The oubreak of the coronavirus has led to uncertainty concerning Lucara Diamond's next rough diamond tender, prompting the Government of Botswana to already give Lucara its permission to hold their next scheduled tender in Antwerp, if necessary. The next quarterly tender isscheduled to take place in mid May 2020, according to a statement from the Canadian miner.
De Beers also cancelled its third rough diamond sale (sight) of 2020 in response to the logistical difficulties after the government in March implemented flight restrictions that prohibited their customers from traveling and prevented the shipment of goods to customers’ international operations. Lucara as well has now said that since travel restrictions relating to COVID-19 are expected to remain in place for an unknown period of time, the Company's ability to complete tenders in Botswana may be impacted. "As a temporary measure, the Government of Botswana has granted Lucara permission to hold diamond sales in Antwerp, Belgium if required."
Lucara completed its first of four planned diamond tenders for the year on March 5, and achieved sales prices within 1% of forecast. Achieved prices were in line with the pricing environment that prevailed in early-mid 2019 and are consistent with their 2020 Outlook. A total of 104 companies attended the sale in Gaborone. At that tender, sold 83,610 carats, including 37 single stones greater than 10.8 carats in size. A total of 4 stones were sold for in excess of $1 million, including 2 that sold for more than $2 million. All goods prepared for sale were sold.
The miner also notes, however, that diamond prices have since deteriorated in response to weaker demand as COVID-19 has continued to spread globally. And while the Karowe Diamond Mine, situated in north central Botswana remains fully operational, the full impact of COVID-19 on Lucara's operations and production outlook for 2020 remains highly uncertain. As a result, the company has suspended its 2020 guidance until further notice. They note that Clara, Lucara's web-based digital sales platform for rough diamonds, which sells diamonds under 10.8 carats in size, remains operational. A total of 6 sales have been transacted on Clara in 2020, with 25 out of 32 total on-boarded manufacturers participating, the highest participation rate to date. A total of just over 1,800 carats and 821 diamonds have been transacted.
“The global diamond industry is experiencing the widespread impacts of COVID-19 throughout the value chain, manifested as fewer sales, weaker pricing and production curtailments at several mines,” said Eira Thomas, Lucara CEO. "Though the Karowe diamond mine continues to operate according to plan, and the first quarter 2020 sale achieved results within expectations, the full impact of COVID-19 on our business remains uncertain," she added.