LUCARA Diamond Corp. last week signed a ten-year sales agreement with HB Trading in which it will supply the manufacturer with diamonds of 10.8 carats and above mined from its Karowe mine in Botsana until end-2032.
This builds on two years of diamond supply between the parties. Small refinements were made to the agreement. Diamonds contained in the deal typically comprise 60% to 70% of Lucara’s production annually.
In terms of the agreement, diamonds are sold to HB Group at prices based on the estimated polished outcome of each diamond. This is determined through state-of-the-art scanning and planning technology, said Lucara.
A ‘true-up’ is paid on actual achieved polished sales less a fee and the cost of manufacturing. Lucara said that the value of the agreement was that it achieved revenue transparency for the majority of its production, aligned producer with manufacturer, and delivered “superior prices”.
Eira Thomas, CEO of Lucara also said the agreement stabilised prices and “demonstrably” grew demand. “For the first time in our ten-year history, we have insight on what becomes of each and every +10.8 carat rough diamond produced from our mine,” she said.
Prices have moderated lately, however – but the market remained “positive”, Thomas said in August.