Huge diamond find ‘not just luck’

4 February 2016

The find of the biggest diamond in a century wasn’t just blind luck but owed a large amount to investment in advanced mining equipment and good business strategy, a mining analyst has said.

Canada-based Lucara Diamond announced that it recovered a 1,111 carat diamond in its Karowe mine in Botswana.

Canada-based Lucara Diamond announced that it recovered a 1,111 carat diamond in its Karowe mine in Botswana. © Lucara Diamond

The diamond, which measures 65mm x 56mm x 40mm, is the largest ever to be recovered in Botswana and the second largest ever to be found (after the Cullinan diamond).

Days later the company mined an 813 carat and a 374 carat diamond.

Carole Ferguson, a director and senior research analyst at SP Angel, said she had recently visited the Karowe mine and said she was impressed by the technology and management know-how at the site.

“They made their own luck,” she said. She said the company had invested more than $170m in the mine since 2012 and had soon started to recover good quality diamonds. Among the advanced equipment in use at the site was a recently installed XRT machine that uses x-ray technology to ensure large diamonds are not crushed during processing.

Lucara confirmed this machine had been used to recover their 1,111 carat find.

Ferguson added: “Lucara have a really focused management team and a high calibre CEO with a background in metallurgy and diamonds so he knows exactly what he's looking for.

“You often see a good quality mine without the right sort of technical backup,” .

Ironically the famous De Beers company had sold the mine to Lucara in 2009.

“If DeBeers had known how good this mine was going to be they would've never let it go,” Ferguson added.

Lucara is currently analysing the 1,111 diamond carat, to get a better idea of its likely value.

Much of this will depend on whether the diamond can be cut without it breaking into several pieces. Colour and clarity would also affect the market value.

In a research note Ferguson said the value of the two large stones could be around $100m but she said this was a very rough estimate.

“Valuation at this stage is more of an art than a science,” she added.

Meanwhile, since the discovery the Lucara share price has risen by 30%.

The Cullinan diamond was found in South Africa in 1905 and was cut into nine separate stones. The largest, the Great Star of Africa, and the next biggest, both form part of the Crown Jewels.

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