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Lucara Rough-Supply Deal with HB Back On

February 19, 2024  |  Leah Meirovich
Lucara Diamond Sorting at Karowe rough diamonds 1280 USED 021924

Lucara Diamond Corp. has renewed its rough-supply agreement with Belgian manufacturer HB Antwerp after terminating the deal in September.

The new contract, which spans a 10-year period, is similar to the last agreement, with HB committing to buy all rough over 10.8 carats from Lucara’s Karowe mine in Botswana, the miner said Monday. The purchase price of the diamonds will be based on the estimated polished outcome of each stone, which the pair will determine by using scanning and planning technology. Lucara will then receive a “top-up” fee — a portion of the profit from the sale of the polished stone.  

The deal will provide regular cash flow for Lucara to use on the development of Karowe’s underground project, the company said. It also aligns with the government of Botswana’s strategy to diversify downstream. The government’s recently released budget included $65 million set aside for a 24% stake in HB.

Last year, Lucara ended its rough-supply contract with HB, citing a “material breach of financial commitments” by the Belgian manufacturer following its split from cofounder and managing partner Oded Mansori. In November, Lucara lowered its full-year forecast due to a loss of profit after it stopped its deal with HB and reported it was looking for new supply agreements. However, there were media reports that the Botswana government was pressuring Lucara to reconnect with HB. The Belgian manufacturer also has a supply deal through its connection with Botswana to buy large rough from state diamond company Okavango for a period of five years.

The new contract will need approval from Lucara’s lenders. Following that, it will be effective retroactively from December 1. Lucara has been supplying rough to HB since that date, the miner explained.

“As we navigate through the ever-evolving landscape of the diamond industry, I’m pleased to announce Lucara’s strategic decision to reenter into a long-term supply agreement with HB Antwerp,” said Lucara CEO William Lamb. “This partnership reflects our commitment to ensuring stability and sustainability in our operations. Our collaboration with HB Antwerp presents an opportunity to further enhance our position in the market.”

Main image: Rough-diamond sorting at Karowe. (Lucara Diamond Corp.)

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Lucara Diamond Sorting at Karowe rough diamonds 1280 USED 021924 Lucara Rough-Supply Deal with HB Back On

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