Lucapa Diamond profit up, hits record production at African mines
Australia’s Lucapa Diamond (ASX:LOM) hit record production in August at its two mines in Africa on the back of a growth-focused strategy, which lead it to the scaling up of production at both operations to maximise revenue generation and returns.
The diamond producer’s Lulo mine, in Angola, churned out 3,180 carats, the highest monthly result since production began in 2015.
At its new Mothae operation in Lesotho, Lucapa achieved two milestones during the month of August — a processing record of 120,736 tonnes treated and a production high of 2,911 carats, which takes year-to-date output to 17,935 carats.
The announcements come as the Perth-based miner posted Tuesday a consolidated net profit after tax of $1.1 million for the six months leading to June, a significant improvement after losing $4.3 million in the previous corresponding period.
Lucapa, which acquired Mothae in early 2017, has a 70% interest in the operation, while the government of Lesotho owns the remaining 30% of Mothae. The mine, which began commercial production in December, is located three miles from Letšeng, the highest dollars-per-carat kimberlite diamond mine in the world.
The company’s 40%-owned prolific Lulo mine, in turn, hosts the world’s highest dollar-per-carat alluvial diamonds.
Lucapa’s positive results contrast with the dire state of the sector. Diamond miners are struggling across the board, especially those producing cheaper and smaller stones where there is too much supply.
Buyers, those that polish and cut diamonds for retailers, have been hit this year by lower prices and tighter credit, prompting them to delay purchases. Tiffany’s reported in August a 3% decline in like-for-like sales, while shares in Signet, the world’s largest retailer of diamond jewellery, have lost more than 60% of their value this year.
De Beers, the world’s top diamond producer by value, has responded by axing production — with a target of 31 million carats this year compared with 35.3 million in 2018. It has also announced it would spend more on marketing.
At the latest sale, the company increased the amount of stones buyers were allowed to reject in each lot purchased from 10% to 20%, according to people familiar with the auction.