• Monday, 21 January 2019

Lucara Completes First Sale Through Clara Diamond Solutions

VANCOUVER: (LUC - TSX, LUC - BSE, LUC - Nasdaq Stockholm) Lucara Diamond Corp. (Lucara or the Company) is pleased to report that its inaugural diamond sale through Clara Diamond Solutions, its 100pc owned digital sales platform, was successfully launched on Friday, November 30 and final matching was completed on December 16, 2018.

A total of seven manufacturers participated in the sale, five of whom matched and received their orders. All told, diamonds successfully matched to orders generated revenue of US$660,865, achieving +8% over Lucara's market price and +15% over Lucara's reserve price for these goods. Goods of approximately similar value have been set aside for the next sale, scheduled to take place later this month. Diamonds will be added onto the platform in the coming weeks gradually, as additional manufacturers are on-boarded and in response to increasing variety and size of orders received. In time, as supply and demand is optimized, Lucara will progress into continuous sales of appropriate, qualifying goods through Clara. Further, Lucara will continue to augment its overall sales strategy through a combination of Clara and its regular tender process.

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Eira Thomas, CEO commented: This trial sale marks a momentous milestone for Clara. On November 30, Clara successfully initiated its inaugural diamond sale with positive results, confirming that the platform is commercially viable. Though we are delighted with the prices achieved for the rough diamonds sold in this first sale, Clara's longer-term value will be realized through its' scalability, increasing the volume of rough diamonds transacted by adding production from other global diamond producers. Onboarding of additional manufacturers is continuing and Lucara is in active discussion with a number of leading diamond producers who are also interested in trialing the platform in 2019. We want to thank all of our partners for their enthusiasm and commitment to the trial, and for embracing the opportunity to innovate and modernize the diamond sales process to increase consumer confidence and unlock value for all participants in the value chain.

This first trial sale, which was conducted in partnership with a select group of large vertically integrated jewelry houses and global diamond manufacturers was designed to demonstrate that Clara can unlock significant value throughout the diamond pipeline, by facilitating rough diamond sales on a stone by stone basis, based on specific polished demand. Clara will utilize the results of this inaugural sale to help optimize the quantity and selection of rough diamonds offered in the short term, as the platform moves into continuous sales and more participants are on-boarded.

How does Clara work?

Clara uses proprietary analytics, with the latest cloud and blockchain technologies, to sell rough diamonds individually, based on polished characteristics and demand, transforming the sales process, driving efficiencies and unlocking value for diamond producers and manufacturers alike.

Under an exclusive collaboration agreement with Sarine Technologies, a digital fingerprint of each rough diamond is created and uploaded to the Clara platform with a corresponding asking price. Simultaneously, diamond buyers upload their specific polished diamond requirements in terms of size, cut, color and quality, including their desired purchase price, creating an 'order' within Clara. Clara uses proprietary analytics to match individual, scanned rough diamonds to the buyers' optimal polished requirements. Clara earns the differential between the asking price and purchase price of each match as its revenue and requires a minimum transaction spread to facilitate an optimal match.

Inaugural Sale Commenced November 30

The selection of rough diamonds offered in Clara's first sale included diamonds between 1 and 4 carats in size in the better colors and qualities from Lucara's Karowe mine as well as additional aggregated third-party rough. Seven vertically integrated jewelry and global diamond manufacturers placed their polished diamond orders on Clara and Clara completed its first digital matching cycle on December 16 with positive results. The initial sale limited the number of manufacturers to ensure that each participant had a high likelihood of matching orders and receiving stones so feedback could be easily incorporated and monitored.

Data collected from this sale will also provide key metrics to demonstrate the premium Clara can obtain over historical tenders and for rough purchased through long term supply contracts. In co-operation with our manufacturing partners, Clara will analyze both qualitative and quantitative feedback about their experiences as purchasers, at the time of sale and following delivery of the diamonds purchased. Additional feedback is anticipated as diamonds move through the diamond pipeline into manufacturing and ultimately final retail sale. This test has confirmed that the platform is now ready and has the capacity to on-board additional manufacturers in the short term.

Benefits of Clara

Eliminates diamond sales by assortments; facilitates diamond sales stone by stone achieving best possible pricing for producers
Manufacturers purchase only the diamonds they want, eliminating the need to re-trade and finance unwanted inventories, achieving higher margins
Continuous sales versus fixed sales cycles, smooths out revenue streams
Clara is integrated with blockchain technology, so every rough diamond is tracked with a secure and immutable record of its origins and ownership, providing peace of mind for consumers

Next Steps

This inaugural trial has demonstrated that the platform works as intended and further confirms that it is now ready and has the capacity to on-board additional manufacturers in the short term. Further, Clara continues to receive expressions of interest from both manufacturers and producers alike, and growth in both volume of orders and supply is expected over the coming months as the platform moves into continuous sales. A second sale on the platform is planned for later in January and thereafter, a steady ramp up in sales through Clara is anticipated in 2019. Lucara will be reporting sales through Clara quarterly, along with additional guidance, once the platform has moved into continuous sales. Lucara will continue to optimize its sales strategy through a combination of Clara and its regular tender process.