No takers for Lucara’s diamond
Sotheby’s auction fails to secure reserve price
LUCARA Diamonds is reassessing its sale options for the world’s second-largest gem-quality rough diamond, after bidders failed to reach the reserve price at Sotheby’s on Wednesday.
LUCARA Diamonds is reassessing its sale options for the world’s second-largest gem-quality rough diamond, after bidders failed to reach the reserve price at Sotheby’s on Wednesday.
The 1,109-carat Lesedi La Rona diamond was found at Lucara’s Karowe mine in Botswana in November 2015, and has gone across the world as the Toronto-listed company showed it to potential buyers.
The rough, white diamond the size of a tennis ball was expected to fetch $70m — the highest price paid for an unpolished diamond — but the bidding reached $61m, so Lucara retains ownership of the largest diamond found since the discovery of the 3,106-carat Cullinan diamond in 1905 near Pretoria.
The diamond’s size meant it could not be properly analysed by equipment the industry uses to establish the optimal cut and the polished diamonds that could be extracted, said Lucara CEO William Lamb.
“If you look at the bidding, you could see people were placing a value on the polished outcome of Lesedi, which we didn’t consider to be a viable option for a diamond of Lesedi’s stature,” Lamb said on Thursday.
“We are in no rush to make a decision on Lesedi. There is a lot of value in not being reactive to the slightly disappointing outcome of this auction,” he said.
Lucara declined to apportion blame for the failure of the diamond to sell in London on the economic uncertainty caused by Britain’s decision to leave the EU or the state of the global economy, he said.
“What really frustrated me was that minutes after the auction ended I was surrounded by three or four people saying ‘We really need to talk’. They should have rather put their hand up in the auction, but it does show that there is a lot of interest in buying Lesedi,” Lamb said.
Investec said a private sale was likely because some poten- tial buyers preferred to remain anonymous. “The news (of the failure to sell Lesedi) may prompt some concern over the health of the diamond market, in particular special stones,” Investec said.
Lucara, which recently sold the 813-carat Constellation diamond for $63m, has a 374-carat diamond it wants to sell, as well as a number of large diamonds in its inventory. It could well consider selling one or more of these at auction to establish an alternative sales process for these special diamonds, Lamb said.
“Maybe the Lesedi was just too much to sell so we could always come back with something that is easier to understand,” he said.
Among the options for Lesedi was to put it in a museum for a number of months, and give it more exposure to the public and drum up the value proposition for the diamond. Or Lucara could form a partnership to extract value from the diamond, with a private sale being the third option, he said.
“I still think this diamond should not be cut. Based on history, people will not see the likes of a stone of this size again in their lifetime. It really is something very special,” he said.
Maybe the Lesedi was just too much to sell so we could always come back with something easier to understand