Lucara Started 2020 On A Low

But its 1758-carat Sewelo stone is destined for Louis Vuitton and HB Company for manufacturing whose proceeds will benefit community projects in Botswana


Canadian precious stone miner, Lucara Diamond Corporation, which is known for producing gemstones at Karowe Diamond Mine in Botswana, experienced a decline in their 2020 first quarter (Q1) results compared to 2019 in the same period.

The dual-listed mining company recognised revenue of $34.1 million in Q1 2020 compared to $48.7 million in Q1 2019. A total of 86 178 carats were sold for the three months ended on March 31st 2020, which is a slight decrease compared to 95 053 carats which were sold in the same period last year.

According to the company, the Q1 2020 tender represents the smallest planned sale for the year and reflects a reduction in realised prices in the larger size classes compared to those achieved from the equivalent period in 2019.

Listed on the Botswana Stock Exchange (BSE), Lucara released these figures on Friday last week. The figures also show that the company recorded a net loss of $3.2 million for Q1 2020, resulting in a $0.01 loss per share for the quarter. This compares to net income of $7.4 million for Q1 2019 and earnings per share of $0.02. Lucara attributes a decrease in total revenue as a significant contributor to the company’s performance in the first quarter of 2020.

In the period under review, the Vancouver-based miner’s cash flow from operations totaled $2.4 million, a significant decrease of $8.2 million when compared to cash flow from operations of $10.6 million in Q1 2019. According to Lucara, a weaker pricing environment and a decrease in revenue between the periods largely contributed to the results.

Nevertheless, the company noted in their statement that they are beginning the second quarter with a strong cash position and available liquidity. That is because as at March 31, 2020 Lucara had cash and cash equivalents of $27.4 million, an increase of $16.2 million from December 31, 2019.

The company maintained draws totaling $19.0 million on the working capital facility from Q1 2020. A balance of $31.0 million is available to be drawn for working capital, if required, subsequent to March 31, 2020.

On a much brighter side, Lucara realised strong operations at Karowe Mine in Q1 and delivered results consistent with the 2020 plan and budget. That is because 0.9 million tonnes of ore and 1.2 million tonnes of waste were mined at Karowe. An unbroken 549 carat white diamond of exceptional purity was also recovered (in early February) from direct milling of ore sourced from the EM/PK(S) unit of the South Lobe. The diamond was not made available for sale in Q1.

Lucara president and CEO, Eira Thomas, noted that demand for their product continues to be weak on which the company is focused on cost management and capital discipline through the COVID-19 period. “To this end, Lucara’s capital spending programme for 2020 is now being re-scoped to focus on critical path elements, largely in support of our ongoing, underground expansion programme. As a reminder, Lucara entered this crisis with a strong balance sheet and no debt,” Thomas said, noting that Karowe continues to operate safely and at full production.

Meanwhile, Lucara announced that they have entered (in January 2020) into an unprecedented collaboration with Louis Vuitton, the famous luxury house, and the HB Company, a diamond manufacturer from Antwerp, to manufacture its historic, record setting, 1,758 carat Sewelô Diamond. The diamond was recovered from Karowe Mine in Botswana in April 2019.

“Lucara will receive an upfront non-material payment for the Sewelô and retain a 50 percent interest in the individual polished diamonds that result. Further, 5 percent of all retail sales proceeds generated from this historic collection will be invested directly back into Botswana on community-based initiatives undertaken by Lucara,” reads a statement from the company.