Eira Thomas, President & CEO,


"The past 18 months have been difficult due to the pandemic, and Lucara had to make some critical decisions in how we sell our diamonds."

Can you highlight some developments in Lucara over the past two years?

The past two years have been an incredible period of change for Lucara. In 2019, the company published a feasibility study looking at the potential to expand our mine underground. We recently announced the completion of a facilities agreement of a US$220 million debt facility, as well as the completion of an additional US$30 million equity raise. Both these financings were designed to supplement cash flow from operations to support approximately US$500 million capex expansion at Karowe. We are anticipating a busy second half of 2021 as we move forward with full underground development.

The past 18 months have been difficult due to the pandemic, and Lucara had to make some critical decisions in how we sell our diamonds. We entered into a 24-month committed supply agreement with Europe’s largest manufacturing company, HB Antwerp. Our new supply agreement with HB creates true alignment between the producer and manufacturer for the first time. Rather than Lucara selling our +10.8 carat rough diamonds at the mine gate, we are putting this most valuable part of our production (accounting for ~70% of annual revenues) into manufacturing with HB and receiving final polished prices less a fee and the costs of polishing. HB’s fee is based on the final polished price achieved so we are both motivated to maximize the value of each and every diamond.

Our 100% owned secure web-based digital marketplace, Clara, also continued to develop positively, and interest in the platform increased by approximately 180% during the pandemic. We are using technology to create a much more efficient transaction between the buyer and seller. In doing so, we are unlocking significant value for both participants and providing assurance on diamond provenance, which is increasingly important to the consumer. Through our exclusive partnership with Sarine Technologies, Clara uses proprietary analytics combined with cloud and blockchain technologies to completely modernize the diamond supply chain.

To what extent did the pandemic impact Karowe’s production?

Diamond mining was declared essential by the Botswana government, and we continued to produce at full capacity but made a deliberate decision not to sell our large diamonds into the pricing weakness. We instead negotiated the offtake agreement with HB Antwerp. The polished diamond market was not as negatively impacted as the rough diamond market, so it made sense to put our diamonds into manufacturing to sell polished instead. By Q4 2020, rough diamond prices had rebounded quite strongly, with the robustness continuing into 2021.

What is the timeline for the underground development at Karowe?

We will sink the shaft over the next two to three years and ultimately start our lateral underground development. By the time the open pit is nearing its natural end of life in 2025/2026, we will be ready to deliver the ore from the underground, feeding the mill at the same production rate in terms of tonnes, that we are today.

Is the demand for synthetic diamonds a threat to the mined diamonds market?

The one is not a threat to the other, and we believe these markets can and will continue to co-exist. Technology in manufacturing synthetic diamonds continues to improve, driving costs down and decreasing the product's price, so they are not considered a store of value. There is also a false narrative that synthetic diamonds are more environmentally friendly. Studies from the Natural Diamond Council have demonstrated that in general, naturally mined diamonds have a CO2 footprint which is three times less than those of laboratory-grown diamonds. Moreover, there are significant, tangible socio-economic benefits generated by the mining industry, including high paying jobs and local business development which are critically important to economic development in the countries where these mines are operated, including Botswana and Canada.