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Lucara May Struggle to Hold Botswana Sales
Apr 1, 2020 11:03 AM
By Rapaport News
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RAPAPORT... The coronavirus outbreak has threatened Lucara Diamond Corp.’s ability to hold tenders in Botswana, and had a heavy negative effect on rough prices, the company said Tuesday.
The Botswana government has given Lucara permission to hold sales in Antwerp as a temporary measure, the miner noted. The country will enter a 28-day lockdown starting Thursday after recording its first three cases of coronavirus.
Prices have “deteriorated” since Lucara’s last tender on March 5, prompting the company to suspend its 2020 guidance until further notice, the group added. Although the next quarterly sale isn’t supposed to take place until mid-May, the full impact of the pandemic on the company’s operations and production remains uncertain, it said.
“The global diamond industry is experiencing the widespread impacts of COVID-19 throughout the value chain, manifested as fewer sales, weaker pricing and production curtailments at several mines,” explained Eira Thomas, Lucara’s CEO.
Prices at the March sale in Gaborone, Botswana, were within 1% of the company’s expectations, with all items selling. It sold 83,610 carats, including 37 individual stones above 10.8 carats. Four diamonds fetched at least $1 million each, with two of them garnering more than $2 million.
Meanwhile, Clara, Lucara’s digital sales platform, has continued to attract interest, though activity has dropped slightly due to the market challenges. Six sales have taken place on the platform since the start of 2020, with 25 manufacturers participating in transactions involving just over 1,800 carats and 821 diamonds.
“We expect this interest to continue and potentially grow as travel restrictions persist, respective of the possibility that the transportation of our diamonds may be subjected to delays or other constraints in relation to the COVID-19 crisis,” the company noted.
Lucara’s Karowe mine in north-central Botswana continues to operate as planned, but with reduced staff numbers, social distancing, restricted travel, and employees working from home where possible. The company is also reviewing its spending for the year, most of which is related to the mine’s $53 million expansion to underground operations. It was planning to invest the bulk of that amount in the latter part of the year.
De Beers, which operates several mines in Botswana, said activities there were currently normal, but it planned to provide an update in the coming days. The company canceled this week’s sight in Gaborone because of restrictions on travel and movement of goods.
Image: The Karowe mine. (Lucara Diamond Corp.)
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Tags:
Botswana, Clara, Eira Thomas, gaborone, Karowe, Karowe mine, lucara, Lucara Diamond Corp., mining, Rapaport News, rough prices
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