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Lucara Profit Surges as Polished Proceeds Pay Off

Aug 11, 2022 5:17 AM   By Leah Meirovich
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Lucara Diamond Corp.’s profit more than doubled year on year in the second quarter amid strong demand and a higher proportion of proceeds coming from the sale of polished diamonds through its supply contract.

Net profit reached $12.5 million for the three months ending June 30, compared with $6 million the year before. Revenue jumped 13% to $52.3 million, the company said Wednesday. While sales volume slipped 3.8% to 66,167 carats, the average price grew 1% to $557 per carat.

The sales total includes $13.1 million in “top-up” payments from a deal with Antwerp-based manufacturer HB Group, which agreed to purchase all of Lucara’s rough above 10.8 carats from its Karowe mine in Botswana until December 2022. Through the arrangement, HB pays an initial rate for the rough, with Lucara receiving an additional fee if realized prices for the polished outcome exceed estimates. During the second quarter of 2021, Lucara’s share of top-up payments came to $7.9 million.

The miner also saw a rise in sales on its Clara platform, which matches buyers with the specific stones they need. Lucara brought in $9.4 million through five sales during the period, a 13% increase from the $8.3 million it derived from six sales a year ago. The number of buyers on the platform was stable during the quarter, as the company is maintaining a waiting list to manage supply and demand, it noted.

“In the second quarter...Karowe...delivered production on plan in combination with healthy diamond sales, reflecting stable polished-diamond demand and a continued positive outlook for diamond prices longer term,” said Lucara CEO Eira Thomas.

Production for the period fell 15% to 86,317 carats. The miner recovered five diamonds over 100 carats during the quarter.

Revenue for the first half of the year climbed 21% to $120.5 million. Sales volume dropped 9% to 146,462 carats, while the average price surged 24% to $631 per carat. Lucara recorded a profit of $31.5 million for the six months, more than triple the $9.4 million it reported during the first half of 2021.

The miner expects revenue of $195 million to $225 million for the full year from the sale of between 300,000 and 340,000 carats, 100% of its predicted output from Karowe.

Image: The processing plant at the Karowe mine. (Lucara Diamond Corp.)
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Tags: Botswana, Clara, diamonds, Eira Thomas, HB Group, Karowe mine, Leah Meirovich, lucara, Lucara Diamond Corp.
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