‘Rather than raise capital to fund the original Merlin development, we will focus on a lower-cost pathway to development using existing resources’
THE slump in diamond prices has been tough on all the sector’s miners, but hardest hit are its smaller players. Perth-headquartered Lucapa Diamond Company is no exception. To its credit, however – and that of its now-departed CEO Stephen Wetherall – the company is debt-free.
In July, just as Wetherall announced his resignation after nine years at the helm, the company paid a final instalment on A$30m in debt. In addition, the firm’s Lesotho-based subsidiary Mothae Diamonds closed R7.3m in debt with the South African government’s Industrial Development Corporation.Yet this wasn’t enough to save Lucapa’s Merlin Diamond Project in Australia, at least not as per a 2022 scoping study that had planned on a A$69m outlay. Selby announced in November the project would be shelved until lower cost options were found. Lucapa paid A$8.6m for Merlin in 2021 with a plan to produce about 2.1 million carats over a 14-year life.
It makes perfect sense for Lucapa to tighten its belt while the diamond market finds its feet again. Better, perhaps, to focus on gifts already in hand? Two diamond recoveries within a month at Lulo, one a 235-carat piece and the Angola mine’s second largest since opening in 2015, has given Selby encouragement to throw “even more resources” into Lulo’s exploration in an effort to “find the primary source”.
It will be interesting to see whether Selby revisits Wetherall’s strategic musings over Lucapa’s long-term future which included the question of whether to sell its mines in order to recapitalise (and reinvent) the firm as a 100% focused exploration play.
LIFE OF NICK
Selby is a veteran of the Southern African diamond mining scene having started his working life at SouthernEra Resources before joining Kimberley Diamond Company and Gem Diamonds after that. Lucapa employed him in 2014 as chief operating officer. He was promoted to executive director three years later and then stood in at Lucapa following the departure of Wetherall in July. After a few months, Lucapa’s board appointed Selby CEO and that was that for the hands-on Saffer who schooled at Wynberg Boys’ before qualifying in extraction metallurgy from Wits Technikon.