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Thu 30 Jun 2016 10:19 AM

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World's largest uncut diamond fails to sell at auction

A 812.77 carat uncut diamond named 'The Constellation' sold for $63.1 million to a Dubai-based firm, according to media reports.

World's largest uncut diamond fails to sell at auction
The 1109-carat rough Lesedi La Rona diamond, the biggest rough diamond discovered in more than a century, sits in a display case at Sothebys on May 4, 2016 in New York City. (Getty Images)

The biggest uncut diamond to be discovered in over a century 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 $61 million - an amount that fell short of the undisclosed minimum reserve price.

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

"The fact that the stone didn't sell, yes, it is disappointing but it doesn't change anything for Lucara as a company," Lucara CEO 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," he said.

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, Lamb said, 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."

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 don't have to sell it because ... we have an exceptionally strong balance sheet. We have well over $150 million to $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.

The biggest is the Cullinan diamond, a 3,106-carat stone found in South Africa in 1905.

Lucara last month sold a 812.77 carat uncut diamond named "The Constellation," which it found at the same Botswana mine as the Lesedi la Rona, for $63.1 million. A Dubai-based firm was the buyer, according to media reports.

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