Vancouver-based Lucara Diamond Corp. (TSX: LUC) has terminated its sales agreement with HB Trading covering high-value diamonds from the Karowe mine in Botswana, following a reported “material breach of financial commitments” by HB.
The two parties inked a diamond sales contract in 2020, which was extended for 10 years in 2022. The deal stipulated that HB would buy Lucara’s 10.8-carat diamonds and above from the Botswana mine at prices based on the estimated polished value of each stone.
While Lucara did not disclose details around the “breach” it’s known that the government of Botswana agreed in March to buy a 24% stake in HB Antwerp, the parent company of HB Trading. As part of the deal, state-owned Okavango Diamond Company would supply HB with an undisclosed quantity of rough diamonds for five years.
The agreement is yet to be signed.
Lucara’s decision also comes on the heels of an internal dispute between HB co-founder and managing partner Oded Mansori and the company’s other partners earlier this month. The parties had contrasting views on the direction of the business, leading to Mansori’s exit and a pending legal case.
The company said it will continue to use its established mechanisms to sell rough diamonds from Karowe, including its Clara online sales platform, traditional tenders and other value-added options for precious stones.
“The Lucara production profile is unique in the diamond industry and the company will continue to look at innovative sales mechanisms to maximize the value of our rough diamonds,” chief executive officer William Lamb said in the statement.
Lucara expects to generate between 395,000 carats and 425,000 carats and revenue up to $230 million this year from its mine in Botswana, which is the world’s no. 1 diamond producing country by value.
The Vancouver-based miner sold $25.8 million worth of diamonds through HB in the second quarter of this year.