The diamond and specialty minerals stocks box score for Wednesday was an upbeat 97-74-139 as the TSX Venture Exchange rose three points to 590. Adam Lundin and Dr. William Lamb's Lucara Diamond Corp. (LUC) rose 1.5 cents to 45 cents on 222,000 shares. Lucara's stock has found a new range near 45 cents, handily above the 32-cent zone where it traded for several months before word came of two massive diamond finds at its Karowe mine in Botswana. Still, for Lucara to move higher, it will first have to find buyers for the big gems.
In late August, Lucara applauded a 2,492-carat behemoth gem that it deemed an "exceptional" diamond -- the second-largest diamond ever recovered. In mid-September, the company had more good news, enthusing that it had pulled a 1,094-carat diamond from Karowe. That gem, said Dr. Lamb, Lucara's president and chief executive officer, bore "striking similarities" with a 692-carat diamond recovered a year earlier, which subsequently produced cut diamonds that sold for $13-million (U.S.).
That would suggest that the much larger diamond would command a heftier price, with polished diamonds fetching perhaps more than double what the 692-carat diamond managed. Even so, that would be a far cry from what Lucara received in 2016 for its 813-carat Constellation rough diamond, which sold at auction for $63-million (U.S.), or for the 1,109-carat Lesedi La Rona diamond that fetched $53-million (U.S.) at auction the following year.
Dr. Lamb concedes that Lucara faces a challenge in selling its two mammoth diamonds for anything close to what shareholders probably expect. He recently told the Financial Post that "there is nobody alive who has ever seen something like this" -- referring to the nearly 2,500-carat diamond that ranks behind only the 3,106-carat Cullinan diamond that was recovered in 1905 from the Premier mine in South Africa.
The fate of the Cullinan is telling: It was put up for auction and while it commanded considerable attention, nobody stepped up to buy the gem in over two years. In 1907, the colonial government of South Africa bought the diamond and presented it to King Edward VII. Now, Dr. Lamb may be looking at a similar situation. He says that Lucara's big find is "so significant and people are trying to dumb it down to what it's worth." (Little wonder: Shareholders have a habit of expecting their company to turn a profit, after all.)
Meanwhile, Dr. Lamb and his crew may have to wait a while to sell the 1,094-carat diamond. In fact, they have not yet sold the 1,080-carat diamond that Lucara recovered just over a year ago. "We're not shy of diamonds," Dr. Lamb conceded, perhaps lamenting that they were shy of people who are willing to drop $50-million (U.S.) to acquire these stones. And so, Lucara sits with its three plus-1,000-carat diamonds, looking for buyers willing to make a reasonable offer. It could be sitting for some time, as Dr. Lamb expects rough diamond prices will remain in a "fairly depressed state" for up to nine months.