This morning, Dundee Capital Markets’ equity research team initiated formal coverage on Lukas Lundin’s Lucara Diamond (TO:LUC) and put a buy rating with a $3.00 target price on it (approximately 10% higher than the last trade of $2.73).
Yesterday, outperforming Lucara announced the sales figures from its second exceptional stone tender of 2014 and fifth tender in the company’s history.
Lucara sold 16 diamonds totalling 1,445 carats for total revenues of $40.12 million or $27,755 per carat in the latest tender. 13 of the large stones were sold for more than $1 million each and 4 sold for more than $4 million each.
The highest value stone was a 109.4 carat diamond which sold for $6.19 million or $56,615 per carat (image above).
William Lamb, President and CEO, commented:
“The incredible Karowe diamonds continue to yield spectacular results and the recovery of these exceptional stones also continues. The company’s next exceptional stone tender is scheduled for early in the fourth quarter of 2014. Potential stones that will be included in this sale include a 239- and a 193-carat diamond recovered during the second quarter.”
Diamond prices are typically strong during the back half of the year as the world’s holiday season brings in strong demand for the stone they say is a “girl’s best friend”.
The company is guiding between 400,000 and 420,000 carats generating $150 to $160 million in revenue this year. Lucara is already well over halfway there (80%) and their most profitable exceptional stone tender is still to come.
Lucara’s first exceptional tender of 2014 brought in roughly $50 million in sales. Sales to date, including this most recent tender exceed $124 million meaning for the company to just meet guidance they would have to sell only $26 million worth of diamonds over the next 5 months.
In the history of the company Lucara has not sold less than $25 million worth of diamonds in any of their exceptional stone tenders yet and the Karowe mine is processing some of the most valuable stones the mine has ever seen.
Needless to say, Lucara beating their revenue guidance this year is a foregone conclusion which should continue to propel the stock higher.