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Lucara beats global diamond market downturn

Canadian rare diamonds powerhouse Lucara has posted positive revenue figures from its third quarter sales tender, well within the company’s projections. The BSE listed top gem producer this week said figures were thus far looking impressively good for the company when taking into account current global rough diamonds slow market performance.

Lucara through its wholly owned subsidiary, Lucara Botswana runs and owns Karowe Mine, as the sole shareholder. Karowe is located in the outskirts of Letlhakane Village in the Boteti district of Botswana. On August 29th Lucara closed its third diamond tender sale of the year. The company says despite challenging market conditions, the tender was extremely well attended with a total of 123 companies attending and 47 companies winning one or more tender lots.

In the three completed tenders of the year a total of 19 diamonds sold for in excess of $1 million USD, including 7 for more than $ 2 million USD and one for over $ 8 million USD. Lucara Diamond Corporation President and Chief Executive Officer, Eira Thomas said revenue received was in line with expectations and in line with the Company, meeting the yearly guidance of $ 170 to $ 200 million USD in revenue.

Thomas said her company continues trading on positive trajectories with continued strong performance of Karowe mine as well as the consistent recovery of large, high quality diamonds that contribute more than 70% of Lucara’s total revenues. “Attendance at our sales remains high, a testament to our well established client base and Karowe’s production profile, which continues to be well regarded and sought after in the marketplace,” she observed.

CLARA – THE DISTRUPTOR

The Vencuvour , Canada based Executive added that Lucara’s digital diamond trading and sales platform Clara continues to disrupt the gem sales space “Our performance  is further evidenced by our growth with the client base for Clara which has grown from 4 to over 20 customers since the beginning of the year. Ramp up continues on plan, with transactions now occurring bi-weekly.”  She said.

This week US based global business media house Bloomberg reported that Lucara’s Clara Diamond Solution is set to transform the diamond supply value chain. Bloomberg says modern technology has been making serious inroads into the diamonds traditional industry. “Advances in software, scanning and now block chain are disrupting long-established business practices” noted the US based media outfit.

Clara Diamond Solutions is a secure, web-based, digital sales platform. It uses proprietary analytics, combined with cloud and block chain technologies to completely modernize the diamond supply chain. Eira Thomas says feedback on the Clara Diamond Solutions platform has been overwhelmingly positive. “Customers return after their first experience, having saved considerable time and money,” shared Thomas.

Thomas explained that Clara’s approach transforms current sales practices, driving efficiencies and unlocking value for producers and manufacturers alike. The platform operates under an exclusive collaboration agreement with Sarine Technologies, a well-established service provider of diamond scanning and planning technologies used by the diamond manufacturing companies globally.

She elaborated that for the producers, Clara helps reach a broader customer base and allows for continuous sales, which helps smooth out cash flows. “By sidestepping purchasing in batches, manufacturers don’t have to finance unwanted inventory and resell unwanted diamonds. All of this means more certainty, transparency and profits for producers and manufacturers,” she said. Thomas says Clara  will continue  to help maximize the value Lucara receives for Karowe diamonds, as demand is increased, and will  because it is a completely scalable offering ,be opened up to other producers to try as well.

ANOTHER TOP GEM RECOVERY

On Wednesday Lucara announced yet another high value recovery from Karowe, this time around the underground terrains of the magnificent Karowe open pit birthed a 123 carat gem quality top white Type II diamond.  The high value precious stone was recovered from direct milling ore sourced from the EM/PK(S) unit of the South Lobe. The EM/PK(S) has also delivered several other high value diamonds including the 1,109 carat Lesedi La Rona, the 813 carat Constellation and the recently recovered 1,758 carat Sewelô.

The Botswana Stock Exchange listed diamond outfit says the EM/PK is an important economic driver for the underground feasibility study which is currently underway and scheduled for completion in Q4 later this year. A 375 carat gem quality diamond was also recently recovered at Karowe from the processing of historic DMS recovery tailings, generated prior to the incorporation of Lucara’s XRT diamond recovery circuits.

Karowe continues to have strong production performance year to date, with recovery from direct milling ore of 22 individual, +100 carat diamonds, including 6 greater than 200 carats. “Reprocessing of historic DMS recovery tailings (pre-XRT circuit) is ongoing. Processing of these tailings does not displace direct feed ore, but rather supplements overall production.”

