Eira Thomas, President and CEO of Lucara Diamond, speaks at The Northern Miner's Canadian Mining Symposium, held on the Canadian Home in London on Might 22, 2019. Martina Lang's Image to The Northern Miner.
The next is a modified extract of Lucara Diamond (TSX: LUC; US-OTC: LUCRF) and Managing Director Eira Thomas, interviewed by Dean MacPherson, TMX Group International Mining Director, Northern Miner's Canadian Mining Symposium held on the Canadian Home in London, In the UK, 22 Might 2019.
Thomas discusses at present's huge image for mining corporations, together with: mergers and acquisitions, the influence of synthetic diamonds on pure diamond miners and variety in mining.
For more details about his prolonged feedback about Lucara's production and his new Clara digital gross sales platform for a narrative on our upcoming Diamonds Canadian, revealed concurrently the Canadian Diamond Symposium in Toronto on June 20, 2019.
is at www.northernminer.com/2019-diamonds-symposium/  Dean MacPherson: I need to leap straight into it and get your opinion on it in th diamond industry and mining industry usually. What occurs, what do you see, what do you are feeling?
Eira Thomas: The widespread theme we have now heard just a little this afternoon and often out there is that the mining industry is somewhat unloved proper now.
But we now have a variety of optimism. Actuality is an enormous demand for commodities produced for all types of mines, whether it comes from metals and minerals to new know-how or power we use in our every day lives, or with regards to things like luxury products and diamonds. 19659003] When you consider in world GDP progress, it’s a must to consider in diamonds. I am very optimistic. We now have lots of alternatives right now, and we’ve to get out and persuade the brand new investor base that this opportunity is that they need to grab as we speak.
DM: Wonderful. I like it. That's what I assumed. We now have heard loads of judgment and gloom, and also you typically hear this voice in mining today. So it is good to listen to optimism and remind ourselves of the significance of industry. And the fundamentals help it, the return of buyers ultimately. So endurance is needed.
Earlier we had Mark Bristow and a few CEOs who talked concerning the improvement of mining and business. You could have had expertise of this. You have been CEO of Kaminak, who was acquired by Goldcorp and stated final yr that M&A is an enormous a part of your strategy. I assumed you possibly can enlighten M&A.
ET: Positive. Or I might say nothing. [Laughs]
DM: What do you consider the industry usually
ET: I had a number of M&A transactions during my career, including one hostile takeover a few years in the past that I by no means promised
BM: You have been a goal or acquirer?
ET: No, I used to be truly an acquirer. However it was such a very long time spent process, it took years for my life. So to begin with, I have little interest in making hostile takeovers.
There is a time and place for M&A that is recognized to be troublesome to make and create worth for all shareholders.
I feel we're going to have it in the diamond industry, the place this area is very small, and it has been a troublesome time particularly for young producers.
When the Washington Group took over Dominion Diamond, it was investing midway. So it took a whole lot of power from area and now leaves various younger corporations which might be really not investing of their measurement.
We attempt for the point the place it is sensible
Lesedi La Rona's 1,109 carat diamond present in 2015 at Lucara Diamond's Karowe diamond mine in Botswana. Photograph: Lucara Diamond. Lucara Diamond's Karowe mine in Botswana. Photograph: Lucara Diamond.
But the problem for Lucara is a very excessive margin, we’ve got two progress tasks that we’re very enthusiastic about. And we focus immediately on the natural progress tasks we now have in the portfolio.
However in fact we’re always wanting for. We expect this is a cautious thing, and we expect that the industry often wants some sort of consolidation and sooner or later we consider it’s going to occur.
DM: Have buyers pushed or required M&A? What temper is on the investor aspect?
ET: It is fascinating to us as a result of we are dividends. We’ve got paid a dividend since 2014. We have been the primary diamond company to start out a dividend coverage, and we’ve got paid $ 256 million in dividends, a lot larger than the money we have now invested in constructing the venture.
Dividend is at present 7%. We have now money in our stability sheet and never in debt.
So we acquired buyers who actually personal this story about this dividend and they’re very delicate to that dividend. Including a md who is a bigger shareholder and who attaches great significance to his dividend.
Crucial message to us is that no matter it is, it needs to be artistic, it needs to be smart, it has to add obvious value
DM: Do you take a look at Canadian jurisdictions? Do you take a look at Botswana? Wider Africa
ET: As a result of it is such a small area, we actually can't be too restrictive in our standards. We look extensively, but in fact we danger all the things we take a look at on the idea of geological potential, political authority, basic geological high quality.
