Sourcing

Lucara, HB Group Partnership Revived

SourcingFeb 22, 2024

Lucara, HB Group Partnership Revived

It is another 10-year sales agreement in which all the larger rough recovered from the Karowe mine will go to HB Group for manufacturing.

813-carat “Constellation” diamond in rough form
The 813-carat “Constellation” diamond, recovered from Lucara’s Karowe Diamond Mine in Botswana. Lucara has revived its partnership with manufacturer HB Group, less than six months after calling off their previous 10-year big-diamond deal. (Photo courtesy of Lucara Diamond Corp.)
Vancouver, British Columbia—Mining company Lucara Diamond Corp. and Antwerp-based HB Group are getting back together.

Earlier this week, Lucara announced that the two companies had signed another 10-year sales agreement, less than six months after severing the previous agreement inked in November 2022.

As with the companies’ past agreements, the new diamond sales agreement means HB Group will purchase all 10.8-carat or larger rough diamonds that come out of Lucara’s Karowe mine in Botswana.

The price will be based on an agreed-upon estimate of the diamonds’ polished outcome with a “top-up” paid to Lucara based on how much the polished actually sells for (if applicable), less a fixed margin paid to HB Group. 

“This pricing mechanism is expected to deliver regular cash flow for this important segment of the company’s production profile at better-than-conventional diamond industry tender prices,” Lucara said.

The cash flow will help the mining company continue to fund Karowe’s underground expansion, which is expected to cost an estimated $683 million.

 Related stories will be right here … 

The revival of the deal follows a rough year for Lucara. 

Sales fell 17 percent year-over-year in 2023 amid a slowdown in the diamond market. The company recorded a net loss of $20.2 million, compared with net income of $40.4 million in 2022.  

Commenting on the new agreement, Lucara President and CEO William Lamb said, “As we navigate through the ever-evolving landscape of the diamond industry, I’m pleased to announce Lucara’s strategic decision to re-enter into a long-term supply agreement with HB Antwerp.

“This partnership reflects our commitment to ensuring stability and sustainability in our operations.”  

Lucara and HB Antwerp first entered into a sales partnership in July 2020, agreeing that HB would purchase and manufacture all Karowe’s 10.8-carat or larger rough for the remainder of the year. 

Lucara announced a 24-month extension to the partnership in April 2021. 

In November 2022, the two entered into a 10-year sales agreement, the agreement Lucara then terminated in September 2023 citing HB Group’s “material breach of financial commitments.” 

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