Lucara Reports Strong 2013 Full Year Results

Lucara Diamond Corp. (TSX:LUC)(BOTSWANA:LUC)(NASDAQ OMX First North:LUC)
("Lucara" or the "Company") today reported full year revenue of $180.5 million
from diamond sales that achieved an average price of $411 per carat at operating
expenses of $100 per carat.


HIGHLIGHTS

Safety: There were no Lost Time Injury ("LTI's") and no reportable environmental
incidents at Karowe during the fourth quarter of 2013. Karowe's full year Lost
Time Injuries Frequency Rate ("LTIFR") was 0.17. LTIFR is defined as the total
number of work hours lost per 200,000 work hours. 


Cash flows, cash operating margins and year end diamond inventory: The Company
achieved revenue of $47.9 million ($433 per carat) from sales of 110,635 carats
of diamond during the fourth quarter of 2013 including one exceptional stone
tender. This excludes revenue of $10.9 million, which was received during the
quarter from Karowe's late September tender. At an average operating expense of
$109 per carat, the cash operating margin during the quarter was $324 per carat.



Full year sales of 438,717 carats achieved proceeds of $180.5 million, or $411
per carat. The Company achieved a full year cash operating margin of $311 per
carat based on operating expenses of $100 per carat. Full year operating cost
per tonne milled was $18 compared to budget of $23 per tonne. 


At year end the Company was well positioned for 2014 with a significant diamond
inventory of approximately 67,000 carats of diamond, including a selection of
exceptional stones totalling over 1,000 carats. The Company expects to hold its
first Exceptional Stone Tender of 2014, early in the second quarter. 


Exceptional stone tenders: The Company continued to recover large and
exceptional diamonds, resulting in an exceptional stone tender during the
quarter achieving revenue of $22.9 million ($20,280 per carat). During 2013 the
Company held three exceptional stone tenders achieving revenues of $72.1 million
(2,971 carats at $24,290 per carat).


Net cash position: The Company continued to achieve strong cash operating
earnings of $39.0 million during the quarter and $118.6 million for the year
resulting in a year-end cash balance of $49.4 million. Management expects to use
the existing cash resources to finance Karowe's plant upgrade capital
expenditure during 2014. At year-end the Company remains debt free with the $25
million Scotiabank credit facility being undrawn. 


Karowe operating performance: Karowe exceeded budget in terms of carats
recovered and sold and surpassed its initial and updated revenue forecast of $90
million and $118 million respectively, largely due to the recovery and sale of
large and exceptional diamonds (see above). Karowe earnings before deducting
interest, income taxes, depreciation and amortization ("EBITDA") was $113.3
million, an EBITDA margin of 63%.


William Lamb, President and Chief Executive Officer commented: "Our first full
year of production has surpassed expectations on all fronts having achieved
total revenues in excess of $180 million and met production and safety targets
at significant cost savings. Lucara exceeded its initial revenue guidance of $90
million by approximately $20 million, not including sales received from its
exceptional stone tenders, achieving robust margins and demonstrating that the
Karowe diamonds have been well received in the marketplace. Additional revenues
of approximately $72 million, generated from the sale of our large and
exceptional stones has further, significantly strengthened our balance sheet. 


"In 2014, Lucara will continue to focus on operational excellence, cost
discipline, and the completion of its' plant optimization project, which is
designed to enhance the recoverability of large diamonds from Karowe. The
Company is now debt free, with a solid balance sheet and is well positioned to
achieve its operational objectives going forward. We believe that 2014 will be
another exciting year for Lucara and its shareholders."


FINANCIAL HIGHLIGHTS



                                        Three months ended       Year Ended 
                                               December 31      December 31 
In millions of U.S. dollars unless                                          
 otherwise noted                             2013     2012     2013    2012 
----------------------------------------------------------------------------
                                                                            
Revenues                                   $ 58.7   $ 29.1  $ 180.5  $ 41.8 
Proceeds from quarterly sales tenders is                                    
 comprised of:                                                              
  Sales proceeds received during the                                        
   period                                    47.8     29.1    180.5    41.8 
  September tender proceeds received in                                     
   October                                   10.9        -        -       - 
                                        ------------------------------------
Total proceeds from quarterly sales                                         
 tenders                                     58.7     29.1    180.5    41.8 
                                                                            
  Average price per carat sold                                              
   (excluding September tender proceeds                                     
   received in October)                       433      289      411    $274 
  Operating expenses per carat sold           109       84      100      92 
  Cash operating margin per carat             324      205      311     182 
                                                                            
EBITDA (1)                                   32.8     12.9    102.9    (0.2)
Net income (loss) for the period             21.4     (4.1)    65.2    (7.5)
Basic earnings (loss) per share              0.05    (0.01)    0.17   (0.02)
Cash flow from operations (before                                           
 working capital adjustments)                33.9      3.8     99.6    (3.8)
Cash on hand                                 49.4     13.3     49.4    11.1 
----------------------------------------------------------------------------
(1) EBITDA is a non-IFRS measure defined as earnings before interest,       
 taxation, depreciation and amortization.                                   
----------------------------------------------------------------------------



