Please stand by. Good morning. My name is Justin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lucara Diamond 2022 Q2 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star and then the number 1 on your telephone keypad. If you would like to withdraw your question, please press the pound key. Thank you. Miss Eira Thomas, you may begin your conference.
Okay, thank you very much, Justin, and welcome everyone to Lucara's Q2 conference call, and thank you for joining us today. On the call from management, we have Zara Boldt, our CFO, and Chris Schauffele , our project manager for the underground expansion project. We're really pleased to be welcoming John Armstrong to his first results call with the company. I will be making forward-looking statements, so I do draw your attention to our cautionary statement, which is slide two, and it is available for your perusal on our website. In Q2, Lucara celebrated 10 years of continuous operations at its 100% owned Karowe Diamond Mine and delivered another solid quarter in respect of operating performance at the mine, including 590 days LTI-free.
Our multichannel approach to sales continues to mature, driving stronger revenues from a more efficient, transparent supply chain and contributing $52.3 million in revenues, a 13% increase over Q2 2021, which despite growing global economic uncertainties, evidences the continuation of strong prevailing rough and polished diamond market fundamentals. Diamonds sold during the quarter generated an average price per carat, excluding top-up payments, of $557, consistent with the comparative period and reflects a stronger diamond market offset by natural variability in size, color, and quality of rough diamonds recovered and sold in each period. All three of Lucara's sales channels performed well in Q2 and better than in the comparative period, with HB, Clara, and Tenders achieving $32.4 million, $9.4 million, and $10.5 million respectively.
In terms of diamond recoveries from the mine during the period, we recovered 194 specials or single diamonds greater than 10.8 carats, including five greater than 100 carats in size, representing approximately 6.1% by weight specials of total carats recovered, which is consistent with historical recoveries and quarterly variability expected within the South Lobe. Karowe Underground Expansion Project continued to make solid progress in Q2. We invested approximately $29.1 million and completed all pre-shaft sinking activities for both the ventilation and production shafts, commenced main shaft sinking at the ventilation shaft, and advanced power line and associated substation construction on plan.
Importantly, we concluded negotiations and executed the main shaft sinking contract with UMS, which resulted in a modest 2.5% CapEx increase from $534 million to $547 million, reflecting the inclusion of updated detailed pricing. The transition to main sinking over the last few weeks has been slower than anticipated. However, we are in a ramp-up period, and cycle rates are continuously improving, and opportunities have been identified to decrease main sink cycle times and reduce any potential impacts on schedule.
Finally, in respect of liquidity, the company reduced the balance on the working capital facility to zero during the period, and as of June thirtieth, had cash and cash equivalents of $40.8 million and had drawn an additional $20 million from the $170 million project loan facility for a total drawdown to date amount of $65 million. The company retains access to ample liquidity to execute on its growth plans. The full $50 million working capital facility was unutilized as at June thirtieth. I would now like to invite Zara to take you through a more detailed overview of our financial and operating performance for the period.
Thanks very much, Eira. Good morning and good afternoon, everyone. Thank you for joining us for our Q2 earnings call. Just a quick reminder that I'll be making some forward-looking statements. Please refer to slide two of today's presentation for our cautionary statement. Also, certain financial measures that I will refer to during today's call and which appear in the presentation are non-IFRS financial performance measures. These include adjusted EBITDA, adjusted operating earnings, operating cash flow per share, operating margin per carat sold, and operating costs per ton of ore processed. Please refer to our interim MD&A for details on how these measures are calculated. As a reminder, all references in the presentation will be to US dollars unless otherwise stated. Let's begin with the financial highlights from the Q2.
The company recognized total revenue of $52.3 million during the Q2, a 13% increase from the $46.3 million earned in Q2 2021. This is representative of a continuation of strong prevailing rough and polished diamond market fundamentals. Revenues from the sale of Karowe diamonds were $50 million. The sales agreement with HB accounted for 65% of total Karowe revenue recognized in the quarter. Karowe diamonds sold during the quarter generated an average price per carat, excluding top-up payments of $557. The similar price per carat to the comparative period reflects a strong diamond market, offset by variability in the size, color and quality of rough diamonds sold in each period.
