Lucapa Diamond Company (ASX:LOM) has engaged administrators following a cost cutting exercise and halving of its corporate workforce, with US President Donald Trump’s trade tariffs putting pressure on pricing and demand for diamonds.
Richard Tucker and Paul Pracilio of KordaMentha Restructuring have been appointed as voluntary administrators.
Lucapa has a 40% stake in the Lulo alluvial mine in Angola, which produces large, premium Type IIa diamonds – with several recovered that are over 100 carats.
The company’s main exploration project is the Merlin Diamond Project in the Northern Territory, which is covered by a 24km2 mineral lease and a 210km2 exploration licence.
Eight of the 11 known kimberlite pipes at Merlin were mined by Rio Tinto (ASX:RIO) and Ashton Mining between 1999 and 2003, producing 500,000 carats of diamonds from 2.2 million tonnes of treated kimberlite.
The voluntary administrators are undertaking an urgent assessment of Lucapa and the operations and will shortly begin a dual-track recapitalisation and sale process.
During the March quarter, Lucapa witnessed a 44% drop in its diamond inventories to 1,685 carats, a 41% decline in its cash and receivables to $2 million and had to take on interest-bearing debt of $600,000 compared to the same quarter of 2024.
The company undertook a review of its corporate spend during the quarter which resulted in cuts to its corporate overheads and workforce.
Lucapa said in its March quarter report that the overall effect of the tariffs introduced by the US post quarter end are still yet to be fully understood, with many buyers taking a wait and see approach during April.
This impacted demand and prices for those producers still trying to sell diamonds.
KordaMentha’s Tucker told Mining.com.au late last year that around 99% of mining companies that KordaMentha assists will come out of administration, usually by way of a deed of company arrangement (DOCA).
A DOCA is an agreement between the company and its creditors aimed at keeping the business operating and providing a better return for creditors than immediately winding up the company.
Write to Angela East at Mining.com.au
Images: Lucapa Diamond Company
