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Lucara Mulls Clara Spin-Off, New Botswana Mine

Oct 12, 2021 5:14 AM   By Joshua Freedman
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RAPAPORT... Lucara Diamond Corp might spin off its digital sales platform and add another mine in Botswana, CEO Eira Thomas revealed in a recent interview.

Clara Diamond Solutions uses an algorithm to match customers with the precise rough they need based on their polished requirements. The Canada-based miner acquired it in 2018 and has developed it into a larger business targeting other rough producers. Earlier this year, an unnamed third-party supplier carried out a trial on the platform, while discussions with other possible sellers continue.

“We’re going to have to see how our shareholders ultimately value these two businesses [the core mining operation and the sales platform], and it is possible at some point in the future that we end up spinning Clara out,” Thomas said September 30 in an online video conversation with the Young Diamantaires group.

“Our goal has been to commercialize it and demonstrate that it works. Longer term, I think in order to entice other producers to sell through Clara, it probably makes sense to create an independent vehicle that is not owned by a mining company.”

Thomas did not elaborate on how or when this would happen. Lucara “is and remains 100% committed to Clara,” a company spokesperson added Tuesday in a statement to Rapaport News.

“As Clara continues to grow and develop, we will be able to determine the appropriate timing that fully benefits Clara and Lucara’s shareholders,” the spokesperson noted.

Building the mid-tier

Meanwhile, the mining industry lacks an “investable mid-tier diamond company,” Thomas continued — referring to the divide between large companies such as De Beers and Alrosa on one hand, and a host of small miners on the other.

“So we think consolidation is something that would be beneficial, and we’re very hopeful that is something we can work towards in the coming years,” the executive asserted.

Thomas’s comments follow the recent approval of an expansion project for Karowe, Lucara’s sole mine, which should extend the lucrative Botswana deposit’s life span by around 15 years through to 2040.

Having secured that plan, “we are going to turn our minds to looking for other assets that we can bring into the portfolio,” she divulged. “We love Botswana, we’d love to have another mine in Botswana. So we will continue to work that angle as well.”

It’s unclear whether Thomas meant she wanted to buy a mine or discover one through exploration. Few large-scale diamond-mining sites are available at present, given the rarity of economically viable sources. In July, De Beers announced it was considering selling its Damtshaa mine in Botswana after pausing production amid challenging market conditions.

“We will continue to keep our eyes open for assets that could add value to our current portfolio,” the Lucara spokesperson explained. “Botswana is a great country to work in, and one that we have built strong relationships in. As such, we will also continue to investigate that angle.”

Thomas was talking with members of the Young Diamantaires organization, which the World Federation of Diamond Bourses (WFDB) launched in 2016 to promote the industry’s next generation.

Image: Eira Thomas. (Lucara Diamond Corp.)
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Tags: Alrosa, Botswana, Canada, Clara, Clara Diamond Solutions, Damtshaa, De Beers, Eira Thomas, Joshua Freedman, Karowe, lucara, Lucara Diamond Corp., mines, mining, Young Diamantaires
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