Lucapa Sales Drop as Polished Profits Dry Up

RAPAPORT... Revenue at Lucapa Diamond Company slipped in the first quarter amid a lack of large-stone sales and the absence of income from a supply agreement with Safdico.Revenue from the miner's Mothae deposit in Lesotho plunged 49% year on year to $5.9 million, Lucapa said Thursday. This reflected an unfavorable comparison with the same period of 2021, when the company sold two D-color diamonds weighing 103 carats and 215 carats.Sales from Lucapa's Lulo mine in Angola fell 25% to $7.1 million, as the miner held just one sale of goods, compared with two a year earlier.The miner also did not earn any polished profits from rough sales it made through its supply deal with Safdico, a South Africa-based manufacturer. Under that agreement, Lucapa receives the value of the rough at the point of sale and shares in a portion of the margins that the polished generates. Production at Mothae rose 55% to 8,145 carats for the quarter, while Lulo's output grew 12% to 5,227 carats. Although rough-diamond prices remained strong throughout most of the quarter, the company noted a dip towards the end of March and early April."We believe the recent softening in diamond prices because of geopolitical influences will be temporary, as the fundamentals of the natural-diamond sector remain strong, with consumer demand forecast to outstrip available diamond supply," said Lucapa managing director Stephen Wetherall. "The Russia-Ukraine war's impact on the flow of funds globally, China's Covid-19 shutdowns, and inflationary fears have created a more cautious environment for the short term."Image: The Lulo mine. (Lucapa Diamond Company)