Canadian Mining Journal's “Seven Questions” series features informal interviews with accomplished leaders in the mining industry.
This time, we spoke with Eira Thomas, president, CEO and co-founder of Lucara Diamond (TSX: LUC), which recently approved a US$534-million underground expansion of its Karowe diamond mine in Botswana, known for producing large, high-value diamonds.
Thomas has more than 25 years of experience in the mining industry focused on diamonds (Aber Diamond, Stornoway Diamond and Lucara) and gold (Kaminak Gold and Tectonic Metals). In addition to being part of the exploration team that discovered the Diavik diamond mine, she was named one of the World Economic Forum's “Young Global Leaders” in 2008.
CMJ spoke with Thomas about innovation in the diamond market, Lucara's pandemic response in Botswana, and how the mining sector can attract a more diverse workforce.
Canadian Mining Journal: We've seen a strong recovery in the diamond market this year after a pretty dark period last year at the start of the pandemic. How are you feeling about demand for mined diamonds as you prepare to invest US$534 million in an underground expansion of Karowe?
Eira Thomas: We're feeling really good about it, we think it's a great time to be looking at the diamonds space in general. We've seen a strong, V-shaped recovery in rough diamond prices and that positive trend has continued through the first half of the year and it looks like those prices will continue to be sustained. We've spent more than $45 million on the project to date so we're busy sinking shafts at the site and we'll be looking to invest more than US$534 million over the course of the next five years. Most of that will come from cash flow from our existing open pit operations. The remainder of that capital has come from a debt financing that we announced recently that will give us an additional US$220 million.
In terms of the recovery of diamond prices, we're seeing strength now all across the board. There were certain pockets of goods (such as large stones) that were trending favourably early, but now we've seen decent demand improvements across all colours and qualities and sizes. That's encouraging because it speaks to the overall market depth having really improved. And we are seeing good prices for larger goods as well.
CMJ: The expansion is expected to extend Karowe's mine life to 2040 at least. Considering that Lucara is a single-asset company, longer-term, how are you planning to add value for shareholders?
ET: Karowe is our flagship asset, but we have another business in Lucara and that is Clara, our secure, web-based digital marketplace for the transaction of rough diamonds. Clara really has done very well throughout the pandemic, particularly as there have been so many travel restrictions the diamantaire community haven't been able to travel to buy diamonds. Clara has really filled an important gap and we saw our customer base increase from under 20 participants prior to the pandemic to more than 88 buyers on the platform today. So we definitely see the demand for an innovative, more efficient and transparent marketplace for the transaction of rough diamonds.
Demand has now outstripped the supply that we can provide from just Karowe alone so we are opening up the platform to sales of third-party goods. Our real ambition is to sign on with a larger producer with more of a committed long-term, larger supply of rough diamonds and we're actively negotiating with a number of different players on that front. We are hopeful that we'll make progress on that before the end of the year. In the meantime, we are adding incremental third-party supply each month, mostly from the secondary market. At the present time, we don't get a lot of credit for Clara, but as we start to increase third party supply, the value of that for Lucara will start to be evidenced.
We see Karowe and Clara as our main two platforms, but now that the underground is financed and fully sanctioned, we certainly are turning our minds to the opportunity of M&A. We continue to look at that universe very carefully and we would love to add another diamond mine into the portfolio. We would only do so if it is accretive to our existing operations, but that is now something we have more time to look at.
CMJ: Tell me about Lucara's Covid-19 response and how the company has responded to local needs around the Karowe mine site.
ET: Mining was declared an essential service early on so we have remained fully operational throughout the pandemic, but we moved quickly to implement some very strict controls to ensure we could keep our people on the ground safe. It has been a challenging period of time. The government of Botswana has only recently come out of a state of emergency and the availability of vaccines in-country is still low. So we continue to be very very vigilant. Thankfully, the roll-out of vaccines is starting to happen. Around 50% of our workforce is now vaccinated with at least one dose and we're hoping by the end of November everyone will have received at least one dose. We'll be feeling a lot better about things at that point, but in the meantime, we've been able to demonstrate that our operating protocols (distancing, hygiene, minimizing people onsite) have worked.
In addition, we worked hard to supplement the government's efforts – they set up a Covid fund and we contributed to that. We also worked directly with our communities of interest to address their major concerns around the crisis – whether it be delivering food hampers to those in need or setting up facilities to react and respond to the increase in gender-based violence, which was a real issue in some of the communities surrounding the mine site.
CMJ: What are the closest communities to Karowe and can you tell me a bit more about the company's response to domestic violence?
