Lucapa Moves into Diamond Manufacturing

Lucapa Diamond Company plans to cut and polish select stones in-house in an effort to maximize value for its shareholders.

Third-party manufacturers charge high fees without adding significant value, explained CEO Stephen Wetherall in a recent interview. Bypassing them — either by partnering with a manufacturer of the company’s choice, or by cutting and polishing its own diamonds — would save Lucapa money, he told Rapaport News.

While the miner would prefer the former solution, it has not ruled out cutting and polishing some of the diamonds itself on a standalone basis, he said. Lucapa has yet to determine the percentage of its stones it will ultimately manufacture, but Wetherall expects the figure to vary from year to year.

“We are initially entering into the sector by looking at select or bespoke diamonds,” he added. “It might grow down the line into other more regular sizes, but it will be select diamonds initially. Ideally, the strategy will incorporate select diamonds from both [the Lulo and Mothae mines].”

Lucapa hasn’t yet found a location for its manufacturing venture, Wetherall noted. However, one option is Angola, which just opened a new facility.

Additionally, the miner intends to maximize profits further by focusing on its Lulo operations in Angola and its Mothae project in Lesotho. While Lucapa won’t discontinue its Orapa or Brooking exploration projects, Wetherall said, ramping up production at the other two mines will take precedence.

“Growing shareholder value is our major imperative, which, in the current climate, we believe warrants a complete focus on our high-value and cash-generating assets,” he stated. “We are still very enthusiastic about [the other] two assets, but at present, it is about creating shareholder value.”

While the company had originally expected to double the amount of ore it processes at Mothae by 2021, it now plans to bring that date forward. It is also set to increase production at Lulo this year by 25% — introducing an additional operating shift on the diamond treatment plant to process ore around the clock, the company said.

The miner believes Lulo has significant potential to become a “world-class asset,” Wetherall added.

Source: Diamonds.net