Lucara Diamond Corp is likely to cut the second largest diamond ever found following to find a buyer after bidders at the Sotheby’s auction in London failed to beat the minimum price in last year.
Lucara’s chief executive William Lamb is quoted as saying that another challenge to fetch what the tennis ball-sized diamond is worth, is the fact that the polishing itself is risky.
The unsold diamond, he noted, still “weighs heavily” on the company’s shares, which are down more than 30 percent from late 2016.
“It’s only the second stone recovered in the history of humanity over 1 000 carats. Why would you want to polish it? Asked Lucara’s chief executive. The stone in the rough form contains untold potential; as soon as you polish it into one solution, everything else is gone.”
“When is a diamond too big? I think we have found that when you go above 1 000 carats, it is too big – certainly from the aspect of analysing the stones with the technology available,” said Panmure Gordon mining analyst Kieron Hodgson.
Hodgson added: “At the end of the day, it’s about understanding what the stone can produce. And the industry now doesn’t work on hunches as much as it used to 20-30 years ago.”
There is a “very, very small universe” of companies with the skill, money and network to polish and sell the Lesedi, which will likely take two to four days for the first laser cut, said Lamb.
But after Lucara’s public auction, potential buyers now know what the market is willing to pay, said Edahn Golan, of Edahn Golan Diamond Research & Data. “Maybe it’s worth waiting a couple of years,” he said.
Reports indicate that while Lucara does not need the money, investors may not have that patience.
Lamb said the unsold stone “weighs heavily” on the stock, which is down more than 30 percent from late last year.
To be sure, Lucara has seen other benefits from the stone, said independent diamond analyst Paul Zimnisky.
“There’s the value of a particular diamond, but then there’s also a story behind the second-largest rough diamond ever recovered in modern time,” he said. “Just from a publicity standpoint, nobody knew what Lucara Diamond was when they recovered that stone … now they’re probably one of the most recognised names.”
Lamb says it’s unlikely Lucara can sell the stone for its desired price and polishing the Lesedi itself is risky.
Another option is for the Vancouver-based miner to partner with one or more companies to cut and sell the stone. “We’ve already done our homework,” Lamb said. “You don’t take a stone like this and give it to the second best.”