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Lucapa adjusts 2021 EBITDA higher on improved diamond market

LUCAPA Diamond Company said earnings before interest, tax, depreciation and amortisation (EBITDA) for the 2021 calendar year would come in between A$26m and A$28m a 45% upgrade on previous guidance.

The upwards adjustment is owing to improved market prices for diamonds and a change in the mining plan of the firm’s Lulo mine in Angola which has seen quicker access to higher value, so-called ‘fancy pink’ diamonds.

Prices to date have averaged $1,242 to $1,312 a carat compared to a previous estimate of $957 to $1,034/carat, the company said. In September, De Beers reported seventh cycle rough diamond sales of $515m compared to the seventh cycle sales in 2020 of $334m. The improvement signaled the continued recovery of the diamond market, said De Beers CEO, Bruce Cleaver.

Increased prices

De Beers increased its prices by more than 5% whilst its rival, the Russian diamond producer, Alrosa has raised its prices 9% on a like-for-like basis. Goldman Sachs estimates a 6% price increase in diamonds this year which is still 10% below the pre-Covid-19 three year average of $156 per carat.

Lucapa Diamond said production was likely to come in lower at between 35,000 to 37,200 carats partly owing to the revised Lulo mining plan. Disruptions at the firm’s other mine, Mothae in Lesotho, also affected production.

Lower production would result in cash operating costs of $828 to $844/carat compared to $638 to $657/carat guided previously.

Commenting on the strong performance from Lulo this year, Lucapa Diamond MD, Stephen Wetherall, said it was “… expected to accelerate returns to Lulo shareholders and the capital loan repayments to Lucapa, which in turn we expect to utilise

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