- New deal offers several benefits to Lucara
Lucara Diamond Corp has rekindled its relationship with HB Group, marking a significant turnaround following their fallout last year.
Lucara announced today that it renewed its diamond sales agreement with HB Group, encompassing all qualifying diamonds over 10.8 carats from its 100 percent-owned Karowe Diamond Mine in Botswana. This move comes after Lucara terminated its previous diamond sales agreement with HB Trading in September last year, citing HB’s failure to meet financial commitments.
Under the terms of the new 10-year agreement, Lucara states that the purchase price for its +10.8 carat rough diamonds will be determined based on mutual agreement of the estimated polished outcome. This pricing model incorporates state-of-the-art scanning and planning technology, external benchmarks, and over a decade of Lucara’s special stone sales data. Additionally, Lucara will receive a further sales value uplift based on actual achieved polished sales, minus a fixed margin payable to HB. This innovative pricing mechanism is expected to generate regular cash flow for Lucara, surpassing conventional diamond industry tender prices.
The new deal offers several benefits to Lucara, including consistent cash flow to support the ongoing development of the Karowe Underground Project and potential revenue growth, particularly for large complex rough diamonds. Moreover, Lucara aims to align with the Government of Botswana’s downstream diversification strategy and participate in the polished diamond revenue upside.
Furthermore, the agreement will streamline diamond evaluation, sales reporting, and payment processes, while establishing an efficient and restructured, high-quality diamond supply chain capable of meeting the demands of prestigious brands.
William Lamb, President and CEO of Lucara, emphasised the company’s dedication to stability and sustainability in its operations through its partnership with HB Antwerp. He underscored Lucara’s commitment to delivering exceptional quality and premium value from its diamonds to all stakeholders, regardless of external pressures.
Pending approval from Lucara’s project lenders, the agreement terms will be retroactively effective from December 1, 2023. During this period, Lucara has continued to supply qualifying rough diamonds to HB, supporting its operations and the Karowe Underground Project.
