak to that calculation, I just couldn’t figure out how to get to that 34% number?

I think sort of what we may be looking at there is in terms of the overall report may not be year-to-date. I think as we’ve now mined into the south lobe.

Craig, I’m going to have to just check exactly where that number is and then if you don’t mind I’ll send you an email, I’ll get back to you.

Yes. No problem, I appreciate it.

And then just finally on the Mothae sale can you just give us an update on kind of what’s going on there now and the process that we’re looking at?

So, we do have a facility which continues with Paragon we had a discussion with them yesterday, it does appear that they do have a finance yet which is obviously our biggest concern in the market at this point anybody who is actually having to go out and raise funds is not going to be as easy as what it might have been a year to two years ago. We have also engaged with the government to see exactly where we’re based, sit on this.

I’ll be speaking with the minister again on Monday just out planning the plan that we’ve got between now and the end of the year. One of the things which Lucara obviously has done we had a full write down on the tie last year, therefore sort of whatever money we get is just sort of additional on to the bank account.

We all see still continue to work I guess as hard as what we can with Paragon, but unfortunately it’s very much in the hands of this point in terms of finalizing their fund raising the best that we can do from our side is just to ensure up the government has informed of exactly where the process is going.

Okay now, that make sense. Thanks William and that’s it for me, thanks for the call.

Good quarter guys.

Thanks Craig.

Thank you.

Hey, good morning, gents. William, I wondered if you could give us a bit more information on the teething issues you’ve encountered with the new pondcare, [ph] and what we’ve learned over the last sort of couple of months and in terms of integrating it.

So typically, any variances you might see between central and south lobe material processing. And then, the follow up being when do you think we might get that result with the slip [ph] optimization studies?

Okay. Let me answer the first one.

I think what was - the market seem to sort of ignore, even though we put it in press releases was that, the volume or the extent to which we actually optimize the process plant, the additional equipment et cetera, which is pretty much in line with what we actually bought originally; so taking an existing operation and suddenly adding seven new circuits and the market expecting that it was going to be sort of a light switch which we switched on enabling work seamlessly. The fact that the guys on site went through a very, very steep learning curve, and had the plant up and running within three months, and then getting up to nameplate capacity within about another month was I think a job well done.

But what we have seen is, as we - the center lobe material remains the easier one to process between the center and the south. What we are seeing as we get deeper into the south lobe and it was expected is that the material does get harder.

And we’ve been able to identify that the hardness of the material is actually associated with an increase, as it’s just a very fresh. It’s a part-crustic [ph] magnetic kimberlite.

So it is the building blocks of what makes up the earth’s mantle. So we have seen that, a lot of those hard materials, which original caused some of the issues with the DMS is magnetic.

And we can actually remove that using magnetic separation which leads into sort of some of the optimization things we are looking at for next year. But what that does is it actually opens up significant flexibility of what we can actually process but also the throughput that we can process.

So, for small amounts of capitals put in a magnetic separation ahead of the DMS, We can then start to move around the size distributions, processed through DMS, XRT in the different size productions. And that just gives us the huge amount of flexibility to actually process whatever we want, whenever we want, knowing that both the DMS and the XRTs are runny exceptionally efficiently.

Right.

And then, on the continued optimization studies, obviously, this is centered around - some of the recoveries which we’ve seen, there were one or two stones which showed breakage, but when we had an external consultant coming into a breakage study for us, it was actually sort of broken during the, I guess, the in-placement. But the challenge is that we’ve identified that there may actually be upside in terms of the recovery of particularly larger stone.

So things that we’re looking out for next year is that - and it’s run hand-in-hand with the magnetic separation process, as we start to flex is an opportunity without spending excessive amount of capital to increase the top size of what the plant can actually process, taking it up from the 60 millimeters to as yet undetermined number. And I think it’s really again coming down to taking value, especially with what we see coming out of the south lobe.

Great stuff, and just what were on next year, I mean, considering your right of recovery of the exceptional stones, I mean, are you possibly thinking about three exceptional tenders next year?

It’s all dependent on what actually happens to the market. It’s easy to say that we will - as there are some - but we will sell everything that we have.

