342-carat diamond recovered from Lucara's Karowe mine last month. Photo: Lucara Diamond Corp

342-carat diamond recovered from Lucara's Karowe mine last month. Photo: Lucara Diamond Corp

Prices Favour Lucara

Issue 125, May 2015

Continued from Page 1 ➤

Lamb, who spent 13 years at De Beers before joining Lucara in 2008, says the diamond industry is structurally biased towards tight supply. “If you look at De Beers and Alrosa, most of their mines are 20 years old. They don't have any brand new mines, so they don't actually have the capacity to just go in and significantly crank-up production.”

“For the mines to produce another 2 to 5m carats, it's not an easy job and you have to spend a lot of capital. For a truck-and-shovel operation in iron ore, you just send in another shovel and two extra trucks and suddenly you have another 100,000 tonnes a year.”

South Lobe

Lamb is famously hands-on, visiting Lucara's Karowe mine in Botswana at least 10 times a year. “I'm not a CEO that does a seagull visit,” he says. “I like to spend 4, 5 days on the plant, in the pit licking rocks.”

Karowe has surprised the market since entering production in 2012 with a freakish number of large stones, including a 342-carat diamond recovered in April, covering half of Lamb's palm. “You have to kiss a lot of frogs before you find a princess,” he says. “We're doing that.”

Lucara's statistical models predict large diamond recoveries equal to 3.8 per cent of the mine's total diamond weight, but recoveries from its South Lobe have been as high as 7 to 12 per cent. Management has left the lobe untouched whilst tweaking Karowe's plant, using X-ray transmission technology to avoid crushing large stones. It is now waiting to re-enter the prized South Lobe, promising a sharp increase in big diamond recoveries.

“At the end of last year we had more than $100m in cash,” Lamb says. “The way things are trending now, I've actually lost count of how many plus 100-carat gem and non-gem quality stones we've recovered."


Lucara is publicly looking to acquire a second mine and sees its success at Karowe as a key offering to other companies, but Lamb says imminent consolidation is unlikely. “Our area of expertise is in project development: building a project, getting it up and running, going through that value-add stage, but the strengthening of the US dollar, that alone has changed the entire circumstance.”

Would-be suitors, including Stornoway in Canada and Firestone in Lesotho, have all raised capital in US dollars to build new mines, giving them a huge cash uplift as the dollar has jumped against their build costs in-country. Firestone raised $222m in US dollars last year at 8.5 to 9 Rand to the dollar, Lamb says. “It's now trading in excess of twelve.”

“The same is true for Mountain Province and Stornoway, so actually agreeing terms and having them even come to the table, is almost an impossibility.”

“I’m not a CEO that does a seagull visit.”


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