Lucara Diamond looks to 2021 market revival as $514m Karowe project awaits approval

Eira Thomas, CEO, Lucara Diamond Corp.

LUCARA Diamond Corp. has forecast improved conditions in the global diamond market during 2021 as it looks to approve the $514m extension of Karowe, its Botswana mine, in the second half of the year, as well as begin the process of financing it.

The Toronto-listed miner said revenue for the current year would be $180m to $210m compared to $125.3m in the 2020 financial year which was stunted by price contraction in the diamond market amid Covid-19 travel restrictions.

Sales have been forecast at between 350,000 to 390,000 carats compared to 373,748 carats in sales last year (2019: 411, 732 carats).

The combination of lower sales volumes, and depressed pricing – Lucara fetched an average price of $335 per carat last year compared to $468/carat in 2019 – spelled bad news as the company slumped to 0.01 cent/share basic full year earnings loss (2019: +0.02/share).

Eira Thomas, CEO of Lucara, said last year represented an annus horribilis for the diamond market which she said was “incredibly challenging”. The firm suspended sales of diamonds worth 10.8 carats or more believing it would be better to release stock in better conditions.

By the fourth quarter of last year, pricing had revived slightly such that Lucara realised a price of $402/carat. Thomas said 2021 looked considerably better for diamonds. “The diamond industry begins 2021 with a healthier supply-demand balance than it has had at any stage in the past five years,” she said.

“Looking ahead, supply curtailments and a pick up in consumer demand are expected to support a continuation of a stable, positive price trend in both the rough and polished markets,” she added.