But if we start to see that, the only thing that actually selling in the market are the exceptional stone. We’d rather actually have those sellers as regular tenders.

I think one thing that we are considering and I’m not just sure how the market is going to take it. Yes, we all have the exceptional stone tenders but those are now pretty much priced into what the expectation is of revenue going forward.

And we’re now looking at the materiality and whether that’s actually value for us going forward in announcing the results of the exceptional stone tender, because what we see is that actually just creates additional volatility. And we got to determine whether that is actually of value for our shareholders or not.

So kind of a roundabout answer, no guarantee that we’ll have too exceptional, three, maybe even four exceptional stone tenders next year. That’s going to be determined by the production profile and the quality of the diamonds which we produce.

And it was something that I pointed out sort of a number of calls ago. It’s that, it’s not really possible to predict when you recover a 100 carat stone, but impossible to predict when you recover 100 carat gem quality stone.

And it’s those things that will always be taken into consideration when looking at when we have an exceptional stone.

Great. Thanks.

Yes, good morning, all. Yes, great quarter guys.

Just a couple of follow-on questions, just looking at processing rights and throughputs, what are you have the plant going in this quarter relative, I guess, the average for Q3. And follow-on from that, I guess, looking at in Q3 had 160 stones about 10.8.

Can you some - for more information on what to expect to come out of Q4, given that you’ve got higher percentage of material coming from the south lobe. I guess from by virtue of the mass you was talking about earlier looking at average carat.

So was that almost 38 or special stones above 10.8. And I guess lastly, the high grade of the grade in Q3, was that higher than expected or any positive reconciliation there, or just some more information on that grade.

Thanks.

Let me go back to your first one, in the intense of how the plant is running - I think it’s running, what we would consider to be on the satisfactory basis. What we actually have seen in Botswana, and sort of I know that people identify sort of Southern Africa would significant power risk.

We were actually notified earlier this week that Botswana power preparation for the first time in quite a while, actually has three of the two plants up and running in Botswana, it’s going to be sitting with the surplus of power, which is quite surprising. What we’ve seen is - we never actually had significant downtime in terms of lack of power, it’s the quality of the power.

So we’ve seen sort of one or two sort of incidence were this power - actual power dips. And it’s what frustrating because it’s never allowed a smooth operation.

But apart from the that the plant is actually running very well, both when the processing of the higher yielding top level material as well as when we get back into the center and a small amount of north lobe material. And in terms of the recovery of the larger stones, what we’re seeing, and this one is probably the easiest.

Instead of trying to predict how many plus 10.8 carats, we have –what we are seeing consistently across the quarters now is run about 5% to 5.5% of the total diamonds recovered larger than 10.8 carats. And I’ll put to qualify round that is - it is always going to be a fairly mixed bag of what the quality of those diamond look like.

But whether the recent statement talks to run about 3.8%, we are seeing significantly above that in around 5% to 5.5% mark. I know the grade number, grade is sort of in line but what we had predicted, it’s - with the additional stripping, obviously we’ve got a lot of additional ground open, which allows us to be a little bit more selective.

We have been able and I guess as we look at the stockpile of the grade is fairly consistent across the - on average across the Kimberlite. So we are looking at processing material, which was originally in the mine plant maybe just moving some sort of forward from three months forward and putting that on stockpile, when we know that it has very, very high yields and we need the magnification move before that can go to the plant.

Great, thanks. And we’ll see, what’s the higher proportion of large stones projected I guess in stockpile, this is a steady excited that in integrated and updated results for the estimate, any thoughts?

Yes. I guess, relative any time soon, what we’d like to do is sort of get anywhere from 69 months of just nice south lobe material to the processed plant.

That is something, we’ve already discussed at the management level, when we look to put that probably third quarter next year we probably start to target there.

Excellent. Thank you.

Great quarter, guys. Thanks.

Thanks, Geordie.

Thanks, operator. Good morning.

A couple of questions here, first just so I am clear, with the DMS on the plant optimization you’ve just completed, that your throughputs down on that but you’re looking at more optimization next year might bring throughput up, is that correct? And just the question really leads to what throughput are you - what should we’d be expecting next year and beyond?

