For a long time could diamond producer Lucapa Diamond Company (WKN A0M6U8 / ASX LOM) only sell the high-quality gemstones from its Lulo mine as rough diamonds through the state-approved channels and therefore do not participate in the added value that is created by grinding and polishing the Lulo diamonds. That has now changed!
In 2019, legal changes were implemented in Angola that allow SML, the Angolan subsidiary of Lucapa, to sell diamonds in other, value-adding channels and partnerships. Which means that SML can now achieve additional values above the price of rough diamonds.
A very nice result of this new sales channel can now be seen. At the end of March, SML had sold a 46-carat, pink rough diamond of gem quality to a grinding and polishing partnership, whereby they secured a share of the margin that is supposed to arise from the sale of the resulting polished stones.
And now you have the result: three polished diamonds, including a 15.2-carat, heart-shaped stone and two pear-shaped diamonds of 3.3 and 2.3 carats! The larger gemstone was also designated by the Gemmological Institute of America (GIA) as “Fancy Intense Orangy Pink”, with a purity grade of VVS1 (only 1% of all diamonds worldwide achieve this category!) And the polished cut and symmetry were also rated as excellent.
In addition, as Lucapa’s Managing Director Stephen Wetherall explained, pink diamonds are rare and only account for 0.1% of global diamond production. And given the recent closure of the well-known Australian underground mine Argyle, which produced around 90% of the world’s pink diamonds, these stones will become even rarer in the future. Excellent prerequisites for selling the gemstones made from the rough Lulo diamond!
In any case, we are curious to see what sales price will ultimately be achieved and what part Lucapa will have in this. However, we believe that these new sales channels will give the company the opportunity to be more involved in the value chain of its Lulo diamonds and that this represents an important step forward for Lucapa.
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In accordance with Section 34b WpHG and Section 48f Paragraph 5 BörseG (Austria), we would like to point out that partners, authors and / or employees of GOLDINVEST Consulting GmbH can hold shares in Lucapa Diamond Company and thus a conflict of interest could exist. Furthermore, we cannot rule out that other stock market letters, media or research firms will discuss the values we have discussed during the same period. Therefore, symmetrical generation of information and opinions can occur during this period. Furthermore, there is a consulting or other service contract between GOLDINVEST Consulting GmbH and a third party in the issuer’s warehouse (Lucapa Diamond Company), which creates a conflict of interests, especially since this third party grants GOLDINVEST Consulting GmbH for a fee for reporting Lucapa Diamond Company rewarded. This third party may also hold, sell or buy shares in the issuer and would benefit from an increase in the price of Lucapa Diamond Company shares. This is another conflict of interest.
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