…Lucapa mines excel despite lower dollar per carat average in Q4
Silence Charumbira
MASERU, Lesotho – Lucapa Diamond Company says Mothae and Lulo diamond mines delivered solid performances in the fourth quarter (Q4) ending 31 December 2023.
Mothae mine, in the highlands of Lesotho, performed well despite a lower dollar per carat average, Lucapa says in a statement on January 25.
Managing Director, Nick Selby, says Mothae’s performance positively impacted on the overall diamond price for the year. On the other hand, the company’s Angola mine, Lulo, also enjoyed some “high-value recoveries”.
Lucapa pleased with Mothae and Lulo’s performance
“Both mines delivered a solid performance against processing and production targets in Q4 and we are pleased with the full year results which saw group guidance achieved. Mothae performed well despite experiencing a lower dollar per carat average in Q4, which impacted its overall diamond price for the year. Lulo had a good run which saw its high-value recoveries attract firm prices at tender,” Selby said.
At the beginning of Q4, Lucapa said, mining continued in the high-grade lizeria (floodplain) areas. In October, two large Type IIa diamonds were recovered from the lizerias, weighing 123 carats and 208 carats respectively. Towards the end of the Quarter, as the wet season intensified, mining shifted to the terraces where access was easier.
In November, a 235 carat Type IIa diamond was recovered from the terrace areas at MB550. This diamond is Lulo’s second largest recovery since commercial operations commenced in 2015. Toward the end of the Quarter, heavy rain affected mining and treatment but had little impact on overall production. Lulo finished the final quarter of the year strongly with the recovery of 7,640 carats of diamonds including the two +200 carat diamonds.
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Lucapa fetches US$15.7 million from Lulo gems
“Two exceptional stone tenders were conducted during the quarter in Luanda by Sodiam E.P. The first, in October, featured seven high-value diamonds ranging from a 10-carat pink to a 180-carat white Type IIa. The parcel, which also contained a 66-carat pink fetched a total of US$15.7 million (A$24.5 million) at an average price per carat of US$29,401.
“Following the recovery of three +100 carat diamonds in October and November, a second tender was conducted in early December. Four high-value diamonds weighing 41 carats, 123 carats, 208 carats and 235 carats sold for US$17.1 million (A$26 million) for an average of US$28,000 per carat. One run-of-mine sale of 4,508 carats was held in the final quarter bringing the total sales for Q4 of US$34.9 million at an average price per carat of US$6,170 for the period. At the end of Q4, Lulo had 6,040 carats in inventory which will be sold in Q1 2024, the company says.
Mothae set new annual records for tonnes mined and processed, carats recovered, and average price per carat achieved. All Q4 performance targets were achieved at Mothae the company adds.
“The mine processed 399,500 tonnes in the period which produced 8,314 carats. These metrics were 49% and 47% higher than the previous corresponding period. However, the quality of the diamonds was lower than expected, leading to an average price per carat of US$541 in Q4, meaning Mothae missed price per carat guidance for the full year.
The diamond price achieved was impacted by the mining of lower-value areas and the absence of high-quality Type IIa diamond recoveries. Lucapa’s technical team and Mothae’s management are investigating the cause of the low-value recoveries. There were three run-of-mine sales during Q4 with 10,947 carats sold into the Safdico partnership agreement. At Quarter end, Mothae had inventory of 1,872 carats with the first sale scheduled for January 2024.”
Mothae mine 2023 Guidance
Mothae met full year guidance in all categories except price per carat mainly due to the absence of quality Type IIa diamond recoveries during Q4. Amid the softening of diamond prices and an uncertain capital market environment, in Q4, the decision was announced to scale back the original Merlin Diamond Project Feasibility Project in favour of a smaller scale and lower capital development study.
The alternative study is examining a lower-cost pathway to developing the mine and will investigate, among other things, using existing resources such as the trial mining plant and front-end scrubber to get Merlin into production. As the smaller scale development option uses some of the existing modelling and key workstreams, work is well advanced. During Q4, the installation of a groundwater monitoring network of 17 boreholes was completed.
Tightening economic conditions imposed by central banks and a surge in inflation continues to impact discretionary spending on items such as diamond jewelry, however according to media reports at the end of 2023, there are signs the US market is recovering, however the Chinese market remains slow.
The overall diamond price index began to trend upwards towards the end of 2023 coinciding with two major events in the global diamond trade. The first was the halting of rough diamond imports to Indian diamond manufacturers for two months to ease oversupply and stabilise prices from October to December. The second newsworthy event to occur was the EU’s decision to phase in restrictions on Russian diamond imports in 2024.
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