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Lucara Revenue Sees Revival in Second Quarter

Aug 11, 2021 7:58 AM   By Rapaport News
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Lucara Diamond Corp.’s revenue rose more than sixfold year on year in the second quarter as demand for polished stones drove up rough prices.

Revenue from the company’s Karowe mine in Botswana soared to $46.3 million for the three months ending June 30 from $7.5 million a year ago, it said Wednesday. While sales volume remained flat at 68,961 carats, the average price jumped to $671 per carat, versus $109 in the same period of 2020. The miner reported a profit of $6 million, compared with a loss of $13.9 million last year.

The sales total includes $5.1 million in “top-up” payments from a deal with Antwerp-based manufacturer HB Group, which has agreed to purchase all of Lucara’s rough above 10.8 carats through December 2022. Through that arrangement, HB pays an initial rate for the rough, with Lucara receiving an additional fee if realized prices for the polished outcome exceed estimates.

The miner also saw an increase in sales on its Clara platform, which matches buyers with the specific stones they need. Lucara brought in $8.3 million through six sales during the second quarter, a 38% increase over the previous quarter. In addition, prices for rough on the platform grew consistently with each subsequent sale, the company noted. The number of buyers using the platform increased to 84 from 80 in the first quarter, with Lucara maintaining a waiting list of buyers to manage supply and demand, it explained. During the April-to-June period, the miner also trialed Clara with third-party suppliers.

“The diamond market continues to be strong and stable in 2021 following a very strong start to the year, where we have seen price increases in virtually all sizes and [qualities] of diamonds,” Lucara said. “The key dominant retail markets for diamonds in the US and China remain buoyant, and the market continues to be supported from lower supply from producers and a pickup in capacity in the midstream in India.”

Production for the period was virtually unchanged at 101,330 carats, with the company recovering 261 special-size diamonds, including one weighing more than 1,000 carats, two over 400 carats, and a further 14 greater than 100 carats.

Revenue for the first half of the year rose 139% to $99.4 million. Sales volume increased 3.6% to 160,721 carats, with the average price up 131% to $618 per carat. Lucara recorded a profit of $9.4 million for the six months, compared to a loss of $17.1 million in the same period of 2020.

The company is on track with plans for the underground expansion at Karowe, which will extend the mine’s life to 2040. The upgrade is projected to add approximately $4 billion in revenue from ore mined from the deposit’s high-value south lobe. Lucara will begin its ramp-up of underground operations in 2026.

The miner expects revenue of $180 million to $210 million for the full year from the sale of between 350,000 and 390,000 carats. Output from Karowe will be between 340,000 and 370,000 carats for the year, it added.

Image: A rough diamond with a loupe. (Lucara Diamond Corp.)
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Tags: Botswana, Clara, diamonds, HB Group, Karowe mine, lucara, Lucara Diamond Corp., Rapaport News
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