19 Nov

Lucara unearths diamond history with 1100-carat stone

Canadian mining company Lucara has unearthed a colourless diamond for the ages. Once cut and polished, it could give birth to the single largest polished diamond in the world.

The astounding stone has no precedent in the past century and will command a massive price at auction. The only question is how high it will go.

Lucara Diamond Corp. said it recovered a gigantic 1,111-carat, gem-quality diamond from its Karowe mine in Botswana this week. To put that in perspective, it is believed to be the second-largest gem-quality stone ever found. The only one known to be bigger is the legendary Cullinan diamond, which was recovered in South Africa in 1905 and weighed 3,106.75 carats.

“I’m still waking up at 4:00 a.m. every morning completely stunned,” Lucara chief executive William Lamb said in an interview Wednesday.

The diamond measures 65 millimetres by 56 millimetres by 40 millimetres. It is so big that Vancouver-based Lucara could not do a proper analysis, because the stone won’t fit in its scanning machine. But the company knows for certain that it is a white, Type IIa diamond, considered the purest form of diamond. Only about two per cent of the world’s diamonds are Type IIa. There are very low amounts of impurities within this stone, according to the company.

Lucara is part of Toronto mining kingpin Lukas Lundin’s stable of companies, so this marks another big win for him and his brother Ian.

There is no way to guess where this diamond could be priced because nothing remotely similar to it has ever been sold in the modern tender process. In 2010, Petra Diamonds Ltd. sold a 507-carat diamond to a Hong Kong-based retailer for US$35.3 million. Before that, Gem Diamonds sold a 603-carat stone for US$12.4 million in 2006.

Lamb said this diamond should command far more money. Not only is it an order of magnitude larger than the other stones, but it also has unique historical cache as the largest gem-quality diamond found in more than 100 years. It will be interesting to see if a buyer places value on that.

“Because it’s got an historical component to it, it becomes similar to a piece of art,” Lamb said. “People are going to say, ‘Hang on a second, do I want to own a piece of Botswana history?’”

There is no way to guess where this diamond could be priced because nothing remotely similar to it has ever been sold in the modern tender process.

The Karowe mine, which entered production in 2012, produces less than one per cent of the world’s diamonds. But it has already gotten recognition for producing high-quality stones. According to Lucara, the mine churns out around half the world’s rough diamonds weighing more than 100 carats. So the company knew it might find something really big.

Last summer, Lucara completed the installation new X-ray technology in its plant to help uncover very large stones. That move has already paid off. There was long-standing concern in the industry that a diamond this big could get broken apart in a modern processing plant, but Lucara proved they can be preserved with the right amount of care.

Lucara bought 70 per cent of the Karowe mine in 2009 from De Beers for just US$49 million. It obtained 100 per cent ownership of the mine the following year, when it bought African Diamonds PLC for $70.3 million in stock.

Looking ahead, Lamb is excited by the possibility that this mine could hold more stones of this caliber.

“I don’t know if anybody, including us, understands what the resource could potentially do,” he said. “Now we have to sit back and ask if we could recover something larger.”

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