All of this is taken under consideration in our analysis, however I might not say that each one jurisdictions are utterly limited to us. It is clear that we are more snug in jurisdictions resembling Botswana. It will be the primary selection, but in fact Canada is additionally not a nasty selection
DM: The diamond industry received a little bit of a shock last yr when De Beers announced its own initiative of Lightbox's synthetic diamond. It is tempting to see this as a destructive occasion for miners. How do you see it?
ET: Have you learnt what? I'm really enthusiastic about it. For my part, it was a really constructive improvement for the industry.
Its function is to clearly distinguish these two markets. The artificial diamond market is not the identical as the natural diamond market and may coexist. However we don’t see that entry to the natural diamond market can be notably necessary on the subject of buying for essential monuments
. The truth is that a artificial diamond you may need purchased for five years ago, $ 5,000 is lower than $ 800 at this time. So lower than a cellphone.
So there is no worth for an artificial diamond. Somewhat, artificial diamonds fill a bit round trend jewelery and we see it virtually as a place to begin for shoppers.
I take a look at the viewers for ladies that they respect that if you end up a young woman who is making an attempt to personal your first designer handbag, you will not purchase it till you’re more likely to have acquired a number of rewards underneath your belt.
However that doesn't imply you don't need to. So you’ll be able to go out and purchase this pretend Gucci purse in New York at 42th Road. This doesn’t mean that it reduces your appetite to the actual state of affairs when you’ve the chance to afford it.
One other analogy I exploit is to think about how we eat luxury merchandise. Everyone can perceive that as shoppers we have now aspirations and that we might have that designer, either a go well with or a Chanel purse, in our closet.
However on the similar time we own Zara and own Gap. It's continuity. They don’t seem to be mutually unique.
That's how we will see the artificial and natural diamonds that play collectively on this market. And since the price of artificial materials has fallen so dramatically, these diamonds can never be bought again what they purchased. Obviously, De Beers is standing and declaring that is the case.
DM: It's a terrific analogy that you simply delivered to the retail luxurious market. Very fascinating
Before we wrapped up, I needed to ask you somewhat concerning the ESG movement [environmental, social, and governance factors]. You began in mining more than 20 years in the past. So, properly, very younger. However if you began, the main target was definitely not very excessive, like variety and ESG generally. I needed to get my perspective and what do you consider the modifications you've seen because you began as a geologist in exploration and mining. Are you optimistic about subsequent era leaders?
ET: I’m very optimistic. We now have to be a bit of patient, but I also agree with the truth that it has not occurred quick enough. We have now seen that numerous corporations are often more profitable corporations, successful corporations. It is turning into very apparent.
We’re very pleased with us at Lucara.
DM: Founded by quite a number of ladies.
EN: Sure. And two partners and unique founders. Catherine McLeod is additionally the founding father of Lucara. And what we’re very pleased with is that we’ve got the primary female lady from Botswana to steer our diamond company in Botswana. And he is the primary feminine chief to steer a mining firm in Botswana. We are additionally proud that 98% of our staff are in Botswana. We now have no expats within the Botswana Government Group. So this is something that we now have adopted as a chance and clearly pays us.
We just confirmed Q1 results. The mine has by no means been stronger. We’re really hitting a report production by means of the manufacturing unit. This is one of the best production chain we now have been in for seven years to finish this exercise. We cross the patterns and carats which were produced, and we do it safely.
We have now just saved one other entire yr with out lacking events in our mine. All this stuff contribute to raised efficiency and Lucara is a very good instance of this. And so we see the benefits, we’ll proceed on this basis.
DM: I've found that variety of programming and the ESG program are typically fairly impressive. Before we wind up, do you have got anything you need buyers to take away?
ET: I consider the best way this is opened, because this sense is that this is an area that is not beloved. And I agree.
But we’ve got to translate this power. As industry leaders and corporations, we've acquired an awesome story telling us that we’ve got to get out and inform the story.
And we now have to make it to a wider audience. Our tendency is to preach to ourselves and to the modified. So the broader viewers is a huge alternative. Canada has a superb story to inform. It is an excellent story in the Canadian mining industry to inform and we have now to inform
Eira Thomas, Managing Director of Lucara Diamond and Dean MacPherson, International Mining Director at TMX Group, at the Mining Industry Canada Mining Symposium in London, UK, Might 2019. Martina Langin image of The Northern Miner
This article was first revealed in The Northern Miner