Canadian Mining Journal


DIAMONDS: Lucara has two-pronged growth plan, CEO Eira Thomas says

LONDON, U.K. – The following is an edited excerpt of an interview with Lucara Diamond president and CEO Eira Thomas, carried out by Dean MacPherson, head of business development for global mining at TMX Group, at The Northern Miner’s Canadian Mining Symposium held at Canada House in London on May 22, 2019. 

Dean MacPhersonTell us about Lucara. These are exciting times. 

Eira Thomas: I’m very excited about where Lucara is going. We have come through a big year of transition for the company, a kind of an evolution. We’ve been in production since 2012, so we’re in year seven.

We’ve got a great asset in a great jurisdiction. Our mine is located in Botswana, and we have become well known as one of the world’s foremost producers of very large, high value diamonds.

And that has been a real advantage for Lucara as we start to think about where we want to go. We have a product that is unique. It’s well sought after and it somewhat insulates us from some of the vagaries and volatility we see in the diamond market, particularly for small diamonds, which have been under some pressure in the last couple of years.

At Lucara, we’re really focused on a couple of key things. One is that we’re in the middle of a feasibility study looking to expand our mine underground. That has the potential to extend our mine life out to 2036 and beyond. The second piece of our business strategy is focused on a new business that we acquired about a year ago, which we call Clara Diamond Solutions.

This is not a mining opportunity, but it is a diamond opportunity and it is a new technology. It’s a digital sales platform that has the potential to completely transform the diamond supply chain. So that represents a significant growth opportunity for our company, as well.

Those are two immediate focus areas, and we think this is a great time to be doing this.

DMCongratulations are in order, because just a couple weeks ago, there was a press release about your recent discovery, the second largest uncut. Of course, the stock price reacted.

ET: Yes, we’re really pleased. One of the big differentiators for Lucara as a company and as a strategy has been to invest and incorporate innovation and technology into our mine design, and into our approach, in general.

We were the first diamond mining company to incorporate XRT diamond recovery technology. George Read at Star Diamond talked about it in his presentation [during the Canadian Mining Symposium]. It’s something that they obviously look to incorporate as well for Star, and what’s important about this technology is that it has allowed us to recover these very large, high value diamonds without damaging them, and, of course, that’s very important for value preservation.

So our mine in four years has recovered two stones greater than 1,000 carats. The first one was the historical Lesedi La Rona, which weighed in at 1,109 carats and was purchased by Laurence Graff in 2017. He has recently finished polishing it into a 302-carat, modified, princess-cut diamond, which is the highest clarity, highest quality diamond ever to be certified by the GIA.

And then most recently, the 1,758 carat, which topped the Lesedi that you just spoke about, although this one doesn’t look as pretty as the Lesedi, and we’re the first to admit that. It does have some nice white components.

We’re working now to analyze the stone and understand its full potential. But we think we’ve got at least a “400 carater” that will generate significant revenue for the company.

DMThis is obviously an example of technology paying off. Certainly over the past two years, innovation and technology have become buzzwords in mining, as investors look for more from mining companies. You touched on Clara. This is probably one of the better examples of a mining company adopting technology aggressively, not only to help existing operations, but taking it on as a new revenue stream. 

ET: We’re very excited about Clara. There are two key aspects to Clara. One is around creating a more efficient marketplace. Fundamentally that’s what it’s about. The way we sell diamonds or transact diamonds hasn’t changed in over 100 years. It’s very inefficient, it’s very inflexible.

So Clara is positioned to change that, but the other piece is really around provenance. Consumers today really care about what they’re consuming and where it comes from, and how it was produced.

The diamond marketplace has been deliberately opaque for a very long time. And Clara has the ability now, and really one of its primary purposes is to bring transparency. So we are tagging diamonds as they are 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.

DMIt has that cost efficiency component, as well.

ET: Very much. We can unlock significant value. All of our test work has demonstrated unlocking throughout the value chain — some to the producer, some to the manufacturer — of 18–23% over what we are achieving throughout the supply chain. So it’s a significant win from a cost perspective and a margin perspective. And then it also has this advantage of giving assurance to the consumer.

DMWhat is the rollout timeline for Clara? 

ET: We’re rolled out. We acquired the business a year ago and we put it together with Lucara. That’s when I took over as CEO, and we have been busy commercializing it.

And we’ve now had four sales. We’re ramping it up slowly.

We have got 10 customers buying on Clara. These are the very large, integrated jewellery and manufacturing houses around the world.

And the feedback we’re getting is overwhelmingly positive. So it is our intention before year-end to open up Clara to our fellow producers, and really for Lucara — that’s a big part of our business strategy.

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, current producers only sell their diamonds either every five weeks, or in the case of Lucara, we sell our diamonds once a quarter, because we’re a relatively small producer.

So there are a lot of benefits that come through selling on Clara.

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