Thursday 27th October 2016

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Posts tagged ‘Lucara Diamond Corp (LUC)’

World’s largest rough diamond fails to meet Lucara’s price expectations

June 29th, 2016

by Greg Klein | June 29, 2016

Dissatisfied with a reported $61-million bid, Lucara Diamond TSX:LUC declined to sell its 1,109-carat Lesedi La Rona stone. The company had hoped Sotheby’s June 29 London event would pull in $70 million or more.

The stone’s currently the largest gem-quality diamond in captivity and history’s second largest after the 3,106.75-carat Cullinan diamond. Found in 1905, Cullinan was cut and polished into nine gems for the Crown jewels and royal sceptre. Lucara took the unusual step of delegating the Lesedi La Rona sales job to an auctioneer, not standard procedure for rough. But a heavy promotional campaign failed to find a sufficiently astronomical price.

World’s largest rough diamond fails to meet Lucara’s price expectations

Despite its record size, as well as exceptional quality and
transparency, the Lesedi La Rona drew disappointing bids.
(Photo: Donald Bowers/Getty Images for Sotheby’s)

Yet the miner’s expectations might have been understandable. In May Lucara sold its 812.77-carat Constellation for $63.11 million, or $77,649 per carat, “the highest price ever achieved for a rough diamond,” the company stated. Lucara kept a 10% interest in Constellation’s sale after being cut and polished.

Exceptional cut-and-polished prices in recent months included the Blue Moon of Josephine which went for $48.4 million last March, then considered “a new record price for any gemstone and per carat.” Just one day earlier the same buyer paid $28.5 million for the 16.08-carat Sweet Josephine.

In April, however, Sotheby’s rejected a top bid of $22 million for the 9.54-carat Shirley Temple Blue diamond, having hoped for $25 million to $35 million.

Lucara’s recent record finds came from its Karowe mine in Botswana, aided by an improved recovery circuit. The two Josephines came from South Africa’s Cullinan mine, now operated by Petra Diamonds. That company’s most recent large find weighs in at 121.26 carats. It’s currently on tender.

Earlier this month ALROSA announced one of Russia’s biggest finds, a 241.21-carat rough that followed the previous month’s 207.29-carat stone, each from a different pipe at Yakutia in Siberia.

See an infographic: Six of the world’s most famous diamonds.

Sotheby’s imagines the Lesedi La Rona diamond outshining the legendary gems cut from the Cullinan stone

May 25th, 2016

…Read more

$58.25-million Oppenheimer Blue diamond sets new record polished price

May 18th, 2016

by Greg Klein | May 18, 2016

The gemnomaniacal super-rich continue to smash sales records as Christie’s pulled in $58.25 million for “the largest vivid blue diamond ever to come to auction.” The 14.62-carat Oppenheimer Blue easily surpassed the $48.4-million Blue Moon of Josephine, declared by Sotheby’s in November to be “a new record price for any gemstone and per carat.” Christie’s also beat its own pre-sale expectations of $38.9 million to $46.1 million for the Oppie. With more than 280 lots on the block, the May 18 event totalled $150.11 million.

$58.25-million Oppenheimer Blue diamond sets new record polished price

Rarity, beauty and the provenance of a former De Beers
boss all contributed to the Oppenheimer Blue’s historic price. (Photo: Christie’s)

Although relieved of some bragging rights, Sotheby’s didn’t do too badly either. The previous day, and also in Geneva, Christie’s rival got $32 million for the 15.38-carat Unique Pink, setting a record for a stone of its type, which in turn helped set “a new world record for any jewelry sale” with total auction proceeds of $175.1 million.

But for all the extraordinary cut-and-polished prices of recent months, Lucara Diamond TSX:LUC surpassed everyone with a 812.77-carat rough that raised $63.11 million last week. The Botswana miner hopes to get something like $70 million for a 1,109-carat rough which Sotheby’s puts on the block next month.

