Diamond miners are having to find alternative sales paths for rough stones with traditional markets disrupted by the global COVID-19 pandemic.

 

"This agreement will deliver regular revenues on superior pricing terms to those currently being achieved at tender, and helps position Lucara to move forward with key underground expansion activities for Karowe in 2020," CEO Eira Thomas said.

The recovery of a 549ct white diamond earlier this year had helped build the case for an underground development at the mine in Botswana.

Lucara said HB's purchase price would based on the estimated polished outcome, determined through state of the art scanning and planning technology, with a true up paid on actual achieved polished sales thereafter, less a fee and the cost of manufacturing.

It said high-value diamonds above 10.8ct from Karowe accounted for about 70% of the company's annual revenues.

The sales agreement follows on from a collaboration with HB earlier this year to plan, cut and polish a collection of diamonds from Sewelô, the largest diamond recovered in Botswana.

Lucara said Karowe had remained fully operational throughout the COVID-19 pandemic but it had made a deliberate decision not to tender any of its plus-10.8ct inventory after early March amid the uncertainty caused by the global crisis.

Fellow Canada-listed Mountain Province Diamonds also said yesterday no formal sales were held in the second quarter due to the ongoing COVID-19 impact. It had recently announced a US$50 million sales contract with Dunebridge Worldwide for rough diamonds, below 10.8ct, from its 49%-owned Gahcho Kue mine in the Northwest Territories. 

Lucara's shares (TSX: LUC), which were worth C$1.59 a year ago, closed unchanged yesterday at 60c to capitalise it at $238 million (US$176 million).