Total revenue recognized includes top-up payments of $13.1 million from the HB agreement, as well as $2.3 million from the sale of third-party goods on the Clara platform. Karowe goods made up less than 60% of the total volume transacted through Clara in the Q2 as a third-party producer commenced a series of trial sales, which are continuing into the Q3 of this year. You can see that adjusted EBITDA of $24.4 million increased by 10% from $22.2 million for the same period last year, attributed primarily to higher revenues. Net income for the quarter increased to $12.5 million from $6 million in Q2 2021. That equates to $0.03 basic earnings per share in the current quarter.
As a reminder, the net income achieved in each quarter is most impacted by the revenue earned during that quarter. Non-cash items such as depletion and amortization, foreign exchange gains and losses, gains and losses from derivative financial instruments, and income tax expense do introduce volatility to net income. Operating expenses increased $1.9 million or approximately 13% from $15.1 million in the comparative quarter to $17 million in the Q2 of 2022, reflecting a combination of increased ore tons mined, inventory build-up due to timing of scheduled quarterly tenders and the benefit of a stronger US dollar, offset by input cost increases, particularly as those relate to labor, fuel, insurance and power costs. Cash flow from operations for both the current and comparative quarter was $0.05 per share.
The next slide sets out our operational highlights for the Q2. At the end of the Q2, our production metrics remained in line with our 2022 guidance, with 1.1 million tons of ore and 0.4 million tons of waste mined and 0.7 million tons of ore processed during the three months ended June 30, 2022. We recovered just over 86,000 carats during the Q2 this year, achieving a recovery grade of 12 carats per hundred tons. This is about 15% less than the recovered carats in the comparative quarter, where the average grade was 13.9 CPHT. All ore processed came from South Lobe material.
Eira spoke to the number of specials that we recovered during the quarter, including five diamonds greater than 100 carats, and we sold just over 66,000 carats from the Karowe mine for gross proceeds of $50 million. Operating expenses were $17 million or $221 per carat sold. The 5% increase in operating expenses per carat sold is attributed to a 4% decrease in the volume of carats sold and lower operating expenses attributed to the net impact of the depreciation of the Botswana pula against the US dollar, offset by higher labor, fuel and energy costs. Despite inflationary pressures, we do expect to remain within our full year guidance of $29.50-$33.50 per ton of ore processed.
Our overall performance during the Q2, like the Q1 this year, remains consistent with the strong operational results achieved over the past few years and is generally in line with our plan for 2022. Moving now to some financial highlights from the six months ended June 30, 2022. Our results for the six-month period were strong from both a financial and operational perspective. We recognized revenue of $120.5 million during the six months ended June 30, 2022, as a number of high-value stones delivered to HB in 2021 have now been manufactured and sold, resulting in top-up payments of $24.8 million year to date. The average price per Karowe diamond sold, excluding top-ups, was $619 a carat for this period.
This price reflects a combination of strong diamond market fundamentals and the mix of diamonds recovered and sold during the first half of this year. Strong revenues are the main driver for both the adjusted EBITDA of $60.4 million and net income for the six months ended June 30, 2022, of $31.5 million. Depletion and amortization expense of $10.7 million, deferred income tax expenses of $22.8 million, and a $7.2 million gain on interest rate swaps had the most impact on net income for the first half of this year. Strong cash flow from operations equivalent to $0.13 per share allowed us to reduce the working capital facility balance to zero as of June 30, and to support an investment of $60.2 million in the Karowe Underground Expansion Project so far this year.
Operational cash flows directed to the underground spend were supplemented by two $20 million draws from the project finance facility, which were completed since January first of this year, increasing the amount drawn from the facility to $65 million. The cost per tonne of ore processed was $28.22 for the six months ended June 30, 2022, and reflects cost inflation, again, primarily related to labor, fuel, power, and insurance, offset by fluctuations in currency exchange rates. Our full year cost guidance remains between $29.5 and $33.5 per tonne of ore processed. Let's now look briefly at some operational highlights for the six months ended June 30. During the first half of 2022, we mined 1.9 million tonnes of ore, and we processed almost 1.4 million tonnes of ore.
We're covering just over 170,000 carats. We made no changes to our full year guidance, with ore tonnes mined expected to be between 3.1 and 3.5 million tonnes, and ore tonnes processed expected to be between 2.6 and 2.8 million. Carats recovered to date are tracking well to our full year guidance of between 300,000 and 340,000 carats. We sold about 146,000 carats during the six months ended June 30, 2022, which is also tracking well to our full year guidance of between 300,000 and 340,000 carats. The operating cost per carat sold of $215 is reflective of higher input costs, generally offset by the benefit of a stronger U.S. dollar against the Botswana pula.
