Lucara sells Lesedi La Rona diamond for US$53M

Lucara Diamond (TSX: LUC) has sold the 1,109-carat Lesedi La Rona stone recovered from its Karowe mine for US$53 million, or US$47,777 per carat.

The sale, made to British jeweller Graff in September, took place just over a year after Lucara withdrew the diamond from auction in mid-2016 because the bids it drew were not meeting expectations.

In a note to clients, BMO Capital Markets mining analyst Ed Sterck noted that the price was “some way short of our estimate of US$75 million.”

Sterck added that getting a price closer to the estimate was problematic because of a lack of buyers prepared to risk so much cash on one diamond.

Lucara received more — US$63 million — for the 813-carat Constellation diamond it sold last May, but Sterck noted that the Lesedi La Rona is believed to be more challenging to cut.

In a release, William Lamb, President and CEO of Lucara, said the discovery of the Lesedi La Rona was a company defining event that solidified the amazing potential of Karowe.

“We took our time to find a buyer who would take the diamond through its next stage of evolution,” he said. “The price paid is also an improvement on the highest bid received at the Sotheby’s auction in June 2016. Graff Diamonds is now the owner of the Lesedi La Rona as well as the 373-carat diamond, purchased earlier this year, which formed part of the original stone. We are excited to follow these diamonds through the next stage of their journey.”

The company recently completed modifications to the plant at its Karowe diamond mine, in Botswana, aimed at maximizing the value recovered in two different size categories.

The Mega-Diamond recovery circuit processes material from 50 mm to 120 mm, while the Sub-middles XRT circuit processes material from 4 mm to 8 mm.

Also in September, Reuters reported that the Botswana government is proposing an amendment to its Precious and Semi-Precious Stones Act that would allow it the first right to buy any unusually large stones recovered. The proposal states the purchases would be made by agreement of both parties at the current market price. Lucara said in a release that it supports the policy “as a way for both the government and the company to achieve sustainable revenue at market prices for the sale of its diamonds.”

In its second quarter, Lucara reported net income of US$32.2 million on US$79.6 million in revenues, down from US$46.1 million in net income on US$140.8 million in revenues in the same quarter a year earlier.

— This story originally appeared in the November 2017 edition of Diamonds in Canada.