Lucara Diamond, HP Antwerp extends supply agreement

Lucara Diamond has renewed its supply agreement with HB Antwerp ( HB) for diamonds in excess of 10.8 carats in size from Karowe Mine.

According to the diamond company, the contract has been extended by a further 24- months to December 2022. “The decision to sell our + 10.8 carat rough diamonds under a committed supply agreement with HB beginning in July of 2020 has helped support prices for this critical segment of our production amidst pricing uncertainty caused by the ongoing global pandemic. “Not only have rough diamond prices experienced a positive re- bound over the past two quarters, Lucara is also beginning to see the benefits of this strategy in accessing a broader marketplace and delivering regular cash flow based on final polished sales,” said Lucara Chief Executive Officer, Eira Thomas.

According to Lucara’s top executive, the results warrant an extension of the arrangement for at least 24 months to determine if superior pricing and market stability for our large, high value diamonds can be sustained over a longer term, creating better alignment between all participants and the establishment of a healthier, more efficient global diamond supply chain. “Large, high value diamonds in excess of 10.8 carats in size account for approximately 70 percent of Lacara’s annual revenues. Although the Karowe mine has remained fully operational throughout the COVID- 19 pandemic, Lucara made a deliberate decision not to tender any of its + 10.8 carat inventory after early March 2020 amidst the uncertainty caused by the global crisis. Under the terms of the new supply agreement with HB, the purchase price paid for each + 10.8- carat rough diamond is based on the estimated polished outcome, determined through state of the art scanning and planning technology.

“The advantages of the deal are regular cash flow for Lucara using polished pricing mechanism, potential revenue upside, particularly suited for Lucara’s large, exceptional diamonds and increased tax revenue and additional beneficiation opportunities and a streamlined supply chain that achieves alignment between Lucara and HB to maximize the value of each + 10.8- carat diamond produced at Karowe,” said Thomas.

Meanwhile, HB Antwerp says the collaboration structurally embeds a new transparent and sustainable way of working in the diamond value chain.