Lucara advances its Clara digital sales platform

Lucara Diamond’s (TSX-LUC) Karowe mine in Botswana continues to turn out enormous diamonds.

The latest, in April, weighed in at 1,758 carats.

While the diamond was recovered unbroken, the stone is not all gem quality. Instead, it’s characterized as near-gem of variable quality, including domains of high quality white gem.

Karowe previously turned out the 1,109-carat Lesedi La Rona gemstone, which sold for US$53 million.

Lucara expects to recover between 300,000 and 330,000 carats of diamonds this year at Karowe and forecasts revenues at $170-$200 million.

In the first quarter, Lucara reported a net income of US$7.4 million on revenues of US$48.7 million, compared with a year-earlier loss of US$7 million on revenues of US$25.4 million. The average price of diamonds sold during the period was US$512 per carat.

Clara update

Lucara has also progressed its Clara digital diamond sales platform, acquired in early 2018.

Clara had its inaugural sale in late 2018, and two sales of rough diamonds totalling $1.4 million were completed in the first quarter of 2019.

Lucara CEO Eira Thomas explained at The Northern Miner’s recent Canadian Mining Symposium in London that the platform is meant to create a more efficient way to buy and sell diamonds.

“The way we transact diamonds hasn’t changed in over a hundred years. It’s very inefficient, it’s very inflexible,” Thomas said.

Clara sells rough diamonds individually, based on polished characteristics and specific demand.

“All of our test work has demonstrated unlocking throughout the value chain – some to the producer, some to the manufacturer – of about 18% to 23% over what we are currently achieving. So it’s a significant win from a cost perspective and a margin perspective.”

Thomas said the platform had 10 customers at the time – large integrated jewelry and manufacturing houses – and plans to continue to add buyers. The company also intends to open up the platform to sales from other diamond miners before the end of 2019.

“Clara is a volume story. We believe that our fellow producers will see the immediate benefits of selling on Clara. Not only will they realize higher prices for their diamonds, but they will be selling their diamonds basically in real time. Today, producers only sell their diamonds either every five weeks or in the case of Lucara, once a quarter because we’re a relatively small producer.”

The platform also provides assurance to customers about where their purchase came from via digital tracking.

“The diamond marketplace has been deliberately opaque for a very long time,” Thomas noted. “Clara has the ability to bring transparency. We are tagging diamonds as they’re produced in real time at the mine sites and are able to then follow them through this technology enabled by blockchain right through the value chain, ultimately to the point of final retail sale to that consumer.”

— This article originally appeared in the June 2019 issue of Diamonds in Canada magazine.