two bidders on the telephone. A blue paddle, signally a pre-approved buyer, is lifted on the front row and the price edges up to $58m. But bidding is cautious. The room is slow. There are some red faces. Bennett's jolliness becomes a little strained. One bidder makes a signal and Sotheby's slashes its upward increments from $1m to $500,000. Then at $61m, the room comes to a standstill. “I'm going to drop the hammer,” Bennett warns repeatedly. “Last chance.”
     Eventually the hammer comes down. The diamond did not sell, Bennett says with some bad temper, “but it is a magnificent stone and it will go down in history as one of the greatest stones ever discovered.” The reserve is undisclosed, but Sotheby's set a pre-sale estimate of $70m and the final offer had fallen short. The market had disappeared in front of Lucara. Its enormous diamond, in its glass box, is immediately taken away. If it is broken apart, it will never be seen again.
     Sotheby's regency buildings suddenly feel like a used-car showroom. Bennett is surrounded by a huddle of Sotheby's staffers, glaring out from his horn-rimmed glasses. “We'll make a statement, no interviews tonight.” It is the second major flop for the auction house at the top end of the diamond market. In Geneva in 2013, it auctioned off a 60-carat pink diamond, The Pink Star, for a record-breaking $83m. But diamond cutter Isaac Wolf defaulted on the deal and the stone is still sitting on Sotheby's balance sheet.
     “They set a very high price,” one bidder says, as the room begins to clear. “They were asking for a lot of money. We now need time to think.” He leaves to catch a flight. Lukas Lundin is on the phone outside. “Okay... Okay... Okay...” After a brief trading halt, Lucara's share price has reopened 15 per cent lower. Lundin is used to

larger deals. “There’s always going to be disapp-ointment,” Lamb tells the Financial Post. Lucara will be “retaining” the diamond, the company says in an announcement to the stock exchange.
     In some ways, Sotheby's and Lucara had gone out on a limb. Uncut diamonds are never usually sold at auction, but behind closed doors in private tenders. The auction's timing at the end of June also just missed the peak of the jewellery circuit. Every year, Sotheby's and its rival Christies hold their flagship jewellery sales in Geneva in May. The result “potentially calls into question the sale method chosen,” according to analysts at BMO.
     The auction's timing was also unfortunate politically, five days after the UK's electorate narrowly voted to leave the European Union, causing big currency swings, a surge in the gold price and a $2 trillion drop in stock markets worldwide. Sotheby's held a similarly ill-timed auction in 2008 on the eve of the banking crisis, the largest ever sale of work by artist Damien Hirst. Bidding began the day that Lehman Bros went under and the auction raised $198m, a record for a living artist, but Hirst's prices have collapsed since and Lucara was less lucky in getting across the line.
     Buying uncut diamonds is a risky business. London-listed Petra Diamonds sold an uncut 30-carat blue diamond for $26m in 2014. The buyer cut it down to a flawless 12-carat gemstone and sold it on for $49m, a huge mark-up, reflecting the huge risk of cleaving apart such a pricey item. Sotheby's has estimated that Lucara's stone could be cut into a flawless 400-carat gem, but some uncut diamonds are studied for years before being split open.
     Perhaps the biggest unspoken risk for would-be buyers is that Lucara finds several more. The size of diamonds popping out of its Karowe mine

Lucara's 1109-carat diamond, which failed to sell at an auction in London on Wednesday. Bidding peaked at $61m, below the reserve, which was not disclosed. (Photo: Sotheby's)

in Botswana has consistently risen since it entered production in 2012, as Lucara has tweaked its processing plant, adding ever better layers of X-ray technology.
     Sotheby's spun the line that Lucara's biggest rock was miraculously spotted by a geology graduate from the University of Botswana; in reality it was pushed away from Karowe's crusher by new screening technology, implemented by Lucara just four months before. There is every chance that in the years ahead, Lucara will find stones even bigger.
     The company has plenty of options. It is already in discussions with Diacore, a diamond cutter that has frequently partnered with Sotheby's, buying a large chunk of production from mining giant De Beers. “Something like this was about price discovery,” one mining analyst says. “You set a high reserve and see where the interest is. Now it's an off-market conversation.”
     “That's a big stone,” one mining boss present at the auction says. “It will sell.”