Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

As Canada's Lucara Diamond seeks new mines, tech fuels growth

Published 05/01/2019, 01:20 PM
Updated 05/01/2019, 01:20 PM
© Reuters. FILE PHOTO: A 1,758 carat diamond recovered from from Lucara Diamond Corp.'s Karowe Diamond Mine in Botswana is pictured in this handout photo

© Reuters. FILE PHOTO: A 1,758 carat diamond recovered from from Lucara Diamond Corp.'s Karowe Diamond Mine in Botswana is pictured in this handout photo

By Nichola Saminather

TORONTO (Reuters) - Lucara Diamond Corp, which has recovered two of the largest diamonds in recent history, is turning to technology to ensure growth in an industry where new mine acquisitions remain elusive.

For the Vancouver-based junior miner, that means using advanced technology like sorting based on atomic density to boost value from its Karowe mine in Botswana, and also diversifying away from mining into an online diamond sales platform.

"Diamond mines are extremely rare... we haven't been able find the perfect asset, but we continue to look," Lucara Chief Executive Eira Thomas said in an interview. "In the meantime, we thought it was important to establish a growth agenda."

While bigger companies like Anglo American's De Beers AK Alrosa PAO invest in advanced technologies, Lucara is "by far the industry leader" among the remaining smaller miners, said independent analyst Paul Zimnisky.

"Lucara has one depreciating and depleting asset, so they do need to look long term," Zimnisky said. "They're carving out a unique niche for themselves."

X-Ray transmission (XRT), which Lucara began using in 2015, enabled record diamond recoveries last year, including 33 stones over 100 carats.

It measures ore's atomic density to identify diamonds early, allowing recoveries of larger stones, while traditional mining requires multiple crushing and concentration stages.

"Previously, we could see the diamonds were broken... but we had no idea what the value loss associated with that was," Thomas said. "Did we break a 50-carat diamond or a bunch of 10-carat diamonds? We really couldn't tell."

When Lucara began production at Karowe in 2012,it estimated the diamonds would be worth $200 to $250 a carat, Thomas said. With the XRT technology, they've been worth as much as $600 per carat, she said.

Last week, Lucara said it had recovered a 1,758-carat diamond, the biggest in recent history.

Lucara shares have gained 10 percent this year, outperforming most sector peers.

The miner has also begun using its online sales platform Clara, doing four scheduled sales to eight manufacturers this year.

Unlike traditional in-person tenders, where manufacturers bid on assortments of similar diamonds from producers, Clara allows manufacturers to place detailed orders.

They are matched to stones in the system, with Lucara earning the difference between the bid and ask prices.

Lucara's first sale in January generated revenue of $660,865, but the company didn't provide details of the other sales.

The company aims to sign up at least one producer this year, and will begin continuous sales once the system is fine-tuned, Thomas said.

Clara won't completely replace traditional tenders, which Lucara itself uses to sell diamonds under 1 carat and over 15 carats, Thomas said. The cost to scan smaller diamonds makes it uneconomical, and larger stones have too many potential outcomes, she said.

Clara "opens up our universe of customers, who, right now, have to fly to Botswana to buy our diamonds," Thomas said. "We envisage a world where people buy diamonds from all over the world sitting at their desk."

© Reuters. FILE PHOTO: A 1,758 carat diamond recovered from from Lucara Diamond Corp.'s Karowe Diamond Mine in Botswana is pictured in this handout photo

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.