Safdico, as a Preferred Buyer, can purchase up to 60% of Lulo’s annual alluvial rough production from SML
Lucapa Diamond Company announced another key advancement in the Company’s cutting & polishing strategy, with Lulo alluvial mining company Sociedade Mineira Do Lulo (SML) entering into a cutting & polishing agreement with leading diamond manufacturing group Safdico International (“Safdico”).
Safdico is a subsidiary of Graff International (“Graff”), one of the world’s finest high-end jewellery houses. Safdico supplies Graff with some of the most iconic and valuable polished diamonds sold in Graff stores.
Safdico, as a Preferred Buyer, can purchase up to 60% of Lulo’s annual alluvial rough production from SML (Lucapa 40% and operator), as is permitted under Angola’s transformative new diamond marketing regulations.
The Lulo diamonds purchased by Safdico are placed into the cutting & polishing partnership. Once procurement and manufacturing costs are deducted, the profits generated beyond the mine gate from the sale of the resultant polished diamonds are shared equally between SML and Safdico.
To date, Safdico has purchased ~4,900 carats of run of mine rough diamonds from SML under this commercial partnership. SML is due its first share of the partnership profits from Safdico this quarter (Q1 2020).
This new Lulo revenue stream represents another key milestone for Lucapa’s value-adding strategy.
The new revenues streams come as SML completes a self-funded US$12 million capital investment program designed to expand total group production to >60,000 carats in 2020 (on a 100% basis).
This production increase, coupled with the new revenue streams generated from the cutting & polishing agreement with Safdico, will enable SML to generate higher returns for its partners and make more regular loan repayments to Lucapa.
Source: Company Press Release