Balancing Solid Operations with Funding Risks: Justifying a Hold on Lucara Amid Karowe Expansion Capex and Soft Diamond Markets

BMO Capital analyst Raj Ray maintained a Hold rating on Lucara Diamond yesterday and set a price target of C$0.30.

Raj Ray has given his Hold rating due to a combination of factors related to Lucara’s operational performance and project execution risk. The company delivered 2025 production, sales, and revenues broadly in line with its revised guidance, while unit operating costs came in better than expected, and 2026 guidance is consistent with the latest feasibility study for the Karowe underground project.

At the same time, Lucara is facing a sizeable remaining capital requirement for the Karowe underground expansion, which persists even after a substantial equity raise and full drawdown of its project and working capital facilities. Ray highlights that this funding gap, combined with high capex needs and ongoing softness in the broader diamond market, tempers the upside potential and justifies maintaining a Market Perform (Hold) recommendation and a C$0.30 target price.

Ray covers the Basic Materials sector, focusing on stocks such as Sibanye Stillwater, Lucara Diamond, and Harmony Gold Mining. According to TipRanks, Ray has an average return of 36.0% and a 72.46% success rate on recommended stocks.