Lucara Diamonds has agreed to purchase Clara Diamond Solutions for a total up-front consideration of 13.1 million shares of Lucara.
Approximately $29 million in up-front consideration based on the closing price of Lucara Diamonds' common shares as at 22 February 2018, resulting in approximately 3.7% dilution to its existing share capital.
Clara Diamond Solutions (Clara), a company whose primary asset is a secure, digital sales platform that will transform how rough diamonds are sold, unlocking value for diamond producers and manufacturers alike.
Clara uses proprietary analytics together with cloud and blockchain technologies to modernise the existing diamond supply chain, driving efficiencies and ensuring diamond provenance from mine to finger.
The Clara Diamond Platform
- Clara is a commercially scalable, digital platform that applies computing algorithms to match rough diamond production to specific polished manufacturing demand on a stone by stone basis
- Clara allows buyers to source rough diamonds tailored to specific polished diamond demand resulting in improved margins for both buyers and sellers
- Efficiently integrates with blockchain technology, ensuring provenance tracking across the entire diamond supply chain
- Encourages adoption of technology and accelerates innovation across the supply chain
- Eliminates dependency on a fixed sales cycle, reducing unwanted carrying costs for all stakeholders
Lucara intends to commercialise the Clara platform in the coming months using a selection of the diamond production from the company's Karowe Diamond Mine.
Thereafter, Clara will be scaled to accommodate diamond uptake from a variety of sources across the supply chain.
Testing on the platform has demonstrated the potential to unlock greater than 20% of value throughout the diamond pipeline to the benefit of all participants.
Clara's revenue model will be based on capturing a portion of this incremental value.
Expected Benefits to Lucara Diamonds
- Provides an affordable, potentially high value, near term growth platform, compatible with the company's core diamond mining business
- Non-cash transaction with no expected impact on the dividend
- Expansion of Lucara Diamonds' customer base, engaging new participants in the rough diamond supply chain and is expected to result in higher realised prices for its rough
- Provides stable, continuous cashflow that is no longer tied to a fixed sales cycle
- Diversifies Lucara's existing business model with the potential to deliver strong cashflows to supplement revenue from the Karowe diamond mine
- Supports Lucara's reputation as an industry-leader in the adoption of new technology having invested in a technologically advanced mine design to optimise revenues and minimising diamond losses through and building on the successful integration of XRT technology
- Acquisition of a digital business solution that uses blockchain to unlock value and ensure diamond provenance, integrity and transparency throughout the value chain
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