Humungous prices don’t, however, reflect the diamond market in general. The industry faces “a fragile recovery” following last year’s price slump, De Beers chief executive Philippe Mellier told the Financial Times. He added that “the market is not going to bounce back” as it did following the 2008 financial crisis.

But “my view is we have seen the market bottoming,” the FT quoted him, as rough and polished inventory levels are now “very close to normal and polished prices stabilized around December.”

Lucara gets $63 million for record rough diamond, expects even more next month

May 9th, 2016

by Greg Klein | May 9, 2016

The 812.77-carat sale had Lucara Diamond TSX:LUC bragging about “the highest price ever achieved for a rough diamond, breaking all records”—and the company has an even bigger stone going to auction next month. Lucara got $63.11 million, or $77,649 per carat, for the newly named Constellation, one of last November’s big finds from the Karowe mine in Botswana. The company retains a 10% interest in Constellation’s cut-and-polished profits.

Lucara gets $63 million for record rough diamond, hopes for even more next month

Sorters scrutinize some of the smaller
stones from Lucara’s Botswana operation.

Lucara’s record-breaking recovery, just days before Constellation, was the 1,109-carat Lesedi La Rona, from which Sotheby’s hopes to raise more than $70 million in London next month. As a gem-quality rough it ranks second in size only to the 3,106.75-carat Cullinan stone found in South Africa in 1905.

Cullinan was cut into nine polished gems, eight of them set into Britain’s Crown jewels. The ninth, the 530.2-carat Great Star of Africa, now resides in Queen Elizabeth II’s sceptre. It’s considered the world’s largest top-quality polished diamond but, Sotheby’s says, might lose that distinction to Lesedi La Rona.

But for that to happen, “a full complement of truly diamantine nerves will be required,” the auctioneer points out. “For while the art and craft of diamond-cutting—a meditative skill often passed down through generations—has radically improved since the Cullinan was cut, it is still through man’s ingenuity that the full beauty and light of a gem is revealed.”

Constellation bagged considerably more than the extraordinary cut-and-polished sales of recent months, including the $48.4-million Blue Moon of Josephine.

At a special tender of Karowe rough last month, Lucara flogged 10 diamonds totalling 1,525 carats for $51.3 million.

Last year Lucara attributed its historic finds partly to Karowe’s new XRT recovery circuit. The company planned to spend $15 million to $18 million to integrate an additional recovery process for exceptionally large gems.

See an infographic: Six of the world’s most famous diamonds.

Casualty in Lac de Gras

December 4th, 2015

The NWT looks to Gahcho Kué diamonds as Snap Lake goes on care and maintenance

by Greg Klein

Bad news can have a way of sounding sudden, even when it’s not surprising. De Beers had publicly discussed Snap Lake’s possible closure last March and again just one day before the December 4 official announcement. It comes as the global giant revamps operations in response to faltering rough diamond prices.

The company’s first mine outside Africa and this country’s only fully underground diamond mine, Snap Lake is unique in Canada. The kimberlite “is a dyke that averages about 2.5 metres thick and slopes down beneath Snap Lake at an average of 12 degrees, making it challenging and complex to mine,” according to the company. It’s a fly-in/fly-out operation for all but six to eight weeks a year, when heavy equipment and supplies arrive via ice road.

The NWT looks to Gahcho Kué as Snap Lake goes on care and maintenance

“Even the gains made this year are not enough to overcome
the market conditions and put us in a profitable position,”
lamented De Beers Canada chief executive Kim Truter.
Photo: De Beers

De Beers said it “will evaluate market conditions over the next year to determine the potential of the ore body as a viable mine.” Its capacity was 1.4 million carats annually.

The company, owned 85% by Anglo American and 15% by Botswana, recently announced a number of restructuring moves. The same day as the Snap Lake announcement, Bloomberg cited anonymous insiders who said Anglo might cut this year’s dividend. While the company has been selling assets to raise money, Anglo might get as much as $10 billion if it sold its stake in De Beers, according to an HSBC note quoted by Bloomberg last month.