Well, a little bit of clarification the throughput of the DMS is not down. The DMS is actually have when starting easy process between 150, 160 tonnes per hour.

We are currently feeding the plant, or that section of the plant mostly run about 90 to 100. So the additional capacity of it, what we’re looking and doing it, when the high yield material goes through the DMS.

We are getting yields in excess of 5% to 10%, that’s material that reports to the recovery. And that’s where the slowdown would occur, but running at 100 tonnes an hour doesn’t stop us from running the plant at nameplate capacity.

By the installation of the magnetic separation - separated that gives up additional capacity in the recovery, because you’re not processing as much material through the DMS, but what it does and do it, because the DMS, while the recovery is no longer to constraint, Materials which is currently process through the XRT, the middle of XRT, which is 8 to 14 millimeters. You can start to move some that material into DMS, opening up capacity, where we’re already running the plant quite tight constraints through the XRTs, again because we want to maximize recovery of those larger higher value stones, which get pooled up of the XRT.

So we’ve been able to say, well interestingly to 2.5, which the plant is design for the market 2.6, 2.7 at this stage is very premature. I think we haven’t yet gone to the board asked for any money for magnetic separation.

That’s still really in an analysis stage to see what the overall economic effect will be. But based on what we’ve seen from the conceptual level, it does look like there is a lot of flexibility, which can be added to what the plant currently does.

Okay. But for now, we should be accounting on 2.5 is a sort of run rate - okay.

I’ll take keep it that main plants, putting in any upside of this point, I think we don’t even have the - there is the numbers of what those would potentially be?

Okay. And sounds like, obviously, which lobe, you has an impact on that, kind of have an impact on that.

You are pretty much all in the south lobe now, is that correct?

That’s correct. The south lobe material gets processed definitely for and all of know was October and November and we processed sort of the whole of December.

I have to go back and refresh my thoughts on, what it looks like for the first three months of next year, but on the certain at the majority of that would be sample of this one.

Okay. And Q3 had some center one, is that right?

Yes.

What’s it about even on, or is it mostly central in Q3.

I think that was most probably mixed, that might have been anywhere up to 20% to 30% from the south lobe.

Okay, great. And then, just well, if we look at exploration for a second here, I know you’ve got the plant going now for your BK02 and I guess then AK12, right.

Can you remind us again the strategy around those pipes, the size and any expectations you have with them?

If we put out the expectations that these exploration, I think that’s in the range, but what I am going to do is, I’ll pass over to John Armstrong, he can give you a quick rundown on the three kimberlites, which we’re targeting BK02, AK11, AK12, expect around those, John?

Okay. Good morning.

I guess, with BK02 is around two hectares of size and basically interaction there, and we feel there is some two larger similarities with AK6. In terms of base where accumulated, it’s pretty streaming from previous operators.

So a little bit of that mine in terms of content of things like in part where we targeted the 5,000 content in there. Just get an idea of data begins what the indication of grade and indication of size you see, but based on historical, where it does have some geological similarities ultimately they’re crafting.

With AK11 is again pretty small pipe, nice magnetic [indiscernible] not truly attractive there, again the another phase on that particular volume is pretty staying, AK12 is [Technical Difficulty] with some grade indications, but again I’d like to say, and now let me just data set is pretty sustaining, and we already going to do and going into a firm, previously got with our bulk sampling and moving through a drilling program a delineation on each of those bodies.

I think, Matt, if we look at the timeline of the exploration sample, would be grade and we can get whole of the BK02 sample through the plant before the end of the year. And finalize on white volumes diamond count, all those find things for announcement early in 2016.

But it is bit of a waking game with the DA and getting the permits actually going drove. I guess, firstly to going to get the commissions to go and take a 5,000 tonnes bulk sample, but in sort of the drilling and, I mean any drill and bulk campaigns that needs to be done.

Getting the permits for those takes a little bit longer than what we would have expected.

Okay. But still some news to come from those which will be well issued I think.

And then, where are we thinking on M&A here going forward? I mean, are we still looking around for growth opportunities or are we pretty much really focused at this point?

I think the mandate for any sort of - the mining company CEO is always to look at what is out there. Being able to identify targets now, it becomes a very difficult negotiation.

