11:24 pm
22 October 2016

Canadian Mining Firm Discovers World’s Second-Largest Diamond in Botswana

A nearly tennis-ball-size gem discovered in Botswana is the second-largest diamond ever unearthed, smaller only than a precious stone carved up to adorn the British crown jewels.

The 1,111-carat gem-quality diamond was found this week at the Karowe Mine in Botswana, said Lucara Diamond Corp., the Vancouver-based company that owns and operates the mine. It was among a cache of huge white diamonds discovered at Karowe this week, including a a 374-carat gem and an 813-carat stone the company said was the sixth-largest ever found. One carat is equivalent to one-fifth of a gram.

“I am truly at a loss for words,” said Lucara Chief Executive William Lamb. “We are truly blessed by this amazing asset.”

The large gem discovered by Lucara measures 65mm x 56mm x 40mm in size and is the largest recovered in Botswana.
The large gem discovered by Lucara measures 65mm x 56mm x 40mm in size and is the largest recovered in Botswana. PHOTO: AGENCE FRANCE-PRESSE/GETTY IMAGES

Lucara’s shares were up 28% in Toronto on Thursday afternoon after the discovery of the 1,111-carat stone, whose value could run into the tens of millions of dollars.

The largest diamond ever discovered was a 3,106-carat Cullinan stone found in South Africa in 1905. The stone was cut into several large polished gems, including the Great Star of Africa and the Lesser Star of Africa, both of which are housed in Britain’s crown jewels.

Botswana, along with African neighbors South Africa and Namibia, is one of the biggest producers of mined diamonds. Australia and Russia also are important suppliers.

Numis Securities analyst Phil Swinfen said it is hard to put a value on a diamond without more details about color or the ways it could be cut. Mr. Swinfen, a former diamond-mining geologist, said the Lucara diamond could fetch between $40 million to $60 million or more based on recent sales of large stones the company has found. Lucara sold a 342-carat type IIa diamond discovered in April for $20.55 million, equivalent to $60,087 a carat.

“Given this stone is likely to be historically significant, the value could take on a life of its own and achieve significantly more—all flowing straight to Lucara’s bottom line,” Mr. Swinfen said. “This is immensely good news for Lucara, perhaps the best week in the company’s history.”

The stone is a type IIa diamond, meaning it is a good-quality diamond nearly devoid of impurities. It is the largest type IIa diamond found in more than a century and the biggest dug up by machines, Lucara said. It was recovered from the south lobe of the Karowe Mine by using Large Diamond Recovery XRT machines.

Lucara is the sole owner and operator of the mine, which produced its first diamond in 2012.

The Karowe Mine joins Gem Diamonds Ltd.’s Letseng Mine in Lesotho, the landlocked southern Africa mountaintop kingdom, as the rockbed for the world’s biggest individual diamond discoveries in the 21st century. Before Lucara, Gem Diamonds held the previous record for this century’s largest recovered diamond: the 603-carat Lesotho Promise in 2006. That gem sold for $12.4 million.

I am truly at a loss for words… We are truly blessed by this amazing asset.

—Lucara Chief Executive William Lamb

Lucara’s three diamond discoveries this week come amid sustained poor prices for the gemstone. Prices have fallen because of high levels of diamond inventory and lackluster demand, particularly in China.

Exceptional diamonds, however, are still fetching extremely high prices. South Africa’s Petra DiamondsLtd. sold a rare 29.62-carat rough blue diamond for $25.6 million in February 2014 to a diamond cutter that fashioned it into a 12.03-carat polished diamond called the Blue Moon. The diamond was sold under the name Blue Moon of Josephine to a Hong Kong buyer for $48.5 million at a Sotheby’s auction last week.

Global diamond production is expected to peak in 2017, when 164 million carats of diamonds are forecast to be produced, according to McKinsey & Co. After that, production is expected to go into a long-term decline, unless significant new discoveries are made, McKinsey’s forecasts show.

A spokeswoman for Lucara said the company is considering all possible sale avenues for the three diamonds found this week, including selling the largest stone at its own auction. “The stones will attract a lot of attention,” she said.