Also last month Dominion Diamond TSX:DDC reported an approximately 8% drop in rough prices this year. pegs the year-on-year decline at 18%. Rapaport Group chairperson Martin Rapaport has called on De Beers to slash rough prices another 30% to 50% and replace CEO/diamond newbie Philippe Mellier with an experienced diamantaire.

Rapaport’s news service predicted De Beers’ revenue will fall approximately 44% this year. The company that once ran the global diamond industry has missed out on the sector’s more sensational recent news, such as Lucara Diamond’s (TSX:LUC) announcement of the world’s second-largest diamond find. President/CEO William Lamb has said it might fetch more than $60 million. The stone came from Botswana’s Karowe project, in which De Beers sold its 70% stake to Lucara in 2009 for US$49 million.

The NWT looks to Gahcho Kué as Snap Lake goes on care and maintenance

The NWT’s Lac de Gras region hosts Snap Lake,
two remaining mines and mine-to-be Gahcho Kué.
Map: De Beers

Putting 434 people out of work immediately, Snap Lake’s closure deals a heavy blow to the Northwest Territories, now down to two mines with the October shutdown of the Cantung mine as operator North American Tungsten TSXV:NTC sought creditor protection.

Last year the three diamond mines provided 3,234 jobs, 47% of them going to northerners, and spent $979 million in purchasing, with $653 million on northern companies, according to figures from the NWT and Nunavut Chamber of Mines. Direct and indirect benefits contribute nearly 40% of the territory’s GDP, making diamonds the largest private sector contributor to the economy, the chamber added.

But Snap Lake contributed less than the other mines, with a total of 747 jobs and $182 million in purchasing. By comparison the Rio Tinto NYE:RIO/Dominion Diavik JV created 948 jobs and spent $332 million, while Dominion’s majority-held Ekati operation created 1,539 jobs and spent $465 million.

Still, chamber of mines executive director Tom Hoefer said, “We’re hoping that this kind of devastating action on our economy is something that will make governments take notice.” That would depend on the response from people elected federally in October and territorially in November. Among the NWT’s specific problems are the lack of infrastructure and high cost of living.

“The new federal government has spoken about investing directly in infrastructure, but that was a Canada-wide statement, so we need to see how that affects the North,” Hoefer said. “On the territorial government side, it’s pretty early to tell.” Of 19 MLAs elected, 11 are new to the legislature. Not formally aligned by party, the MLAs have yet to choose a premier or form a cabinet.

An optimistic development for both De Beers and the NWT would be Gahcho Kué, a JV with Mountain Province Diamonds TSX:MPV that’s scheduled for H2 2016 production. Heralded as “the world’s largest and richest new diamond mine,” it would more than make up for Snap Lake’s loss.

“Certainly having Gahcho Kué in the wings is a positive thing for us,” Hoefer acknowledged. But he’s waiting to see if guidance will be adjusted. “The other two mines are more resilient operations than Snap Lake, but they’re still facing the challenges of declining revenues, so what do you do about costs?”

Yet Canada might be the jurisdiction most likely to withstand the diamond downturn, according to analyst Paul Zimnisky. Speaking to Mining Weekly Online last month, he said Ekati and Diavik “are still quite profitable projects, even in a weaker price environment.” He suggested Dominion might pull in “$250 million in free cash flow next year and almost double that the following year, using what I would consider a conservative diamond price.”

Zimnisky also pointed out that financing’s fully in place for Gahcho Kué and Stornoway Diamond’s (TSX:SWY) Renard project in Quebec, slated to begin production late next year. With its Kennady North project surrounding Gahcho Kué on three sides, Kennady Diamonds TSXV:KDI expects its successful $48-million infusion to carry the company through 2017.

