Company highly liquid, no pressure to sell
VINCENT MATUMO
Lesedi La Rona, the billion year old rough diamond which was unearthed from the heart of Botswana’s diamond fields in the Boteti area, is worth more than the nearly P660 million (US$61 million) it was recently bid for, the company says.
The 1,109 carat Type IIa rough stone mined by Botswana Stock Exchange listed Canadian miner, Lucara Diamond Corporation late 2015, near Letlhakane, is the biggest gem quality stone to be discovered in more than a hundred years and only the second biggest after the 3,100 carat Cullinan, which was found near Pretoria, South Africa in 1905. Only the non-gem Brazil originating Sergio of the mysterious carbonadoes family, also known as ‘black diamonds’ and the gem-quality Cullinan, are larger than Lesedi La Rona, historically.
Paul Day, Chief Operating Officer at Lucara told Gazette Business that the company will find “other modalities to sell the diamond at the right price, to the benefit of all stakeholders involved.”
“We think Lesedi La Rona is worth more than the auction was willing to give for it,” Day said.
Rare finds like Lesedi La Rona are usually only offered to an elite group of dealers who assess the gem to determine how many individual diamonds can be cut from it before it is sold.
In May, the Lucara Diamond Corporation sold the second-largest rough diamond, the 813-carat Constellation, for record breaking $63 million fuelling speculation on how much the Lesedi La Rona would fetch. Applying the same dollar-per-carat price, the larger diamond’s value would be ($86 million). The Constellation was bought by a Dubai-based rough diamond trading company.
Opting to auction the stone whole was an attempt to tap a new market of wealthy collectors eyeing trophy stones. The auction, Lucara CEO William Lamb told international media, was an opportunity to “gain access to as many ultra-high net worth individuals as possible, those people who had bought very expensive items in the past.”
Sotheby’s who were marketing the diamond would have made a 12 percent fee from the sale, reports say.
HOW LUCARA GIVES BACK
“Botswana is our major partner in this business and we give back to the country in many ways,” said Day, when quizzed about what the company’s gives back to the citizenry.
“We have paid over $150 million in taxes to the Botswana Government and as a young listed company outside of the multinationals, we are among the highest contributor to national purse,” Day said, adding that their tax rate is incremental and is a “win win for everyone.”
“We also operate the Karowe Emerging Enterpreneurs Trust Fund that funds entrepreneurs in the region,” Day added.
The Sotheby auction kicked off with the sale of three separate rough diamond crystals from the Karowe mine, weighing 5.44, 5.62 and 5.88 carats, on 29 June, the proceeds of which will be donated to the Lady Khama Charitable Trust.
“We are going to present a cheque of about P2 million to the Lady Khama Charitable Trust,” Day revealed.
Day, who had just arrived from London, revealed that Dale te Haar, Chairman of the Lady Khama Charitable Trust, had also attended the auction in London.
Lucara’s financials
Lucara’s financials show that the company experienced cashflow growth of 173 percent since December 2013. Strong operating cash flow generation has financed capital projects and resulted in cumulative shareholder dividends paid of US$39 million. The company entered 2016 with over 60,000 carats in inventory, including the Lesedi La Rona and an 813 carat diamond. Lesedi La Rona was named in a competition which attracted 11,000 email and 1000 sms entries and Thembani Moitlhobogi of Mmadikola village emerged the winner.