If you look at the share prices of most of the diamond companies, they’re not where they were even at the beginning of the year, some of them taking a little bit more of a beating than others. If you did want to get into any M&A activity, I think that’s going to be the first bridge you’re going to have to cross in terms of what the exchange ratios would look like.

So, we continue to look to see what’s out there. I think one of the advantages for Lucara is, if we did have to go and find that with our cash flows, our cash balance it wouldn’t be as high a hurdle as this is what I think some other companies might have to cross.

And then, obviously, with the strong cash flow and cash balance we do actually have something over and above the technical expertise, the way we’ve done things on the mine site; the adoption of new technology, which all things which we believe which should add value to a combination in the future.

Okay. That’s great.

Thanks very much. Good quarter.

Thanks, Matt

Hi, good morning. Thanks for taking my questions.

Two questions basically. First of all the similar quality parcels what type of differential do you see between what you’re guiding your tenders and what’s out there to the sightholder system?

Again, it’s a difficult question, because if we looked at the bidding strategy, we’re in, say, a parcel of XYZ quality goods. If we got 20 bids on that, the steps which we have shown that the highest price that might be 5% or 6% above what we consider market which would be the average between second, third and fourth.

So, we use those numbers to guide our passbook. If we can’t pay the second, third and fourth, it’s obviously going to be sort of most probably again 8% to 10% different to what the sightholders may get, but generally we are seeing in certain qualities numbers higher than what the sightholders get.

And again its driven by sort of how we do the sorting, how we put those parcels together. In other ones, it might be a couple of percent below.

But on average I don’t believe that we’re significantly different to what De Beers would be offering their boxes at. Ours are however, what we consider to be market, because of the tender mechanism that we use for selling.

Okay. And the second, well, you mentioned before that you wouldn’t hold back goods.

If you saw weakness in the exceptional stones, would your same policy apply or you were talking more about running the mine?

I think it’s for everything. We obviously have internally certain criteria.

If we only get one bid for a single lot and significantly it’s below our reserve price, obviously, we know that that’s not even the markets estimate. It’s somebody who is - there’s just no demand for those goods.

So, we wouldn’t just sell it if there was only one bid. So, we do take sort of the attendance the number of bids per stone et cetera into consideration.

But when we start to see sort of lower volumes or lower bids on certain parcels, which generally in the lower quality goods. And I don’t believe that there’s any strategy that says that companies should start to stockpile poorer quality lower value goods, because those are the ones where you’re going to actually have higher volumes and that doesn’t actually add value in the future.

I think…

I think…

Yes.

And one last question. Lot of industries’ chatter is suggesting the rough diamond prices right now are like structurally too high with the midstream not getting any margin or getting negative margin.

And I see different numbers thrown out there that some people saying rough prices have to come down another 20% to 25%. How do you see that?

If we…

[indiscernible] with polished and consumer demand, I mean.

I think the most important thing that we’re going to see coming out over the next three month is that the impact of the generic marketing. If you go back and you have a look at the overall stats of where diamond user sits in the luxury jewelry goods or the luxury jewelry market, and where luxury goods sat in the general consumer market.

It’s dropped down quite a few positions over the past sort of decade, as sort of De Beers sort of stop doing their generic marketing and started to focus on the Forevermark. I think the precedent which will be set by the marketing which De Beers does over the next three or four months is going to set the tone for what the industry is actually required to do going forward.

And I mention that because that’s really what is going to be needed to start to clear out the pipeline. We obviously speak to a number of the DTC clients.

Some of them actually don’t say 20%. Some of them are saying, well, on certain categories they may still be making some money, on others they believe that diamond prices should come down by maybe another 3% to 5%.

But actually, I’ve never heard anything about diamonds coming down by another 20%, 25%. The numbers that we are seeing at the moment to get back to the profitability levels where the cutters and the brokers are happy in the single digits.

Okay. Great.

Thank you so much. Thanks for taking my questions.

Thanks a lot.

Great. Again, thank you, everybody, for taking the time to listen to our Q3 2015 results presentation.

And if there are any questions sort of always go to the website, and ask them through that. But again, thank you very much.

Thanks, Leanne.