De Beers also runs the Victor mine in Ontario’s James Bay region. In February 2013 the company warned the mine could close if natives continued to block the ice road during the approximately 45-day period that trucks can reach the site.

Rio Tinto unveils a record rock from NWT’s Diavik diamond mine

December 2nd, 2015

by Greg Klein | December 2, 2015


Rio Tinto NYE:RIO calls it “one of the largest diamonds ever discovered in Canada.” But could it be the largest? Either way, the rock made its public debut at no less a venue than Kensington Palace, Rio announced December 2. Christened the Diavik Foxfire, and also going by the indigenous name Noi?eh Kwe, the 187.7-carat gem-quality rough surfaced at Diavik, the Northwest Territories joint venture of Rio and Dominion Diamond TSX:DDC.

At two billion years of age, “its ancient beginnings, together with the fortitude, finesse and innovative technology required to unearth a diamond in the challenging sub-arctic environment, make it a true miracle of nature,” enthused Jean-Marc Lieberherr, managing director of Rio’s diamonds division.

Referring to the indigenous name, Tlicho Grand Chief Edward Erasmus said, “I am very pleased that this has been named to honour the area of the caribou crossing, as this has been important to the Tlicho since time immemorial.”

Rio Tinto unveils a record rock from the Diavik diamond mine

The Diavik Foxfire, also known as Noi?eh Kwe.

Following its London presentation the stone returns to Antwerp for “careful assessment and planning for the next stage of its journey,” Rio stated. The rock will likely “yield at least one very large polished diamond with its ultimate destiny in an exclusive heirloom piece of jewelry.”

The stone surpasses a 182-carat rough from another NWT mine, Ekati, that didn’t meet gem quality. Dominion, now the mine’s majority owner, refers to the 78-carat Ekati Spirit as the project’s most significant find. The rough stone sold in 2011 for $6.1 million.

Perhaps with pride clouding accuracy, last September Birks claimed its 15.1-carat, $3.69-million North Star cut-and-polished jewel originated from the largest diamond found in Canada, a 55.07-carat rough from Diavik.

The past few months have seen outstanding numbers in rough sizes and cut-and-polished sales globally. In November the $48.4-million Blue Moon brought Sotheby’s “a new record price for any gemstone and per carat.” The previous day Christie’s auctioned a 16.08-carat diamond ring for $28.5 million.

Also last month, Lucara Diamond TSX:LUC announced the find of a century, a 1,111-carat stone from the Karowe mine in Botswana that’s surpassed only by the 3,106-carat Cullinan stone which now forms part of the British Crown jewels. Within days Lucara announced 813-carat and 374-carat discoveries, with weights subject to change when the stones are cleaned.

Lucara claims diamond history with second-largest rough stone ever found

November 18th, 2015

by Greg Klein | November 18, 2015

Lucara Diamond TSX:LUC takes a place in history with a 1,111-carat gem-quality, Type IIa rough diamond announced November 18. Pulled out of the company’s Karowe south lobe in Botswana, it’s the largest gem-quality diamond known, after the legendary Cullinan stone found in South Africa in 1905. The Cullinan was cut and polished into the two largest diamonds in the British Crown jewels.

Lucara claims diamond history with second-largest rough stone

Found by Lucara’s newly installed large diamond recovery
XRT machines, the rock measures 65 by 56 by 40 millimetres.

Lucara’s latest find far outweighs Karowe’s second-largest stone, a 348-carat piece announced just six days earlier. The company reported a 255-carat diamond at the same time.

At Lucara’s second Exceptional Stone Tender of 2015 last week, the company sold 13 single stones totalling 1,440 carats for a total of $29.7 million, or $20,625 per carat. A tender held last July reaped $68.71 million, or $41,028 per carat, for 14 stones totalling 1,674 carats.

