- Sold to conglomerate led by HRA Group of Companies
- Sale marks Lucara strategic focus on expansion of Karowe Diamond Mine
GAZETTE REPORTER
Lucara Diamond Corp. has sold its 100 percent interest in the Clara Rough Diamond Sales Platform back to its original founders, a group led by the HRA Group of Companies and industry veteran Eira Thomas.
Clara, a digital marketplace for rough diamonds, is known for using technology to connect buyers and sellers, streamlining transactions, and offering traceability services aimed at boosting transparency and trust in the diamond industry.
The sale marks a strategic shift for Lucara, which is now doubling down on its core focus: expansion of its flagship Karowe Diamond Mine in Botswana.
Karowe underground expansion
“The divestiture of Clara enables us to intensify our strategic focus on maximising returns and long-term value creation at our world-class Karowe Diamond Mine,” said William Lamb, President and CEO of Lucara.
“The company’s core competencies and future growth reside in the successful execution of the Karowe underground expansion project.”
Under the terms of the agreement, Lucara will receive approximately $3 million in cash at closing. The transaction also includes the return of 10 million Lucara common shares, which were initially issued as part of Lucara’s acquisition of Clara in 2018.
Additionally, Lucara will transfer certain liabilities tied to sales performance metrics, including a share issuance obligation of 13.4 million Lucara common shares.
Individual diamonds
The company will retain a 3 percent Net Profit Interest (NPI) on Clara’s net earnings, ensuring a continued stake in the platform’s future success.
Clara – which was developed to address inefficiencies in the rough diamond market – allows individual diamonds to be sold to buyers who need them rather than bundling diamonds of various qualities and sizes in large, less-targeted sales.
This approach promises to transform the way the rough diamond industry operates. Managing Director and one of the original founders of Clara, Aaron Ariel, recalled the motivation behind the platform’s creation.
“Nine years ago, while at our factory sorting through a mountain of rough diamonds – many of which we didn’t need but were required purchases bundled inseparably with product needed to fulfill urgent orders – we had a big idea for a technology that could transform the global rough diamond market for everyone,” he said.
More transparent
“Today, we are excited about the opportunity to realise its full potential, which remains largely unexplored. We believe it will become the industry’s premier global rough diamond marketplace.
“We look forward to partnering with stakeholders throughout the supply chain who share our vision for a healthier, more transparent, and, last but certainly not least, a more profitable industry for all.”
The deal also includes a five-year rough diamond supply agreement under which Lucara will provide Clara with diamonds that meet the size and quality specifications historically sold through the platform.
This agreement is set to ensure that Clara remains operational and well-stocked in its early years under the new ownership. The supply agreement can be terminated after the second anniversary or as otherwise mutually agreed between the parties.
Pure-play producer
While the Clara platform has shown potential as an innovative digital channel for rough diamond sales, Lucara’s decision to sell reflects challenges in scaling the platform under a pure-play diamond producer’s ownership. Lamb noted that onboarding other producers’ rough production was essential for Clara to reach its full potential.
“The successful onboarding of other producers’ rough production required to scale the platform remains unattainable while the platform is owned by a pure-play diamond producer,” he explained.
Despite the sale, Lucara maintains its belief in Clara’s long-term potential. “Lucara maintains its conviction … that this technology will play an important role in shaping a demand-driven diamond sector,” Lamb said.