Graff Unit Signs Polishing Deal with Lucapa

RAPAPORT... Graff-owned diamond manufacturer Safdico will cut and polish a portion of rough from the Lulo mine through a partnership with Lucapa Diamond Company.Safdico will have the rights to buy up to 60% of Lulo's annual rough production under the terms of Angola's new reform program, which went into effect last year. The new guidelines open sales to a wider range of buyers of the miner's choosing, rather than forcing producers to sell to a list of clients approved by state-owned diamond company Sodiam.All diamonds Safdico purchases from Lucapa will be placed into the joint partnership, the miner said Wednesday. Once polished, procurement and manufacturing costs will be deducted, with any profit from the sale of the polished diamond to be split equally between Lucapa and Safdico.Safdico has already purchased 4,900 carats of rough from Lucapa through the partnership. Profits from the sale of the first batch of polished will be realized in the first quarter, Lucapa noted. Lucapa, which operates the mine in Angola, first announced its intention to polish its own diamonds in February 2019 in an effort to maximize shareholder value by cutting out third-party manufacturers. Earlier this month, the company also debuted its first polished stones from the Mothae mine in Lesotho. Those included six D-color diamonds from a 36-carat rough, the largest of which was a pear-shaped, 8.88-carat, flawless stone.Lucapa also plans to expand its total group production to more than 60,000 carats in 2020, it said. "This production increase, coupled with the new revenue streams generated from the cutting and polishing agreement with Safdico, will enable [the company] to generate higher returns for its partners," Lucapa explained.Shares in Lucapa rose 8% in early trading Wednesday following the announcement.Image: The 8.88-carat pear-shaped polished diamond from Mothae. (Lucapa Diamond Company)