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Elephantine diamond hunting pays off in southern Africa

by Greg Klein | April 20, 2015

Now that’s one ostentatious stone—Lucara Diamond TSX:LUC announced a 342-carat gem of “exceptional colour and clarity” from its Botswana mine on April 20. “The recovery of this magnificent stone once again confirms the quality of diamonds contained within the Karowe resource,” said president/CEO William Lamb. The company plans to sell the giant gem along with two other recently recovered diamonds weighing over 100 carats each.

Elephantine diamond hunting pays off for Lucara in Botswana

This 342-carat diamond came from
Lucara’s AK6 kimberlite pipe in Botswana.

To put the latest find in context, a Wikipedia partial list of largest rough diamonds names 35 examples ranging from 217 to 3,167 carats. A stone within that range could make one or more magnificent pieces of jewelry but it might get stashed away, its beauty hidden, in a speculator’s vault. Last November the Wall Street Journal reported increased investor interest in southern Africa’s plus-sized stones.

“It’s $10 million you can carry in your pocket without setting off an alarm and it’s reasonably resalable. That’s unique,” the paper quoted Brian Menell, an oil, gas and mining investor who connects well-heeled clients with big diamonds.

The WSJ noted that Lucara got $8.2 million for a 203-carat diamond in October, three weeks after Gem Diamonds sold a 198-carat stone from its Lesotho mine for $10.6 million. About two weeks before that, a 123-carat gem from South Africa got Petra Diamonds $27.6 million.

Last year Lucara sold a total of 412,136 carats at a very high average price of $644 per carat, grossing $265.5 million. The company attributed its 47% revenue increase over 2013 to higher prices and “a larger number of carats being sold in the large exceptional stones tenders, which contributed $135.6 million to revenues.” The exceptional stones brought an exceptional average of $32,471 per carat, while the other tenders averaged $318 per carat, still approximately three times the global average.

Read about diamond supply and demand.

Read about diamond mining in Canada.

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