Daily Management Review

The world's largest diamond couldn't find a buyer


06/30/2016


Sotheby's failed to sell the largest natural diamond found in more than 100 years.



Lucara Diamond Corporation
Lucara Diamond Corporation
Diamond Lesedi la Rona is equal in size to a tennis ball. The gem weighs 1109 carats, or about 222.2 grams. Its price was expected to reach $ 86 million, which would make it the most expensive gemstone in history. However, the highest offered price amounted to just $ 61 million - less than the so-called reserve price, i.e. the lowest acceptable price set by the seller.

Lesedi la Rona could not find a buyer on Tuesday in London. This is a disappointing result for the stone, called a "historical discovery" by Sotheby's curator of gems and jewelry David Bennett.

"It is excellent in terms of size and quality, - said David Bennett. - Nothing even remotely similar in size and quality has exhibited at a public auction before."

It is unclear what will happen next, said BMO’s Capital Markets analyst Edward Sterck. "We see potential for a private sale", - the expert added. 

The diamond is known as Lesedi la Rona. Translation from the Tswana language means "Our light." Experts believe that the gem’s age varies from 2.5 billion to 3 billion years or more. 

The stone was mined in Botswana in 2015 by Canadian diamond company Lucara Diamond Corporation. The diamond’s sale could bring the company an amount comparable to that of its quarterly revenue.

Lucara’s shares fell 18% in trading in Toronto after the fail at the auction.

Lesedi la Rona is the largest of 112 diamonds weighing over 100 carats, found by Lucara over the past three years. The company develops only Karowe mine, but had found 47 such stones last year.

Lucara accounts for less than 0.5% of the annual global diamond production. However, 60% of diamonds weighing over 100 carats, belonged to the company, according to Lucara’s CEO John Lamb. Analysts note that such information is difficult to verify because the diamond market is non-communicant to public information. Still, the experts agree that Karowe is an exceptional mine. "Chances of finding a new Karowe are very small," - says John Meyer, an analyst at brokerage firm SP Angel. According to him, the mine was known for many years, but experts had not noticed its potential immediately.

Lamb joined Lucara in 2008 after working for De Beers, one of the largest diamond producers. In December 2009, Lucara with his partner African Diamonds has acquired 70% of Karowe mine from De Beers, which sold its stake after the global financial crisis. In a year, Lucara acquired the entire shaft paying a total of $ 79 million. Since then, Karowe brought the company $ 762 million in revenue. De Beers explains reasons for the sale by a desire to focus on more attractive assets.

Lucara’s office staff employs only five people working in Vancouver. The company has to hold back, so as not to flood the major diamonds traditional markets in Antwerp, Israel and New York, admits Lamb. According to him, it is necessary to create alternative sales channels, such as auctions. This way, Lamb hopes to attract new wealthy clients from Russia, the Middle East and China, who ready to pay for the prestigious right to possess a rare diamond, which can serve as an alternative to investment in gold. 

source: wsj.com






Science & Technology

With China Set To Dominate, 1 Billion Could Be Using 5G By 2023

Deutsche Telekom unveils next gen 5G mobile antennas in Europe

Diamonds are now the new gold

Expert Body Says Driving In A Driverless Car In An Inebriated Condition Or On Drugs Should Be Legalized

SEC’s EDGAR database vulnerable to cyber threats

Research Says The Risk Of Severe Turbulence On Planes Will Increase Due To Climate Change

Barclays and CLS Group aim to replace SWIFT with blockchain

Designing Of Cars Being Done With Hologram Goggles At Ford

The Already Surging Cyber Attacks Are Set To Rise Even Further, Says A Study

Chinese to equip smartphones with OLED displays

World Politics

World & Politics

Scholar Says Political Appointees Not As Important As Financial Ones In China For The Economy

An Expected Change In Brussels Could Be Crucial For The Euro Zone

Destroying People Who Wouldn't Help One Of His Bankrupt Businesses Was All Trump Talked About When He Met Him In 1990s: Branson

Russia Is Worried About America’s Unpredictability

No oil contracts with Iraqi Kurdistan: Iraq’s oil ministry

Donald Trump lost $ 600 million during his presidency

Britain puts its weight behind Europe in the battle between Boeing and Bombardier

EU hopes to keep the Iran nuclear deal afloat