ET: The closest community to us is the town of Lethlekane which is more than 20,000 people. Most people living there either work for us or they're working at the Orapa diamond mine which is another 40 minutes down the road, operated by Debswana. What we've seen and this has been observed in many places where you have people required to work from home, people who simply cannot work because their business or place of work has been shut down, or people have lost their jobs, there's an increase in stress. There have been many incidents of increased gender-based violence as a result, so we have been involved in building shelters for women and children. We've also really been working hard as a leadership team our team in Botswana travelling around to our communities to increase awareness around gender-based violence. We think that's a really important piece to all of this – getting those conversations going to start tackling this problem, which has really been exacerbated by the stresses of the pandemic. Lucara is involved with 19 different communities in and around the mine site so we hold regular kgotla (community) meetings with each community, and we have a sustainability team based in Lethlakane that travels around and engages with them to understand their specific needs.
One of the ways Lucara has been successful with this engagement is through these kgotla meetings and just being there to listen and hear the specific needs that have emerged as a result of the Covid crisis and otherwise. All of our community based sustainability programs are run out of Botswana: 99% of our workforce is from Botswana and the sustainability team is 100% from Botswana.
CMJ: Speaking of the workforce, I wanted to ask you specifically about the challenge of attracting a more diverse talent to the mining industry in general. The mining sector of the future needs to compete for talent with other industries that are seen as more technologically advanced and that are more diverse. How do you think that mining can become a more welcoming place and attract the smart young tech-savvy people it needs?
ET: I think the industry is painted in a light of being quite antiquated and backward and reliant on old systems and technologies but it has long been in the process of changing. To the contrary, mining is a very technologically intensive and we have been working to innovate and incorporate new technologies into our business plans and strategies. There's huge opportunity for young innovators and for people of all skills and interests within the mining space. There's an outdated view that this industry is still about picks and shovels and we need to do a better job of explaining that we are using some of the most technologically advanced equipment and systems on the planet to drive down costs and create longer-term sustainable businesses. Lucara for example was the very first diamond mining co to incorporate XRT technology as our primary diamond recovery method, which has been a game changer for our business. It's allowed us to recover our largest, highest-value diamonds without damaging them. We were then the first diamond mining company to launch a secure, web-based digital marketplace for the transaction of rough diamonds. So I think the mining industry as a whole is looking to technology to make their business more efficient, more reliable and more sustainable.
When it comes to diversity, there's no question that the industry has lagged. We've made some progress, but to make this industry more attractive to younger generations and more diverse talent pools, we need to do a better job of demonstrating our willingness and our desire to add those elements as part of our business priorities. I often get asked how is it that Lucara has an executive team that's 85% female and a general workforce that is 36% female, which is well above the average for mining. A lot of it is around creating that inclusive environment where people feel like they have options and opportunities within the organization -- not only in the job they have today, but developing talent and providing some sort of sightline into future opportunities.
CMJ: Tell me about your involvement with Tectonic Metals (TSXV: TECT), an Alaska-focused gold junior that you founded with your colleague from Kaminak Gold, Tony Reda.
ET: We're really excited about Alaska because we think that a lot of the learnings that this team gained from working in the Yukon can be directly applied to Alaska. We feel that there's a similar geological opportunity that is relatively underexplored compared to the efforts that have been made in the Yukon in the same belt of rocks. The second real opportunity has emerged around the opportunity to partner in Alaska with local First Nations. I think it was our time in the Yukon and our interactions with our local communities of interest there including several First Nations groups that really galvanized our commitment around creating a company that the key to success was going to be around collaboration and partnering with local stakeholders to set out that common objective. The Doyon are our largest shareholder and they've been a terrific partner. We just announced the acquisition of the Flat gold project which we're super excited about – this is a big, early stage exploration opportunity in a really exciting area with a strong geological endowment and once again we'll be partnering with our largest shareholder.
CMJ: The pandemic has been the ultimate disrupter for businesses and for people in their personal lives. In what ways has it changed your life for the better?
ET: For me it's really been about trying to get a better balance. That sounds a bit odd when we've all been locked up in our houses and nothing about the pandemic is really screaming balance. But when you're a busy executive, single mother of two kids, live half your life on a plane, it's a real challenge to get the balance right. Yes, we were forced into a lockdown situation where we weren't able to move around freely but we were pretty darn lucky in Canada here that those restrictions were pretty short-lived and at least had the opportunity to get outside. I used to spend a huge amount of time as an exploration geologist out in the field and out in the wilderness and it's something that I've always really loved to do. For me getting outside into the local landscape here and the mountains with my dogs and being able to hike several times a week as opposed to once a month if I was lucky, spend more face time with my children – albeit challenging face time when it came to school and some of the other issues that we've had to contend with – that has been pretty special and fantastic and it's given me some insight that perhaps I don't need to be on as many planes and that there's ways to work effectively remotely.