Lucapa signs Lulo cutting and polishing agreement

Lucapa expects up to 90 per cent of its product to be sold as high-end jewellery.

Lucapa Diamond Company has partnered with Mauritius-based diamond manufacturer Safdico International for the cutting and polishing of diamonds from the Lulo mine in Angola, central Africa.

Under the agreement, Safdico is the preferred buyer and can purchase up to 60 per cent of Lulo’s alluvial rough production.

This is permitted under Angola’s new diamond marketing regulations.

Lucapa and its partners at Lulo will split the profits generated from diamond sales equally with Safdico after deducting for procurement and manufacturing costs.

Lucapa operates the Lulo concession with its partners through Sociedade Mineira Do Lulo (SML), where Lucapa is the operator and holds 40 per cent of interest in Lulo.

“This new Lulo revenue stream represents another key milestone for Lucapa’s value-adding strategy,” Lucapa stated in an ASX announcement.

“The new revenue streams come as SML completes a self-funded $12 million capital investment program designed to expand total group production to more than 60,000 carats in 2020.

“This production increase, coupled with the new revenue streams generated from the cutting and polishing agreement with Safdico, will enable SML to generate higher returns for its partners and make more regular loan repayments to Lucapa.”

Safdico is a subsidiary of London-based company Graff International, which is one of the world’s finest high-end jewellery companies.

The partnership announcement follows a record production quarter for Lulo and Lucapa’s other mine, the Mothae kimberlite mine in Lesotho, southern Africa.

Mothae finished the year 45 per cent ahead of its production plan, with 30,107 carats last year, including a quarterly record of 9834 carats in the December quarter.

Despite rainfall disrupting mining activities at Lulo, it also finished within 1 per cent of the previous year’s production result with 19,010 carats for 2019, 4170 of which during the December quarter.

Lucapa recovered a combined total of 287 individual diamonds from Mothae and Lulo throughout the 2019 calendar year.

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