Karowe is the only mine in recorded history to have recovered two diamonds larger than 1,000 carats. The Sewelô was an unbroken 1,758 carat near gem-quality diamond recovered in April this year. It was the largest diamond from the Karowe mine so far, and one of the largest diamonds in the world, while being the largest ever from Botswana. Since 2012, Lucara has recovered 14 diamonds above 300 carats, with two surpassing the 1,000-carat threshold. To date, the company has sold 10 diamonds above USD$10 million each.

Year to date, from all processing, the mine has produced 29 diamonds  weighing more than 100 carats, including 8 diamonds  gauging over  200 carats. Karowe has open pit reserves allowing for a mine life that will reach 2026. However, robust output since mining began in 2012 has management excited about organic growth. Studies are underway to assess the feasibility of extending Karowe’s mine life for at least another ten years to 2036 by expanding the mine underground.

The Company’s $14.9 million program for 2019 consists of ongoing drilling, sampling and geotechnical studies. Included in this effort is an updated resource statement, which indicates higher grades and potentially coarser diamond size-frequency distribution at depth. Moreover, test pumping, modelling and outfitting of new de-watering wells have helped significantly de-risk the underground mining potential. Thomas says the Feasibility Study results for an underground mine are expected in Q4 this year, and a construction decision should be made by H1 next year, “so investors can anticipate continued updates regarding mine potential,” Thomas concluded.

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Gambling Authority tender dangles as a jittery lottery quandary

30th November 2020
SEFALANA MD: CHANDRA CHAUHAN

Lucrative and highly anticipated national lottery tender that saw several Batswana businessmen partnering to form a gambling consortium to pit against their South African counterparts, culminates into a big power gamble.

WeekendPost has had a chance to watch lottery showcase even before the anticipated and impending national lottery set-up launches. A lot has been a big gamble from the bidding process which is now set for the courts next year January following a marathon legal brawl involving the interest of the gambling fraternity in Botswana and South Africa.

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The uncertainty of getting the next meal in Botswana

30th November 2020
uncertainty of getting the next meal

Households representing more than half of Botswana’s population-mostly residing in rural areas- do not know where their next meal will come from, but neither do they take into consideration the quality and/or quantity of the food they consume.

This is according to the latest Prevalence of Food Insecurity in Botswana report which was done for the 2018/19 period and represents the state of food insecurity data even to this time.
The Prevalence of Food Insecurity was released by Statistics Botswana and it released results with findings that the results show that at national level 50.8 percent of the population in Botswana was affected by moderate to severe food insecurity in 2018/19, while 22.2 percent of the population was affected by severe food insecurity only.

According to the report, this translates to 27 percent of the population being food secure that is to say having adequate access to food in both quality and quantity. According to Statistician General, Burton Mguni, when explaining how the food data was compiled, Food and Agriculture Organization of the United Nations (FAO), is custodian of the “Prevalence of Undernourishment (PoU)” and “Prevalence of moderate or severe food insecurity in the population based on the Food Insecurity Experience Scale (FIES)” SDG indicators, for leading FIES data analysis and the resultant capacity building.

“The FIES measures the extent of food insecurity at the household or individual level. The indicator provides internationally comparable estimates of the proportion of the population facing moderate to severe difficulties in accessing food. The FIES consists of eight brief questions regarding access to adequate food, and the questions are answered directly with a yes/no response. It (FIES) complements the existing food and nutrition security indicators such as Prevalence of Undernourishment.

According to the FIES, with increasing severity, the quantity of food consumed decreases as portion sizes are reduced and meals are skipped. At its most severe level, people are forced to go without eating for a day or more. The scale further reveals that the household’s experience of food insecurity may be characterized by uncertainty and anxiety regarding food access and compromising the quality of the diet and having a less balanced and more monotonous diet,” says Mguni.

The 50.8 percent of the population in Botswana which was affected by moderate to severe food insecurity are characterized as people experiencing moderate food insecurity and face uncertainties about their ability to obtain food. These people have been forced to compromise on the quality and/or quantity of the food they consume according to the report on food insecurity.

Those who experience severe food insecurity, the 22.2 percent of the population, are people who have typically run out of food and, at worst, gone a day (or days) without eating. According to the statistics, rural area population experienced moderate to severe food insecurity at 65 percent while urban villages were at 46.60 percent and cities/town were at 31.70 percent. Those experiencing the most extreme and severe insecurity were at rural areas making 33.10 percent while urban villages and towns were at 11.90 percent and 17.50 respectively.

According to a paper compiled by Sirak Bahta, Francis Wanyoike, Hikuepi Katjiuongua and Davis Marumo and published in December 2017, titled ‘Characterization of food security and consumption patterns among smallholder livestock farmers in Botswana,’ over 70 percent of Botswana’s population reside in rural areas, and majority (70%) relies on traditional/subsistence agriculture for their livelihoods.

