- Lucapa Diamond’s (LOM) two flagship African mines may be shuttered for the moment, but the company still has promise in the pipeline
- Travel restrictions and shutdowns of non-essential services saw Lucapa’s Mothae and Lulo mines closed in late March 2020
- Limited exploration work continues at Lulo even amid the COVID-19 restrictions, but won’t be scaled up until the dry season
- Mothae remains closed but strict lockdowns in Lesotho may be lifted soon as the country still has zero reported cases of COVID-19
- Australian staff and contractors have taken a 60 per cent pay cut to minimise costs and make sure the company can keep functioning
- Lucapa is down 3.28 per cent today, with shares trading for 5.9 cents each
Lucapa Diamond’s (LOM) two flagship African mines may be shuttered for the moment, but the company still has promise in the pipeline.
The company says 2020 started on a promising note after a challenging 2019, with a global increase in both demand and rough diamond prices. However, as the COVID-19 pandemic spread its tendrils across the world, interruptions and shutdowns have affected global industries, including diamond mining.
Travel restrictions and shutdowns of non-essential services saw many mining operations around the world shuttered, including Lucapa’s Mothae and Lulo mines late in March 2020. The company has accordingly adjusted its operations to be at the ready to further its mining and exploration strategies when normal activities resume.
While any pandemic situation is never good, and operations at Lulo have been closed for almost a month, the timing could have been worse.
The alluvial fields at Lulo didn’t just fall from the sky – the diamonds there washed downstream from a primary source somewhere upriver. Lucapa is in the midst of an exploration program to identify the kimberlite intrusions which are the genesis of the site’s high-grade diamonds.
Preliminary results yielded 45 diamonds from an upstream tributary which included several D-colour and type IIa diamonds – exactly what Lucapa was looking for. Some work continues at the site even amid the COVID-19 restrictions, but the work wasn’t going to be scaled up until the dry season anyway. Lucapa remains hopeful this timing will coincide with easing restrictions to enable the full rollout of its exploration program.
The company is also working with the Angolan government to shore up a majority share in the project. Lucapa, its partners, and Lulo management are working with the authorities to re-commence normal mining activities as soon as it’s responsible and safe to do so.
Lucapa announced on 25 March that its Mothae mine in Lesotho would enter a care & maintenance and security program. These steps were necessary as the Lesotho government put the nation into lockdown to ensure against the perils of the pandemic.
In this case, the authorities are way ahead of the COVID-19 curve – the country implemented a three-week lockdown despite there being no diagnosed cases. Lucapa remains hopeful restrictions will soon be lifted and the Mothae mine can reopen in a timely fashion. The company believes it should be well positioned to recommence mining operations when global markets recover.
Lucapa has seriously streamlined its Perth office to offset revenue shortfalls while its mines remain closed. Staff and contractors have taken a 60 per cent pay cut to minimise costs and make sure the company can keep functioning and remain at the ready to resume normal activities.
The company’s non-executive directors, Miles Kennedy and Ross Stanley, have agreed to waive their fees until further notice. The company is also looking at other ways to restructure its finances, including new funding options, in order to preserve its balance sheet and continue operations at a maximal capacity.
Lucapa is down 3.28 per cent today, with shares trading for 5.9 cents each at 2:29 pm AEST.