​‘Tennis Ball’ Size Diamond Could Fetch More Than $70 Million At Auction

Author: Michael StevensBy:
Staff Reporter
May. 5, 2016

A ‘Tennis ball’ size diamond, a 1,109-carat gem-quality stone, will fetch for more than $70 million at an auction scheduled for June 29. A Vancouver-based company’s shares rallied after Sotheby’s estimated the biggest diamond unearthed in over a century.

Lucara Diamond Corp’s expects as much as 48 percent of the proceeds from the gem will find its way to the company’s bottom line, Chief Executive Officer William Lamb said, FOX News reports.

“There’s blue-sky potential,” Lamb said on the potential sale price of the Lesedi La Rona diamond - “our light” in the Tswana language spoken in Botswana, where the stone was found last year. “You only need two people that desperately want it, and then you’ll get a good price.”

Lamb said the company, whose profit in 2015 surged 35 percent to $77.8 million, is weighing what to do with the proceeds from the ‘Tennis ball’ size diamond, including a special dividend, share buyback or investments back into its mining operations, the CEO said.

The ‘Tennis ball’ size diamond sent shares of Vancouver-based Lucara at 8.4 percent to $3.47 at 2:10 p.m. in Toronto, extending its gain in 2016 to 52 percent, Sky News reported. The stock surged 30 percent on November 19, when it announced the discovery of the diamond, second in size only to the Cullinan diamond cut into the Great Star of Africa gem in the British Crown jewels.

While Lamb estimates Lucara could have a diamond of about 400 carats cut and polished from the rough diamond, he said the company decided there was less risk and more immediate value to shareholders from selling it in its rough form.

“Nobody knows what a 400-carat diamond is worth,” he said.

Sotheby’s said it set the estimated sales price using “independent reports on the potential yield.” Proceeds from the diamond’s auction will be split between the auctioneer, taxes and royalties to the Botswana government, and Lucara, Lamb said. A Sotheby’s spokesman said financial details are confidential.

“No rough even remotely of this scale has ever been offered before at public auction,” David Bennett, worldwide Chairman of Sotheby’s Jewellery division, said in a statement.

The announcement of the Sotheby’s auction and the potential value of the find comes a day after Lucara reported first-quarter earnings that topped analysts’ estimates and reaffirmed revenue at its Karowe mine in Botswana of as much as $220 million for 2016, excluding the sale of the diamond and a second, 813-carat arrow-head shaped stone.

Bloomberg said the ‘Tennis ball’ size diamond auction comes as global demand slipped 2 percent last year, with total polished diamond sales falling to $79 billion from $81 billion in 2014, De Beers, the largest producer, said in an April report. While the publicity generated by the discovery of the diamond is a short-term boost for diamond prices, the long-term outlook remains less certain, Lamb said.

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