The study set out to characterize the food security situation and food consumption patterns among livestock keepers in Botswana. “Despite the policy change, challenges still remain in ensuring that all persons and households have access to food at all times. For example, during an analysis of the impacts of rising international food prices for Botswana, BIDPA reported that food prices tended to be highest in the rural areas already disadvantaged by relatively low levels of income and high rates of unemployment,” said the study.

According to the paper, about 9 percent of households were found to be food insecure and this category of households included 6 percent of households that ranked poorly and 3 percent that were on the borderline according to the World Food Programme’s (WFP) definition of food security.

Media reports state that the World Bank has warned that disruption to production and supply chains could ‘spark a food security crisis’ in Africa, forecasting a fall in farm production of up to 7 percent, if there are restrictions to trade, and a 25 percent decline in food imports.

Food security in Botswana or food production was also attacked by the locust pandemic which swept out this country’s vegetation and plants. The locust is said to have contributed to 25 percent loss in production.

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Solid demand for diamonds towards the ‘gift’ season

30th November 2020
Diamonds

Global lockdown have been a thorn in diamonds having shiny sales, but a lot of optimism shows with the easing of Covid-19 restrictions, the precious stones will be bought with high volumes towards festive season. The diamond market is however warned of the resurgence of Covid-19 in key markets presents ongoing risks amid the presence and optimist about the new Covid-29 vaccines.

The latest findings published as De Beers Group’s latest Diamond Insight ‘Flash’ Report, which looks at the impact of the pandemic on relationships and engagements, has revealed that in the US that more couples than ever are buying diamond engagement rings. Bridal sales is mostly the primary source of diamond jewellery demand in recent months, De Beers said.

According to De Beers, interviews with independent jewellers around the US revealed that the rate of couples getting engaged has increased compared with the period when Covid-19 first had an impact in the US in the spring.

“In addition, despite challenging economic times, consumers were spending more than ever on diamond engagement rings – often upgrading in colour, cut and clarity, rather than size. Several jewellers speculated that with consumers spending less on elaborate weddings and/or honeymoons in the current environment, they had more to spend on choosing the perfect ring,” said De Beers.

According to De Beers, a national survey of 360 US women in serious relationships, undertaken in late October in collaboration with engagement and wedding website, The Knot. This survey is said to have found that the majority of respondents (54%) were thinking more about their engagement ring than the wedding itself (32%) or the honeymoon (15%), supporting jewellers’ hypothesis that engagement ring sales were benefiting from reduced wedding and travel budgets in light of Covid-19 restrictions.

When it came to researching engagement rings, online was by far the predominant channel for gaining ideas/inspiration at 86% of consumers surveyed, with 85% saying they had saved examples of styles they liked, according to De Beers. According to the survey, only a uarter of respondents said they had looked in-store at a physical location for design inspiration.

“For many couples, the pandemic has brought them even closer together, in some instances speeding up the path to engagement after forming a deeper connection while experiencing lockdown and its associated ups and downs as a partnership. Engagement rings are taking on even greater symbolism in this environment, with retailers reporting couples are prepared to invest more than usual, particularly due to budget reductions in other areas,” De Beers CEO Cleaver said.

According to De Beers Group, its Diamond Insight Flash Report series is focused on understanding the US consumer perspective in light of Covid-19 and monitoring how it evolves as the crisis evolves. Also, the company said, it is augmenting its existing research programme with additional consumer, retailer and supply chain touch-basis to understand the pain points and the opportunities for stakeholders across the diamond pipeline.

Demand for diamonds is as hard and resilient as the precious stone itself. De Beers pocketed US$ 450 million in its recently held ninth rough diamond sales cycle, and the company says it is more flexible approach to rough diamond sales during the ninth sales cycle of 2020, with the Sight event extended beyond its normal week-long duration.

“Steady demand for De Beers Group’s rough diamonds continued in the ninth sales cycle of the year, reflecting stable consumer demand for diamond jewellery at the retail level in the US and China, and expectations for reasonable demand to continue throughout the holiday season. However, the resurgence of Covid-19 infections in several consumer markets presents ongoing risks,” said De Beers CEO Bruce Cleaver recently.

High expectations are on diamonds being a sentimental gift for holiday season or as the most fetished gift. However the ninth cycle was lower than the eighth which registered US$ 467 million. For the last year period which corresponds with the current one, De Beers managed to raise US$ 400.

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