RESULTS OF OPERATIONS

Karowe Mine, Botswana 



----------------------------------------------------------------------------
                      UNIT     Q4-13     Q3-13     Q2-13     Q1-13     Q4-12
Sales                                                                       
Revenues              US$m      58.7      42.1      47.2      32.5      29.1
Proceeds generated                                                          
 from sales tenders                                                         
 conducted in the                                                           
 quarter are                                                                
 comprised of:        US$m      47.8      50.9      49.3      32.5      29.1
  Sales proceeds                                                            
   received during                                                          
   the quarter        US$m      58.7      42.1      47.2      32.5      29.1
  September tender                                                          
   proceeds                                                                 
   received in                                                              
   October            US$m     (10.9)     10.9         -         -         -
  Sales proceeds                                                            
   received post                                                            
   June period end    US$m         -      (2.1)      2.1         -         -
Carats sold for                                                             
 proceeds generated                                                         
 during the period  Carats   110,635    80,918   102,452   144,712   100,987
Carats sold for                                                             
 revenues                                                                   
 recognized during                                                          
 the period         Carats   127,804    76,582    89,619   144,712   100,987
Average price per                                                           
 carat for proceeds                                                         
 generated during                                                           
 the period            US$       433       625       481       225       289
                                                                            
Production                                                                  
Tonnes mined (ore)  Tonnes   918,765   898,501 1,157,747   969,330   701,931
Tonnes mined                                                                
 (waste)            Tonnes 1,694,134 1,430,105 1,259,479 1,109,727 1,267,343
Tonnes milled       Tonnes   613,064   647,304   560,910   533,260   545,354
Average grade                                                               
 processed         cpht(i)      18.9      17.6      15.6      23.1      25.4
Carats recovered    Carats   116,061   113,882    87,580   123,228   138,487
Costs                                                                       
                                                                            
Operating costs per                                                         
 carats sold (see                                                           
 page 5 Non-IRFS                                                            
 measures)             US$       109       110       102        86        84
Capital                                                                     
 expenditures         US$m       1.5       2.4       1.7       2.2       0.4
                                                                            
(i) carats per hundred tonnes                                               
----------------------------------------------------------------------------



Operational performance at Karowe was as per forecast for the last quarter of
2013. Tonnes of ore mined were on target, and overall waste stripping was well
advanced to access the deeper sections of the ore body in the south lobe as per
the life of mine plan. The mine currently has three months of ore exposed
providing flexibility of material processed. The process plant performed well
during the quarter, and tonnes processed and carats produced were in line with
forecast. 


The first full year of operations at Karowe was extremely successful with
production and cost targets either being met or exceeded. The 2013 year end
target of 440,000 carats recovered was surpassed.


The frequency of special stones (+10.8 carats) recovered during the quarter was
significant with 190 stones recovered with an average size of over 26 carats.
This included five stones of over 100 carats and a single 281 carat stone. The
recovery of specials during 2013 far exceeded expectations with 732 specials
recovered with a total weight of over 18,000 carats equating to 4% of annual
production. Included in this were 17 stones over 100 carats and 4 stones over
200 carats.


The geological resource update was completed during the quarter, which
demonstrated superior value through the recognition of a continued presence of
exceptional stones within the centre and south lobes. This is now reflected in
the size frequency distributions and an increase in average modeled price to
$394 per carat for an indicated mineral resource of 46.2 million tonnes with an
average grade of 16 carats per hundred tonnes. The NI43-101 technical report
accompanying the resource update was published on February 3, 2014 and can be
found at www.sedar.com.


REVIEW OF PROJECTS

Mothae Diamond Project, Lesotho

The Mothae project is located in northeast Lesotho and is a large low grade
kimberlite containing a population of large, high value Type IIa diamonds.


The Company is currently reviewing a number of development options for Mothae. 

Karowe, Plant Optimization Project, Botswana

Karowe's plant optimization project to modify the process plant to treat the
harder material at depth and improve the recovery of exceptional diamonds is
advancing. Orders have been completed for some long lead items, and the project
schedule is on track to be complete by year end. 


OUTLOOK

This section with management's production and cost estimates for 2014 should be
read as "forward-looking statements" and subject to the cautionary notes in the
MD&A regarding the risks associated with forward-looking statements.


Karowe Mine, Botswana

Karowe is forecast to process 2.2-2.4 million tonnes of ore and to produce and
sell 400,000 to 420,000 carats of diamond in 2014. Revenue is forecast between
$150 - $160 million. 


Ore mined is forecast between 3.0 - 3.5 million tonnes and waste mined is
expected to be between 10.0 - 11.0 million tonnes.


Karowe's operating cash costs are expected to be between $31-$33 per tonne ore
treated. 


