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Lucara Profit Drops Amid Currency Shift
Feb 19, 2017 7:01 AM
By Rapaport News
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RAPAPORT... Profit dropped last year for Lucara Diamond Corp. as higher taxes and foreign exchange rates worked to the company’s disadvantage.
Net income declined 9 percent to $70.7 million in 2016, largely impacted by a foreign-exchange loss of $11 million compared with a
gain of $15 million a year earlier, the company explained.
“If we look at foreign-exchange calculations and how tax
would have been affected, if we strip that out, those numbers would actually
look very different,” William Lamb, Lucara’s chief executive officer, said in
an earnings call on Friday transcribed
by Seeking Alpha.
Lucara's costs are in Botswana pula, which depreciated about 3 percent against the U.S. dollar last year, while revenue is in the American currency.
Revenue from rough-diamond sales jumped 32 percent to $295.5
million, or $824 per carat, in line with the projected results the company released
in December. The increase stemmed largely from the sale of the 813-carat
Constellation rough diamond for a record $63.1 million, or $77,649 per carat,
in May.
Lucara’s diamonds come from the Karowe mine, which is known
for its large and high-value rough. During 2016, the company attempted to sell
the 1,109-carat Lesedi La Rona rough diamond, but the stone failed to meet its
reserve price at a Sotheby’s auction in June. The miner currently plans to sell
the stone – the world’s second-largest in history – in the first half of this
year.
Revenue in 2017 is expected to be $200 million to $220
million, excluding the potential sale of the Lesedi, which remains in the
company’s inventory.
“The market for large, high-value rough diamonds remains
resilient, and there remains strong demand for these goods,” read a company
statement from last week. The miner “continues to receive a high number of bids
for its high-value single stones as polishers look to move into the higher-margin
areas of the industry.”
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Tags:
Constellation diamond, Karowe mine, Lesedi La Rona, lucara, Lucara Diamond Corp., Rapaport News, Sotheby’s, William Lamb
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