Money Moves July 01, 2016 at 05:00 am

No Buyers for Botswana’s Giant Diamond

Fredrick Ngugi | Contributor

Fredrick Ngugi July 01, 2016 at 05:00 am

July 01, 2016 at 05:00 am | Money Moves

Lesedi la Rona, the second largest uncut diamond ever discovered. Photo (www.telegraph.co.uk)

The world’s largest uncut diamond discovered in Botswana last November could not sell at Sotheby’s auction Wednesday, after bidders failed to hit the expected minimum reserve price of $70 million. The final bid stopped at $61 million, according to Reuters.

Speaking to Reuters,  Lucara Diamond Corp, the company that discovered the tennis ball-sized diamond, CEO William Lamb said that although the auction failed, a number of buyers in the diamond business are still interested in the gem.

The giant gem, weighing 1,109 carats, is the largest piece of uncut diamond to be unearthed over the last century.

“The fact that the stone didn’t sell, yes, it is disappointing, but it doesn’t change anything for Lucara as a company,” Lamb said.

Questionable Methodology

The botched sale saw Lucara’s shares on the Toronto Stock Exchange drop to 14.5 percent at C$3.35, leaving many market analysts skeptical about the process of sale.

Some analysts argue that the auction route was not ideal for such a large and rare diamond, insisting that it should have been offered to smaller groups of high-end diamond dealers.

“The result is a disappointing one and potentially calls into question the sale method chosen,” BMO analyst Edward Sterck wrote.

However, Lucara’s CEO defended the decision to auction the gem, saying they hoped to attract as many affluent buyers as possible, particularly those who have bought very expensive gems in the past.

What’s Next?

Mr. Lamb said his company is not in a hurry to sell the giant gem and even suggested that they might donate it to museums to increase its exposure and help people learn more about diamonds.

“We have an exceptionally strong balance sheet. We have well over $150 million to $160 million in cash, we have no debt,” Lamb noted.

Lesedi la Rona, meaning “our light” in Botswana’s national language, is the second-largest piece of uncut diamond ever discovered.

The largest diamond stone is the Cullinan Diamond discovered in South Africa in 1905. Cullinan weighed 3,106 carats and was later cut into nine pieces.

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