Capital expenditures include between $45-$50 million for Karowe's plant upgrade
to improve large diamond recovery following the occurrence of exceptional
stones, and to enable sustainable processing of hard ore in the south lobe.
Sustaining capital expenditures is forecast at $3.5 million. 


The Company plans on holding eight diamond tenders and two exceptional stone
tenders during the year. The timing of these tenders will be based on Karowe's
production profile as well as commercial decisions to maximize diamond revenue.


Karowe's detailed operating performance and capital spend guidance is available
on SEDAR at www.sedar.com. 


SUBSEQUENT EVENTS

Litigation

Legal proceedings were initiated against African Diamonds Plc, Lucara's
wholly-owned subsidiary, by two former directors of African Diamonds claiming
entitlement to a 3% royalty on production from the AK6 (Karowe) diamond project.


The claim was heard in the Botswana High Court in early June 2011. The High
Court delivered its ruling, dismissing the claims against African Diamonds, with
costs awarded against the plaintiffs. The plaintiffs appealed the ruling. The
Appeal was heard in Botswana by a panel of international judges on Jan 21, 2014
with the judgment being handed down on February 6, 2014.


The Court of Appeals, the highest court in Botswana upheld the previous ruling
by the Botswana High Court, dismissing the claim against African Diamonds, with
costs awarded against the plaintiffs. The decision is final and there is no
further recourse against African Diamonds.


Sale of Mothae plant

In December 2013, the Company signed a memorandum of understanding ("MOU") with
Paragon Diamonds Ltd. ("Paragon") for the sale of certain kimberlite processing
plant and diamond recovery assets. Under the terms of the MOU, the Company will
receive consideration of:




--  $0.1 million cash and 4,434,589 common shares of Paragon on signing of
    the asset purchase agreement 
--  $0.2 million cash and 5,543,236 common shares of Paragon on commencement
    of relocation of the assets from the Mothae site. The number of common
    shares will be adjusted should an equity raise be completed by Paragon
    at a price less than GBP 0.04. 



The signing of the asset purchase agreement is anticipated by the end of
February 2014.


As part of the MOU, the Company received a non-refundable deposit of US$50,000
from Paragon in December 2013.


CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS 

Certain of the statements made and contained herein in the MD&A and elsewhere
constitute forward-looking statements as defined in applicable securities laws.
Generally, these forward-looking statements can be identified by the use of
forward-looking terminology such as "expects", "anticipates", "believes",
"intends", "estimates", "potential", "possible" and similar expressions, or
statements that events, conditions or results "will", "may", "could" or "should"
occur or achieved. 


Forward looking statements are based on the opinions and estimates of management
as of the date such statements are made, and they are subject to a number of
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievement expressed or
implied by such forward-looking statements. The Company believes that
expectations reflected in this forward-looking information are reasonable but no
assurance can be given that these expectations will prove to be correct and such
forward-looking information included in this MD&A should not be unduly relied
upon. In particular, this MD&A may contain forward looking information
pertaining to the following: the estimates of the Company's mineral reserve and
resources; estimates of the Company's production and sales volumes for the
Karowe Mine; estimated costs to construct the Karowe Mine, start-up, exploration
and development plans and objectives, production costs, exploration and
development expenditures and reclamation costs; expectation of diamond price and
changes to foreign currency exchange rate; expectations regarding the need to
raise capital; possible impacts of disputes or litigation and other risks and
uncertainties describe under Risks and Uncertainties disclosed in the Company's
Annual Information Form. 


There can be no assurance that such statements will prove to be accurate, as the
Company's results and future events could differ materially from those
anticipated in this forward-looking information as a result of those factors
discussed in or referred to under the heading "Risk Factors' in the Company's
Annual Information Form dated March 27, 2013 available at http://www.sedar.com,
as well as changes in general business and economic conditions, changes in
interest and foreign currency rates, the supply and demand for, deliveries of
and the level and volatility of prices of rough diamonds, costs of power and
diesel, acts of foreign governments and the outcome of legal proceedings,
inaccurate geological and recoverability assumptions (including with respect to
the size, grade and recoverability of mineral reserves and resources),
unanticipated operational difficulties (including failure of plant, equipment or
processes to operate in accordance with specifications or expectations, cost
escalations, unavailability of materials and equipment, government action or
delays in the receipt of government approvals, industrial disturbances or other
job actions, adverse weather conditions, and unanticipated events relating to
health safety and environmental matters)


Accordingly, readers are cautioned not to place undue reliance on these
forward-looking statements which speak only as of the date the statements were
made, and the Company does not assume any obligations to update or revise them
to reflect new events or circumstances, except as required by law.


On Behalf of the Board,

William Lamb, President and CEO

Lucara's Certified Advisor on NASDAQ OMX First North is Pareto Securities AB.

FOR FURTHER INFORMATION PLEASE CONTACT: 
Lucara Diamond Corp.
Sophia Shane
Corporate Development
[phone]
[phone] (FAX)
[e-mail]
www.lucara.com


Lucara Diamond Corp.
Robert Eriksson
Investor Relations, Sweden
[phone]