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Lucara Hopeful of Second-Half Rebound

May 10, 2020 10:01 AM   By Rapaport News
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RAPAPORT... Lucara Diamond Corp. has indicated the market could improve in the second half of 2020 as lower rough supply and a recovery in Asia bode well for prices.

“Though our near-term outlook on diamond prices remains uncertain, global rough-diamond production curtailments, combined with early indications of polished diamond-demand recovery in Asia, provide some optimism that demand will improve in the latter half of the year,” the company said.

Revenue from the Karowe mine in Botswana fell 30% to $34.1 million for the first quarter ending March 31, as sales volume slipped 9% to 86,178 carats, the miner reported last week. The average selling price slid 23% to $396 per carat due to the sale of lower-quality rough and a drop in demand resulting from the COVID-19 pandemic, the company noted. Lucara recorded a net loss of $3.2 million for the period, compared with a profit of $7.4 million in 2019.

The Karowe mine continues to operate safely and at full production as the Botswana government declared it an essential service, Lucara CEO Eira Thomas explained. “Demand for our product, however, continues to be weak and Lucara is necessarily focused on cost management and capital discipline through this period of uncertainty,” she noted.

As a result, the miner plans to slow the expansion to underground mining at Karowe, which was scheduled to ramp up in the third quarter.

Lucara also postponed its second-quarter tender, originally due to take place in mid-May, and plans to reschedule the sale after evaluating market conditions. Due to travel restrictions in Botswana, the government has given the company special permission to hold the tender in Antwerp.

Lucara has suspended its full-year outlook until it can assess the full impact on its operations and production, which may take several months, as the situation “remains highly uncertain,” the company noted.

Image: The Karowe mine. (Lucara Diamond Corp.)
Tags: Coronavirus, COVID-19, Eira Thomas, Karowe, Karowe mine, lucara, Lucara Diamond Corp, Rapaport News
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