LUCARA ANNOUNCES UNDERGROUND PROJECT LATERAL DEVELOPMENT CONTRACT EXECUTION

On December 1, 2025, Lucara Diamond announced it has executed the contract for all underground lateral development for the Karowe Underground Project (UGP) with Group R Mining and Exploration Botswana (Pty) Ltd. This contract covers the development from the production and ventilation shafts to the orebody, including critical infrastructure like the underground crushing chamber, pump stations, and workshops.

The company states this is the last major contract award for the UGP. Mobilization of the contractor is expected in Q2 2026, with lateral development work commencing in July 2026.

This news is a material positive step for Lucara as it significantly de-risks the execution timeline for the Karowe Underground Project (UGP), which is the company's sole path to future production.

Tracing the project's progress through 2025 releases reveals a clear timeline leading to this award: - February 21, 2025: The company guided that tendering for the lateral development contract would occur in 2025. - May 9 & August 8, 2025 (Q1 & Q2 Results): Management confirmed they were in the process of reviewing and adjudicating tender documents. - May 10, 2024 Transcript (reflecting on Q1 2025 plans): Management guided that bids were expected by the end of Q3 with an award in Q4.

The December 1 announcement confirms management has successfully executed on its stated timeline. Securing a contractor for this critical phase moves the project from planning and tendering into a defined execution schedule. This provides investors with more certainty regarding the path to first production (H1 2028).

However, this operational milestone must be viewed in the context of the company's precarious financial position. Throughout 2025, Lucara has faced severe liquidity challenges: - Q1 & Q2 2025 Results: Both quarters included a "going concern" warning, stating that working capital and cash flow were insufficient to meet obligations and fund the UGP. This was triggered by a downward revision of revenue guidance and a breach of a loan covenant. - August 30, 2025: The company drew down $10 million from a standby facility provided by its largest shareholder, Nemesia S.à.r.l., citing a "financing shortfall." The transaction was exempted from minority shareholder approval due to "financial hardship," a significant red flag.

While awarding the contract is a positive operational development, it does not resolve the underlying funding crisis. The contract's value was not disclosed, leaving a key piece of the capital expenditure puzzle missing. The news firms up the schedule but does not yet address the critical question of how the company will fund the project to completion. Therefore, while materially positive from a project execution standpoint, the overarching financial risk remains extremely high.

Lucara Diamond Corp. is a diamond mining company whose sole producing asset is the Karowe Diamond Mine in Botswana. Karowe is renowned for its production of large, high-value Type IIa diamonds, including some of the largest gems ever discovered.

The company is currently executing its most critical initiative, the Karowe Underground Project (UGP). This project is essential for the company's survival as the open pit mine is scheduled to cease operations in 2025. The company plans to process stockpiled ore until the UGP begins to contribute ore in 2027, with full-scale production targeted for the first half of 2028. The UGP aims to extend the mine's life to at least 2040, accessing the highest-value portions of the orebody.