Lucara Recovers Whopper

Issue 146, November 2015

Diamonds coming out of Lucara's Karowe mine in Botswana just keep getting bigger.

Last week the company unearthed the biggest diamond for more than a century, weighing 1,111-carats, or half a pound. Analysts at Scotiabank described the discovery as “super league status”, whilst Lucara's chief executive William Lamb said he is “still waking up at 4.00am every morning completely stunned.”

Lucara, which has trademarked the slogan “Where Bigger Is”, has led the industry in using X-ray technology in its processing plant to avoid crushing large diamonds. And if there was any question of the recovery being a fluke, Lucara following the announcement with news of two more thumpers, weighing 813-carats and 374-carats respectively. “I am truly at a loss for words,” Lamb said.

Investors nearly over-dosed on the news. Shares jumped 30 per cent, adding C$183m ($138m) to Lucara's market cap, putting a hefty valuation on the diamonds, as well as Lucara's undoubted ability to discover yet more big stones.

There is no precedent for such a sale, but if the largest diamond hits the high-end of Lucara's previous sales per carat, it could comfortably fetch more than $80m. Its two other stones could add a further $49m, if they achieve the average price of Lucara's large diamonds to date.

William Lamb told Global Mining Observer in May that the company was preparing to re-enter its prized south lobe, an envelope of large stones in Karowe's kimberlite resource. But the size of its latest discoveries is nonetheless off the chart. “You’d have to be a very brave person to predict a stone like this,” Lamb told the Financial Post.

The recovery comes at a time when diamond prices have cleaved into two. De Beers suffered its worst ever sale this month, estimated at $70m, whilst exports from Botswana, the world's biggest producer alongside Russia, collapsed to zero in July, according to figures released by the country's central bank.

Large and rare diamonds however continue to hit new records. Hong Kong billionaire Joseph Lau, a property magnate, paid $48m for a
12-carat blue diamond at a Sotheby's auction earlier this month, having shelled-out $29m for a 16-carat pink diamond the evening before. Both were gifts for his daughter.

“You’d have to be a very brave person to predict a stone like this.”

RELATED NEWS

Bomb Threats, Diamonds & Bullet Proof Vests

Martin Rapaport's perilous route to becoming the diamond industry's most influential body

............................................

From Mine to Mistress,
an Overlooked Niche

SLIDESHOW: How gemstone miner Gemfields realises ruby margins above 99 per cent

............................................

First Mining:
Keith Neumeyer's
Gold Deal Binge

"The last thing Keith wants to do is be idle," say bankers working on Neumeyer's threeway deal

............................................

............................................

The Great Royalty Freak-Out

20 hidden royalties in gold, coal, iron ore and base metals that are plausible, desirable targets