But the 1,111-carat discovery “puts Lucara and the Karowe mine amongst a select number of truly exceptional diamond producers,” boasted president/CEO William Lamb. “The significance of the recovery of a gem-quality stone larger than 1,000 carats, the largest for more than a century, and the continued recovery of high-quality stones from the south lobe, cannot be overstated. Our focus on mining the south lobe, which is delivering value beyond expectation, has been perfectly timed with the commissioning of our recent plant modifications, enabling the recovery of these large, high-quality exceptional diamonds.”

One week earlier Sotheby’s announced “a new record price for any gemstone and per carat” with the $48.4-million bid for the Blue Moon of Josephine diamond.

See an infographic: Six of the world’s most famous diamonds.

Update: On November 19 Lucara announced two more big finds from Karowe, an 813-carat and a 374-carat white diamond. Weights are subject to change when the stones are cleaned.

Seven big miners form global Diamond Producers Association

May 27th, 2015

by Greg Klein | May 27, 2015

There was a time when De Beers was, to a large extent, the world’s diamond mining association. That was back when De Beers was, to a large extent, the world’s diamond mining industry. Those days are gone and now the company, still a global heavyweight, has partnered with six others to create the Diamond Producers Association.

ALROSA, De Beers, Rio Tinto NYE:RIO, Dominion Diamond TSX:DDC, Lucara Diamond TSX:LUC, Petra Diamonds and Gem Diamonds “will work together to support the development of the diamond sector,” the septet announced May 27. The organization described its mandate as:

Seven big miners form global Diamond Producers Association

  • maintaining and enhancing consumer demand for and confidence in diamonds including joint category marketing initiatives

  • providing a reliable source of industry information, including trade and consumer research

  • acting as the unified voice of the diamond producers, when required and/or appropriate, with industry and non-industry forums/organizations

  • communicating the role and contribution of diamond producers to the diamond sector and broader society

  • sharing best practices in health and safety, licence to operate, supply chain integrity and environment management

Word on exactly how the DPA will carry out those endeavours and with what emphasis will likely wait until the organization begins operations under a still-to-be-hired executive director. The companies chipped in an annual budget of US$6 million.

Read about diamond supply and demand.

Read about diamond mining in Canada.

Bling goes ka-ching with $22-million diamond ring

April 22nd, 2015

by Greg Klein | April 22, 2015

“Unlike any diamond offered at auction before,” according to Sotheby’s, a 100-carat stone sold for $22.1 million in New York on April 21. One of only six “perfect” diamonds above 100 carats auctioned in the last 25 years, the Emerald-cut, D-colour and internally flawless rock, mounted on a platinum ring, outshone a sale of exceptional opulence that totalled over $65 million.

Bling goes ka-ching with $22-million diamond ring

The diamond “captivated people around the world”
but other jewelry also fetched remarkable prices.

“The stone captivated people around the world throughout our extensive travels this spring, but it was a particular privilege to offer it at our New York headquarters,” said Lisa Hubbard of Sotheby’s International Jewelry Division.

The diamond came from a southern Africa De Beers mine, according to media reports. The BBC said the stone took a year to cut, polish and perfect. Rapaport News reported that applause greeted the sale as an anonymous buyer phoned in the successful bid.

“The market for highly important diamonds was in evidence elsewhere in the sale as well,” Sotheby’s added. Another platinum and diamond ring went for $3.3 million, an 18-karat gold, fancy purplish diamond and sapphire ring got $2.4 million and a necklace of platinum, emerald, sapphire, lapis lazuli and diamond pendant “soared past its pre-sale high estimate to $2.6 million.”

Applause notwithstanding, Rapaport described the event as “a quiet sale with a very strong total,” adding that buyers paid “strong but sane sums for top-quality gems and jewelry.”

One day earlier Lucara Diamond TSX:LUC stated it found a 342-carat stone of “exceptional colour and clarity” from its Botswana operation.

Read about diamond supply and demand.

Read about diamond mining in Canada.

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.