Mining company Lucara has announced that it has terminated the sales agreement it had with HB Antwerp following what it referred to as "a material breach of financial commitments by HB".
In November 2022, Lucara announced that it had entered into an extended diamond sales agreement with Lucara Botswana and HB, for the purpose of selling +10.8 carat rough diamonds produced from Lucara's Karowe mine until December 31, 2032. Lucara first partnered with HB in 2020 to sell Karowe's large, high value diamonds, which have historically accounted for approximately 60% to 70% of Lucara's annual revenues. The Agreement extended this arrangement for ten years.
Under the Agreement, Lucara's +10.8 carat production is sold at prices based on the estimated polished outcome of each diamond, determined through state-of-the-art scanning and planning technology, with a true-up paid on actual achieved polished sales thereafter, less a fee and the cost of manufacturing.
The pricing mechanisms of the agreement, according to Lucara, resulted in complete transparency within the value chain, creating important alignment between all participants in the value chain, and delivering regular cash flow at superior prices for this important segment of our production profile.
However, though Lucara did not explicitly cite this as the reason for the termination of the deal, HB Antwerp has this year been marred with infighting between its executive and ownership teams, leading to the exit of cofounder Oded Mansori. On 11 September, the company announced that it had removed one of its three co-founders from management following differences over strategy, a development that comes amid a pending sales pact with the government of Botswana. The deal has not been signed yet.
Mansori, who co-founded HB Antwerp in 2020 with partners Shai de Toledo and Rafael Papismedov, said he was taking them to court over his removal. For its part following the termination of the deal, Lucara stated that it would be in the market for an alternative partner.
"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," said William Lamb, CEO of Lucara.