Lucara Diamond Corp. has entered into a definitive supply agreement for the remainder of 2020 with HB Group out of Antwerp, in respect of all diamonds produced more than 10.8 carats in size from its 100% owned Karowe Diamond Mine in Botswana.
Large, high value diamonds more than 10.8 carats in size from Karowe account for approximately 70% of Lucara’s annual revenues, and though the 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.
Read more about diamonds and gemstones
Under the terms of this novel supply agreement with HB, the purchase price paid for Lucara’s +10.8 carat rough diamonds shall be 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.
This unique pricing mechanism is expected to deliver regular cash flow for this important segment of Lucara’s production profile at superior prices.
Eira Thomas, Lucara CEO comments:
“Building on the partnership established for the manufacturing of the Sewelô earlier this year, Lucara is pleased to have now secured a broader supply agreement with HB to purchase all our +10.8 carat rough diamonds, through to year-end.
“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.
“It is our strong view that the success of our industry in these very uncertain times, requires better alignment between producers, manufacturers, and retailers to establish a healthier, more efficient global diamond supply chain.
“We are excited to be working with HB to support this new paradigm.”
Oded Mansori, Co-Founder of HB Group, comments:
“Aligned in our core values and beliefs, HB is pleased to be entering into this definitive supply agreement with Lucara, turning our long-term vision for transparency and sustainability in the value chain into reality.
“HB represents a new, innovative approach, using technologies that nullify speculation in favour of a stronger ecosystem, the first of its kind for our industry.”
Advantages of the partnership:
- Regular cash flow for Lucara using a superior pricing mechanism
- Significant potential revenue upside, particularly suited for Lucara’s large, exceptional diamonds
- Increased tax revenue and additional beneficiation opportunities for the Government of Botswana
- The creation of a more efficient, streamlined, supply chain that achieves complete alignment between Lucara and HB to maximize the value of each +10.8 carat diamond produced at Karowe