- Diamond miner Lucapa Diamond Company (LOM) is expecting a $7 million paycheck from international diamond manufacturer Safdico
- The companies signed a fresh deal in January, under which Safdico is the preferred buyer of up to 60 per cent of diamonds harvested from the Lulo alluvial diamond mine
- Lucapa’s Lulo partner will receive a $2.6 million profit stake from diamond sales in 2019
- The other $4.4 million comes from the sale of a single 46-carat pink rough diamond from Lulo
- Lucapa shares are trading almost 12 per cent higher today, currently worth 8.6 cents each
Diamond miner Lucapa Diamond Company (LOM) has its first $7 million payday coming up under its deal with international diamond manufacturer Safdico.
The companies teamed up in late January this year, with the contract signing Safdico on as the preferred buyer for up to 60 per cent of the annual rough diamond production from the Lulo alluvial diamond mine.
Lucapa owns 40 per cent of Lulo with partner company Sociedade Mineira Do Lulo (SML). Lucapa operates Lulo while SML is responsible for selling off the diamond product.
SML will be the recipient of the upcoming $7 million (US$4 million) from Safdico, which is a subsidiary of prestigious jeweller Graff.
The total sum is made up of two parts.
The first US$1.5 million (A$2.6 million) is SML’s cut of the profits from the cutting, polishing, and sale of Lulo diamonds to Safdico in 2019 under a previous partnership.
The remaining US$2.5 million (A$4.4 million) comes from the sale of a single diamond — the 46-carat pink rough diamond pulled from Lulo which was held off from sale in 2019. Further, SML will cut its own share of the profits from any diamonds polished from the big stone.
Lucapa Managing Director Stephen Wetherall seemed pleased the company could pull in some strong profits in an era of global economic uncertainty.
“Given the recent market uncertainty and disruption caused by coronavirus, we and our Lulo partners believe the sale of the 46-carat pink diamond to Safdico under a partnership agreement will unearth the true potential and value of this exceptional stone,” Stephen said.
“We look forward to seeing the polished diamonds produced from this exceptional Lulo gem, which we are confident will see additional value created by the partnership,” he added.
Lucapa mines diamonds in Angola with its partner companies Empresa Nacional de Diamantes E.P and Rosas & Petalas.
Shares in Lucapa are trading 11.69 per cent higher just after lunchtime AEDT today. However, they have been unable to escape the mass sell-off of the past month — since February 26, Lucapa shares have lost almost 43 per cent of their value.
Today, shares are trading for 8.6 cents each in a $45.15 million market cap.