Lucara Hopeful of Second-Half Recovery

RAPAPORT... Lucara Diamond Corp. has indicated the market could improve in the second half as lower rough supply and a recovery in Asia bode well for prices."Though our near-term outlook on diamond prices remains uncertain, global rough-diamond production curtailments, combined with early indications of polished diamond-demand recovery in Asia, provide some optimism that demand will improve in the latter half of the year," the company said last week.The miner also plans to slow the expansion of its Karowe mine to underground mining as it focuses on urgent matters amid the COVID-19 fallout. The project was originally scheduled to ramp up in the third quarter. Revenue from the Karowe mine in Botswana fell 30% to $34.1 million for the first quarter ending March 31, as sales volume slipped 9% to 86,178 carats, the miner said. The average selling price slid 23% to $396 per carat. The decrease in the average price was due to the sale of lower-quality rough compared to the same period the previous year, as well as lower demand as the COVID-19 pandemic forced businesses to close, the company noted. Lucara reported a net loss of $3.2 million for the period, compared with a profit of $7.4 million in 2019."Declared an essential service by the government on April 2, Karowe continues to operate safely and at full production," Lucara CEO Eira Thomas said. "Demand for our product, however, continues to be weak and Lucara is necessarily focused on cost management and capital discipline through this period of uncertainty."Lucara recovered 91,536 carats during the quarter, including 190 diamonds over 10.8 carats, eight of which weighed more than 100 carats, the company noted. In February, the miner unearthed an unbroken white diamond of "exceptional purity" weighing 549 carats from the high-quality EM/PK(S) south lobe. That stone was held back from tender during the quarter.The miner's second-quarter tender, originally due to take place in mid-May, has been postponed. Lucara plans to reschedule the tender after evaluating market conditions. Due to travel restrictions in Botswana, the government has given the company special permission to hold the tender in Antwerp.Lucara has suspended its full-year outlook until it can assess the full impact on its operations and production, which may take several months, as the situation "remains highly uncertain," the company noted.Image: The Karowe mine. (Lucara Diamond Corp.)