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Posts tagged ‘lesotho’

Elephantine diamond hunting pays off in southern Africa

April 20th, 2015

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.

Canadian mines increasingly important to world diamond supply

February 6th, 2015

by Greg Klein | February 6, 2015

As some of the world’s largest sources of diamonds become depleted, Canadian operations—both new and expanded—help prevent a decline in supply. This year’s global rough diamond output will increase about 3.3% over 2014 to produce approximately 135.5 million carats, according to estimates released by Paul Zimnisky on February 6. The independent consultant and diamond authority stated that the world’s 10 largest mines produce about 61% of global production. The top 54 mines produce 85%. The rest comes from small artisanal operations, mostly in Africa.

Canadian mines increasingly important to world diamond supply

With the 2016 opening of “the world’s largest and richest new diamond mine” on schedule, Gahcho Kué has helped spur an exploration
rush in the NWT’s Lac de Gras region.

Four recently opened mines will see their first full year of production in 2015, two in Russia and one each in Botswana and Angola. Three new mines have production planned this year, in Russia, South Africa and Botswana. The latter mine, operated by ASX-listed Kimberly Diamonds, will replace the company’s Ellendale mine in Australia, due to close in May.

Zimnisky sees Canadian production more than doubling over the next four years “driven by two new world-class mines coming online in 2016 and a new mine plan at [Dominion Diamond’s TSX:DDC] Ekati mine, which is estimated to increase production almost three-fold to six million carats annually by 2018.”

Located in the Northwest Territories’ Lac de Gras region, Ekati had been facing a 2020 shutdown. But late last month Dominion released a prefeasibility study for the project’s Jay pipe, which would add 11 years to the mine’s lifespan.

Two upcoming Canadian operations make Zimnisky’s list of the “most anticipated” mines-to-be. Gahcho Kué, also in Lac de Gras, remains on track for H2 2016 production, Zimnisky stated. Production estimates for the De Beers/Mountain Province Diamonds TSX:MPV joint venture total 53.4 million carats over a 12-year life. At an estimated $150 per carat, that “would make it one of the world’s top-10 largest diamond mines by value produced.” Zimnisky estimates global prices to average $103 per carat in 2015, down about 2% from last year.

In north-central Quebec, Stornoway Diamond’s (TSX:SWY) Renard project has production slated for H2 2017, Zimnisky stated, “with annual production estimated to reach 1.7 million carats annually at an estimated $180 per carat.”

Other major projects coming into operation would be Firestone Diamonds’ Liqhobong mine in Lesotho, planned for Q2 2016 production and estimated to produce up to a million carats annually at $125 per carat. “At the moment, Liqhobong is the only new mine in development outside of Canada and Russia estimated to produce at least one million carats annually.”

Rio Tinto’s (NYSE:RIO) Bunder project in India might begin operation by 2018. “Initial production profiles show Bunder producing 700,000 carats annually, from a resource of 27 million carats.”

In Russia’s far east republic of Sakha, ALROSA’s Verkhne-Munskoe project holds an estimated 40 million carats and could turn out a million carats annually by the end of the decade.

Back in the NWT’s Lac de Gras region, forecasts see the Rio/Dominion Diavik mine becoming the world’s fourth-largest by value this year, producing 6.1 million carats at $115 per carat. Another Lac de Gras current producer, De Beers’ Snap Lake has 1.2 million carats estimated for this year at $105 per carat.

Now the focus of renewed exploration activity, the Lac de Gras region alone ranks third for global diamond production by value.

De Beers, meanwhile, stands out as a top performer in the diversified holdings of Anglo American, which owns 85% of the vertically integrated diamond company. This week The Australian stated Anglo “risks a downgrade to ‘junk’ status as it faces billions of dollars of write-downs and plunging profits as commodity prices tumble.”

Zimnisky sees diamond prices rising steadily from this year’s forecast of $103 per carat to $120 in 2019, then dipping slightly the following year.

A report issued last December by Bain & Company and the Antwerp World Diamond Centre forecast rough diamond demand growing between 4% and 5% up to 2024. Supply projections, on the other hand, see only 3.5% to 4% growth up to 2019, then 1.5% to 2% for the next five years.

Read more about diamond supply and demand.