Lucara Diamond Corp., a mining company headquartered in Vancouver, British Columbia, has announced the renewal of its partnership with Antwerp-based HB Group, signaling a revival of collaboration between the two entities.
The renewal of the 10-year sales agreement comes less than six months after Lucara terminated their previous arrangement, which was inked in November 2022.
Under the renewed agreement, HB Group will once again be the exclusive purchaser of all rough diamonds weighing 10.8 carats or larger sourced from Lucara’s Karowe mine in Botswana. The pricing structure remains consistent with past agreements, with the price determined based on an estimated polished outcome, augmented by a “top-up” payment to Lucara, minus a fixed margin paid to HB Group.
Lucara emphasized that this pricing mechanism is anticipated to provide regular cash flow, surpassing conventional diamond industry tender prices, thereby supporting the company’s ongoing underground expansion project at the Karowe mine, projected to cost around $683 million.
The decision to revive the partnership comes at a crucial juncture for Lucara, which faced a challenging year in 2023 with a 17 percent decline in sales compared to the previous year. The company recorded a net loss of $20.2 million in 2023, a significant contrast to the $40.4 million net income reported in 2022.
In response to the renewed agreement, Lucara’s President and CEO, William Lamb, expressed satisfaction, stating, “As we navigate the dynamic landscape of the diamond industry, I am pleased to announce Lucara’s strategic decision to re-establish a long-term supply agreement with HB Antwerp. This partnership underscores our commitment to ensuring stability and sustainability in our operations.”
The collaboration between Lucara and HB Antwerp initially began in July 2020, with HB Group agreeing to purchase and process all rough diamonds weighing 10.8 carats or larger from Karowe mine for the remainder of the year. Subsequently, Lucara announced a 24-month extension to the partnership in April 2021. However, in November 2022, Lucara terminated the 10-year sales agreement, citing HB Group’s “material breach of financial commitments” in September 2023.