Our strong operational results were achieved with an excellent safety record as the mine has operated for 590 consecutive days without a lost time injury. Moving now for a quick review of our three different sales channels. We continue to sell the largest volume of our production through a quarterly tender, but the largest value of our production comes through sales with HB. The average price per carat sold for the HB sales was just over $6,500 per carat. Pop-up payments and third-party transactions through Clara totaled $15.4 million for total revenue in the Q2 of $52.3 million. A very strong result. Let's move on to our full year guidance, please. I've already spoken to some of our assumptions with respect to the production KPIs and our cost KPIs.
We made no changes to our guidance in the Q2. We are tracking well. Moving on, let's look at our accomplishments for the Karowe Underground Expansion. The mine life is expected to be extended until at least 2040. The project was fully financed in September of last year and construction is advancing well. The Underground Expansion CapEx has gone up a little bit to $547 million, as Eira mentioned. This is the result of detailed engineering and schedules from the main sink contract. We do not expect any issues with funding that very modest increase, which is, again, will come from operating cash flow and draws on the project finance facility. I mentioned earlier that we spent $29.1 million in the Q2, completing pre-sink activities. Construction of the power substation continues.
We are transitioning to the main shaft sinking. The ventilation shaft sinking started in June, and the production shaft sinking will start this month, or is expected to start this month. Some other highlights from the Q2. Project to date, we've invested $165 million in the underground expansion program, and we've committed about $310 million. We are well on our way towards that total CapEx of $547 million. As Eira mentioned, we executed the main sink contract for both the production and ventilation shafts with a very modest increase in the overall CapEx. During the Q2, activities focused on ongoing construction and procurement, including completion of pre-sink activities for both shafts, commencement of main sinking for the ventilation shaft.
On the production shaft, the headgear was erected, the stage winder was installed and roped up. Eira also mentioned that the transition to the main sinking phase has been slower than anticipated. However, we have identified opportunities to decrease the main sink cycle times and reduce any potential impacts to the schedule. Procurement of shaft station underground mobile equipment and the mine bulk air cooler was initiated, and the Letlhakane and Karowe power substation construction continued. Transmission line towers have been erected in preparation for the stringing of transmission lines. I will now hand back to Ira for the remainder of the call. Thank you very much.
Thank you very much, Zara, and I'm gonna switch gears now and talk a little bit about the diamond market and our approach to sales. Healthy, rough, and polished diamond prices prevailed during the Q2 despite worsening global economic and geopolitical developments during the period, reaffirming the global rough diamond supply constraints that continue to play out in the market. We did experience some price softening, particularly for certain categories of smaller diamonds. However, approximately 70% of our revenues continue to be generated from our large, high-value diamonds, prices for which continued to be stable. Our longer-term outlook for the diamond market remains positive. Resource performance and the recovery of specials in Q2 remains in line with expectations and consistent with historical recoveries and quarterly variability expected within the South Lobe.
During the period, as I've already mentioned, we had a healthy recovery of specials, 194 in total. These are diamonds, single diamonds greater than 10.8 carats in size. That included five diamonds greater than 100 carats in size, representing approximately 6.1%, by weight, specials of total carats recovered. As messaged in recent preceding quarters, Lucara's approach to sales has evolved from a single tender or auction-style platform to an optimized multi-channel approach, with the aim of creating better alignment along the value chain and increasing margin capture downstream. As a result, we continue to tender our smaller and lower quality goods and have migrated our better quality 1 to 10.8 carat diamonds into sales through Clara, our secure web-based digital marketplace.
Our higher quality +10.8-carat diamonds are being sold as polished diamonds exclusively through our novel committed supply agreement with HB Antwerp. In addition, we have forged direct collaboration agreements with HB Antwerp and certain brands, including Louis Vuitton, in respect of some of our truly exceptional high-value diamond recoveries, such as the Sethunya and the Sewelô. In respect of our HB Antwerp agreement, all of Lucara's +10.8-carat production from Karowe is being channeled into this unique manufacturing partnership rather than being sold as rough. HB Antwerp is using state-of-the-art scanning, planning, and manufacturing technologies to maximize the value of each and every rough diamond, selling into existing demand, protecting prices for our largest, most valuable polished gems, and delivering Lucara a polished price, less a set fee and the cost of manufacturing.
