Ann: Quarterly Activities Report-LOM.AX, page-12

LUCAPA DIAMOND COMPANY (ASX: LOM) ​

QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDED 31 MARCH 2016

ALLUVIAL DIAMOND MINING

• Angola’s biggest recorded diamond – a 404 carat gem worth A$22.5 million - recovered from Mining Block 8
• Lulo generates record quarterly gross diamond revenues of A$32.5 million, underlining the strong global demand for large top-tier gems
• Mining Block 6 another source of large valuable diamonds, with initial recoveries including three +50 carat stones
• Initial trial mining at E46 produces two +50 carat diamonds and another fancy pink - extending to ~20km the area at Lulo known to host large alluvial diamonds of exceptional quality

KIMBERLITE EXPLORATION

• Geophysical surveys successfully define kimberlite drilling targets at the high-priority L259 which is directly underneath an area hosting large valuable alluvial diamonds
• Lulo’s own mobile drill rig arrives on site to commence drilling of L259 and surrounding kimberlites

CORPORATE

• Lucapa receives A$8.3 million from special cash distribution
• 31 March 2016 cash balance of A$10.7 million leaves Lucapa well-funded to advance alluvial mining and kimberlite exploration activities at Lulo

ALLUVIAL DIAMOND SALES

Table 1: Quarter by quarter Lulo diamond sales since commencement of mining in January 2015

Lucapa and its partners sold alluvial diamonds totalling 1,931 carats in the Quarter in line with the strategy of generating regular and increasing cash flows (Table 1).

The 1,931 carats of Lulo diamonds achieved record gross revenues of A$32.5 million at an exceptional average selling price per carat of A$16,831 (US$11,983) (Table 1). This included the A$22.5 million (US$16 million) sale in February 2016 of the 404 carat Lulo gem – the largest recoded diamond ever recovered in Angola.

The Quarter sales generated free cash in excess of the budgeted cash funding requirements for the Lulo alluvial mining company (Lucapa 40% and operator; Endiama 32%; Rosas & Petals 28%). As such, the Lulo partners agreed to a special cash distribution.

As announced to the ASX on 2 March 2016, Lucapa’s net share of the special cash distribution totalled A$8.3 million (US$5.9 million).

All up, Lulo has to date generated A$51.3 million (US$38.1 million) in gross revenues from the sale of alluvial diamonds recovered from the mining and exploration phases at an exceptional average overall price per carat of A$4,233 (US$3,147).

glt lommers