Fri, Jul 01, 2016 - Page 10 News List

Giant diamond fails to sell at Sotheby’s auction

Reuters

The biggest uncut diamond to be discovered in more than a century on Wednesday failed to sell at a Sotheby’s auction, but the chief executive of Lucara Diamond Corp, the company that found the gem, said there was interest from buyers in the diamond trade.

Bids for the 1,109-carat, tennis ball-sized stone topped out at US$61 million — an amount that fell short of the undisclosed minimum reserve price.

Sotheby’s had estimated that the diamond, found in November last year at Lucara’s mine in Botswana, would sell for more than US$70 million.

“The fact that the stone did not sell, yes, it is disappointing, but it does not change anything for Lucara as a company,” Lucara chief executive officer William Lamb said. “There is definitely demand for the stone. It is just demand from the people who we would normally sell the stone to.”

Shares in Vancouver-based Lucara ended down 14.5 percent at C$3.35 on the Toronto Stock Exchange after news of the failed sale.

“The result is a disappointing one and potentially calls into question the sale method chosen,” BMO analyst Edward Sterck said in a note to clients.

The public auction route is unusual for large, rare diamonds, which are usually offered for sale to small groups of sophisticated diamond dealers.

Lucara chose the auction route because it wanted to have “access to as many ultra-high net worth individuals as possible, those people who had bought very expensive items in the past,” Lamb said.

Lucara had not yet decided what to do with the stone, he added, but possibilities include loaning it to museums to increase its exposure and to help educate the public about diamonds.

“We do not have to sell it, because ... we have an exceptionally strong balance sheet. We have well over US$150 million to US$160 million in cash; we have no debt,” Lamb said.

The Lesedi la Rona, which means “our light” in the Tswana language spoken in Botswana, is the world’s second-biggest gem-quality diamond ever recovered, and the largest in more than a century.

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