Lucapa Diamond Highlights Significant Progress Towards Finding a Primary Diamond Source

• Lucapa Diamond Company is engaged in diamond mining and exploration in Africa and Australia, with a focus on the Lulo alluvial mine in Angola and the Matai mine in Lesotho.
• The company has made remarkable diamond discoveries, including a 404-carat diamond in 2017 and a 170-carat pink diamond in 2022, with a focus on type 2 diamonds.
• Lucapa is conducting extensive exploration efforts to find the primary source of these valuable alluvial diamonds, with a high success rate in identifying kimberlite pipes.
• The company's next steps involve completing bulk sampling programs, assessing economic potential, and continuing to discover additional kimberlite deposits to explain the origin of their alluvial diamonds.

Lucapa Diamond recently provided updates on the company's search for the primary source of the extremely high-value diamonds being mined from alluvial deposits at Lucapa's Lulo mine in Angola. After 9 years of mining alluvials and recovering large, high-quality diamonds, Lucapa believes the primary sources, potentially significantly richer kimberlite pipes, are located nearby. Lucapa has made major advancements towards pinpointing these pipes through exploration over their 3,000 sq km concession.

Since mining began in 2015, Lulo has produced over 190,000 carats of diamonds, including 37 +100ct stones and over 2,200 +10ct stones. The +100ct diamonds are remarkably large, pristine and irregularly shaped, indicating minimal transport from the primary source. The largest 404ct diamond found in 2017 was the largest ever D color flawless diamond. A 170ct pink diamond found in 2022 is believed to be the largest in 300 years. These characteristics are unique globally.

Many Lulo stones are rare, high-value Type 2a diamonds, including subgroup Type 2a "Clappers". Type 2a diamonds have very low nitrogen impurities, allowing intense color. They are usually large, inclusion-poor, irregularly shaped and resilient. Only a tiny fraction of global production is Type 2a diamonds, but they include some of the most valuable diamonds ever found.

Lulo alluvial deposits are typically only 0.1m thick and show little evidence of extensive reworking. The soft bedrock and minimal topography indicate the limited concentration of diamonds before washing downstream. Geological characteristics suggest the alluvial deposits likely contain only a small proportion of the original diamond population.

Mining primary kimberlite sources has major advantages over alluvials, including: larger, more continuous orebodies that can support open-pit mining; significantly longer mine life with lower stripping requirements; and better resource definition and mine planning An early airborne magnetic survey identified over 560 kimberlite targets clustered around and upstream of alluvial deposits. 132 out of 150 targets drilled have been confirmed as kimberlite pipes, with an exceptional 80% hit rate. Bulk sampling of kimberlites is underway to determine diamond content, with 13 of 26 samples diamondiferous so far. Samples typically 2000m3 to accurately assess grade. The largest stones recovered to date are two 15ct diamonds. Diamond characteristics are similar to alluvial stones, confirming kimberlite pipes as a likely source.

While kimberlites discovered to date show encouraging results, grades generally remain low. Lucapa believes significantly richer kimberlite pipes remain to be discovered in the region to fully explain the high-quality alluvial diamonds. Evaluation of results will inform the ongoing search for additional pipes with similar characteristics to the best performers.

Funding from Lulo alluvial mining has enabled Lucapa to progress exploration significantly as a small company. Most juniors could not solely self-fund this large project. Lucapa is now at a critical stage of the exploration program, with major developments imminent. The primary source appears closer than ever.

Lucapa Diamond has made significant progress in narrowing in on the primary kimberlite sources of the incredibly rare and valuable diamonds at Lulo. While further exploration work remains, the company is optimistic the richest pipes are located nearby and the primary source will be delineated soon. The transition to mining kimberlite pipes would be transformational, providing access to a much larger, higher grade and longer-life resource. Lucapa's presentation provided investors with exciting updates on this potential company-making exploration program.

The Investment Thesis for Lucapa Diamond

1. Lucapa has already proven the existence of extremely high-value diamonds at Lulo through many years of successful alluvial mining. The largest diamonds found are remarkable in their size, quality, and value. Recovering additional similar diamonds from primary kimberlite pipes could generate tremendous revenues.

2. The exploration results to date, especially the high success rate of kimberlite drilling, validate Lucapa's geological models and increase confidence that additional primary sources remain nearby. Pinpointing these has excellent potential to dramatically expand resources and mine life.

3. The fundamentals of diamond supply and demand are favorable, with no major new mines coming online. High-quality large diamonds are especially scarce, so additional production from Lulo would be coming to market at an advantageous time.

4. Lucapa has demonstrated strong technical capabilities, leading to its exceptional exploration success as a junior company. The experienced management gives credibility to continue driving the project forward.

5. The high-margin revenues from existing alluvial operations provide cash flow to fund ongoing exploration and project development. This reduces dilution and financing risks compared to a pure exploration play.

6. If significantly richer kimberlite pipes are discovered as Lucapa expects, transitioning Lulo from alluvial to primary kimberlite mining could be truly company-transforming. The upside potential from such a large new development could generate substantial returns for investors at this early stage.

7. While risks remain, Lucapa has presented a compelling investment case built on promising geology, exceptional diamonds, successful exploration, strong capabilities, and favourable market conditions. For investors open to speculative mining exploration, Lulo offers exciting upside potential.