How Lucara made and spent P2,7 Billion

Table of Contents

• Lucara Diamond: A Snapshot

• Revenue – Where the Money Comes From

• Lucara’s total revenue over the past year was $203 …

• Costs – What They Spend On

• Expenses – The Cost of Running a Business

• Profit – What’s Left for Investors?

• Why Does This Matter for You as an Investor?

• In conclusion

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Lucara Diamond: A Snapshot

Lucara Diamond is one of Botswana’s key mining companies, primarily known for operating the Karowe Mine, which produces some of the world’s most valuable diamonds. But how does it turn raw diamonds into financial success? Let’s break it down.

Revenue – Where the Money Comes From

Lucara’s total revenue over the past year was $203.88 million/ P2.7 billion which comes entirely from the Karowe Mine. This means the company’s ability to make money is heavily dependent on the diamond market and mining efficiency.

Costs – What They Spend On

To mine and sell diamonds, Lucara incurs expenses. The largest cost is:

• Cost of Sales: $102.79M /P1,4 billion – This includes mining, processing, and labor costs required to extract and sell diamonds.

After deducting the cost of sales, Lucara’s Gross Profit is $101.09M/ P1,3 billion. This is how much is left before other expenses are deducted.

Expenses – The Cost of Running a Business

Apart from mining costs, Lucara spends money on:

• General & Administrative Costs: $14.44M/ P 196.59 million- Salaries, office expenses, and management operations.

• Sales & Marketing: $3.44M/P46.2 million-Promoting and selling diamonds.

• Non-Operating Expenses: $22.96M/ P312,5 million -Financial costs like interest on loans.

• Other Expenses: $16.64M/ P226.5 million – Miscellaneous business costs.

Total expenses amount to $57.48M/P782.5 million , which is deducted from the gross profit to determine earnings (final profit).

Profit – What’s Left for Investors?

After all costs and expenses, Lucara made $43.61M/ P593.7 million in earnings. This is the money available for business growth, reinvestment, and potentially dividends for investors.

Why Does This Matter for You as an Investor?

1. Lucara is Profitable – Despite high operating costs, the company consistently makes a profit.

2. Revenue Comes from One Source – Since all revenue comes from diamond sales, any slowdown in the diamond market could impact earnings.

3. Understanding Cost Structure – Lucara spends a significant amount on operations, but its cost management allows it to remain profitable

In conclusion

If you’re considering investing in Lucara Diamond or any Botswana Stock Exchange-listed company, always analyze:

Where their revenue comes from

How much they spend to generate that revenue

How much profit remains after expenses

Understanding these numbers helps you make smarter investment decisions and build wealth over time.

source: simplywall.st