Canadian mining company Lucara Diamond Corp has entered into a new diamond sales agreement (NDSA) with processor and trader HB Group out of Antwerp, Belgium, in respect of qualifying “special” diamonds – those weighing more than 10.8 ct – recovered from the Karowe mine, in Botswana.
Under the terms of the 10-year NDSA with HB, the purchase price paid for Lucara’s “special” rough diamonds shall be based on the mutual agreement of the estimated polished outcome, determined through scanning and planning technology, together with external benchmarks and leveraging over a decade of Lucara’s “special” diamond sales data.
A further sales value uplift, or top-up, will be paid to Lucara based on actual achieved polished sales thereafter, less a fixed margin payable to HB. This pricing mechanism is expected to deliver regular cash flow for this segment of Lucara’s production profile at better than conventional diamond industry tender prices, the company points out.
It mentions that anticipated benefits of the NDSA include regular cash flow in support of the ongoing development of the Karowe underground project; and significant potential revenue upside, especially for large complex rough diamonds, based on historical performance, providing a premium on diamond sales.
Lucara further expects to benefit through ongoing alignment with the government of Botswana’s strategy to diversify downstream and participate in the upside of polished diamond revenue. It also anticipates streamlined diamond evaluation, sales reporting and payment mechanisms, and the creation of an efficient and restructured, large and high-quality diamond supply chain, which has the potential to meet the demands of high-value brands.
The NDSA is subject to the approval of Lucara’s project lenders. Upon such approval, the agreement terms will be effective retroactively from December 1, 2023. Since that time, Lucara has continued to supply qualifying rough diamonds to HB to fund its operations and the Karowe underground project.
“As we navigate through the ever-evolving landscape of the diamond industry, I’m pleased to announce Lucara’s strategic decision to re-enter into a long-term supply agreement with HB Antwerp. This partnership reflects our commitment to ensuring stability and sustainability in our operations.
“Our collaboration with HB Antwerp presents an opportunity to further enhance our position in the market, building on the knowledge of the past and the understanding of the quality of the polished diamonds produced from our Karowe diamonds.
We remain steadfast in our dedication to delivering exceptional quality and premium value from our diamonds to all stakeholders, even amidst external pressures,” says Lucara president and CEO William Lamb.