The benefits of the committed sales agreement with HB continued to be realized during the Q2 of 2022, as the company participated in the upside to manufacturing polished diamonds for goods delivered in previous quarters. What we're just showing on the screen is an example of some of the high value, rough, polished that has been manufactured and the resulting beautiful polished outcome. What you're looking at there is the 62-carat Boitumelo Pink rough diamond, with the principal diamond yielded from that stone being over 20 carats and graded as a fancy purplish pink, by the GIA and delivering significant upside for Lucara. In Q2, Clara, Lucara's 100% owned proprietary secure web-based digital sales platform, continued to grow in scale and interest and importantly, continued to add third-party supply volumes.
In Q2, we completed five sales on Clara, reporting total sales volume transacted of $9.4 million, which as I mentioned, is a 13% increase from Q2 2021. The strong price trends observed in Q1 for Clara continued into Q2, and the number of buyers on the platform remained stable, though an active wait list continues to be maintained. While most of the stones transacted through the platform are supplied from the Karowe mine, secondary market stones continued to be offered for sale through the platform with good results, and a series of trial sales with another producer also began during the period, which has also generated encouraging early results and will continue into Q3.
Third-party volume sold on Clara in Q2 accounted for close to 40% of total transactions, and the company continues to engage with other potential third-party suppliers, including other producers and the secondary market. Next, I'd really like to just highlight our focus on sustainability. It really underpins everything we do at Lucara. We have been producing a sustainability report now for a decade, and we are very close to issuing our latest sustainability report from 2021. So please do look for that on our website soon. Just as a reminder, we are certified by the Responsible Jewelry Council. We are compliant with the Kimberley Process and a member of the Natural Diamond Council. In 2018, we also became a participant in the United Nations Global Compact, and we currently contribute to 10 of their 17 United Nations Sustainable Development Goals.
I think just to conclude our call today, we end the quarter in a very strong position. We continue to reiterate the strong investment rationale for Lucara. We have a very strong high margin asset in Karowe, which is now just into its tenth year of production. We are extremely excited about the potential for expanding this extraordinary resource underground and extending our mine life out to at least 2040. In addition, we continue to maintain exciting asset diversification and optionality through Clara, the first-ever digital diamond sales platform in the world, and we are continuing to see good traction there. Thank you very much, everyone. Now I will turn it back to the operator to open up the stage for questions.
Thank you. If you would like to signal with questions, please press star one on your touchtone telephone. If you're joining us today using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one if you would like to signal with questions, star one. At this time, there are no questions, but I would like to remind our audience again, please press star one if you would like to signal with questions, star one. Our first question comes from Paul Zimnisky with PZDA.
Hi, everyone. You left operating cost guidance unchanged. How much of this is just a result of you having conservatively forecast fuel, labor, consumable costs, in the midst of inflation? On the CapEx increase, just to be clear, how much of that is a result of cost inflation versus modifications to the engineering or the design of the build?
Thanks very much, Paul. I think I'll direct the first part of that question to Zara, and then I'd invite Chris to speak to the underground portion, please.
Thank you. Good morning, Paul. Thank you for the questions. With respect to our operating costs, we are seeing a natural hedge to inflation from the strength of the U.S. dollar. We did have what we at the time had hoped would be reasonably conservative assumptions for increases to fuel, power, and labor going into 2022. We did see the benefit of those really just in the Q1. Fuel has increased significantly in Botswana and is expected to continue to go up for the remainder of the year. Power has not yet increased, but we are expecting an increase before the end of the year. It's a little bit of a combination of things, conservative assumptions, but also the natural hedge from the U.S. dollar. Thank you.
Hi, Paul. Chris here. The majority of the cost increase was associated with, I'd say, labor, as that forms the largest part of the contract with UMS. Engineering changes were minimal as most of the equipment had to be procured ahead of time and was at site for the installation during the pre-sinking phase. The majority of the increase is associated with consumables and labor.
Understood. Thank you very much.
Once again, if you would like to signal with questions, please press star one. Again, that's star one. We'll pause for a moment. That does conclude the question/answer session. I'll turn the conference back over to you for any additional remarks.
Okay. Well, thank you very much, everybody. We appreciate you taking time out of your summer to join the call today. We continue to be very excited about the trajectory for Lucara going forward here for the remainder of the year, and as we work to execute on the underground in Clara. We look forward to speaking with you again with a further update in Q3. Thanks very much, and enjoy the rest of your day.
Well, thank you. That does conclude today's conference. We do thank you for your participation. Have an excellent day.