Lucara takes steps to protect employees against Covid-19

Diamond producer Lucara Diamond Corporation has implemented a crisis management strategy to protect the health and wellbeing of its employees in Botswana and Canada amid the Covid-19 pandemic.

Lucara's 100%-owned Karowe mine, in north-central Botswana, remains fully operational under new measures and guidelines implemented by the Botswana government earlier this week.

These measures include increased travel restrictions, reduced staffing and increased physical distancing pertaining to all aspects of its business.

Employees who are able to work remotely are doing so.

As travel restrictions relating to Covid-19 are expected to remain in place for an unknown period of time, Lucara’s ability to complete tenders in Botswana may be impacted. As a temporary measure, the government has granted Lucara permission to hold diamond sales in Antwerp, Belgium, if required.

Lucara completed the first of its four planned diamond tenders for the year on March 5, and achieved sales prices within 1% of forecast; however, diamond prices have since deteriorated in response to weaker demand as Covid-19 has continued to spread globally. 

Though Lucara's next quarterly tender is not scheduled to take place until mid-May, the full impact of Covid-19 on the company's operations and production outlook for this year remains highly uncertain and, as a result, the company has taken the decision to suspend its guidance until further notice.

Lucara began the year with a strong balance sheet – cash positive, no debt and an undrawn $50-million working capital facility.

Clara, Lucara's Web-based digital sales platform for rough diamonds, which sells diamonds under 10.8 ct in size, remains operational.

Lucara indicated that it has flexibility and optionality in its capital budget for 2020.

Spending on the underground project is scheduled to ramp up in quarter three, but Lucara has the ability to adjust the timing of these expenditures as they are not currently committed.

Lucara CEO Eira Thomas comments that the global diamond industry is experiencing the widespread impacts of Covid-19 throughout the value chain, manifested as fewer sales, weaker pricing and production curtailments at several mines.

“Though the Karowe diamond mine continues to operate according to plan, and the first quarter 2020 sale achieved results within expectations, the full impact of Covid-19 on our business remains uncertain.

"Our longer-term outlook for the diamond market remains positive, based on improving supply-demand fundamentals that were beginning to manifest in late 2019, prior to the Covid-19 crisis taking hold.

"What's more, diamond sales are continuing through Clara, our secure Web-based digital sales platform, which has the unique advantage of providing customers with a forum to buy rough diamonds without the requirement to travel,” she says.