Deep in the jungle of Angola are what could well be the world’s most valuable dirt tracks.
Starting next month, Lucapa will start processing the material used to build the roads in the hope it will recover monster gems worth millions of dollars each.
Up until February, Lucapa had been using the biggest rocks from the diamond-rich gravels around Lulo to build roads around the project in the belief that none of them could be diamonds. That all changed, however, on February 4 when the company recovered a giant 404-carat stone — a diamond bigger than any other ever found in Angola.
It was a gem that should never have been discovered.
Lucapa’s processing plant was only configured to recover diamonds up to a maximum size of 280 carats (the biggest diamond ever unearthed in Angola at that time was 278 carats). As it was, the elongate shape of the 404-carat diamond — it resembles a large thumb — and its orientation as it went through the Lulo processing plant meant it managed to fit through the holes in the sorting screen.
Had it been lying horizontally rather than vertically at the time it passed over the screen, the stone — ultimately sold for $US16 million — would have gone straight into the waste stockpile for use in more roads.
Since that fateful day in February, Lucapa has been stockpiling all the over-size material from Lulo as it prepares to install a new sorting machine capable of recovering diamonds weighing up to 1000 carats each.
That new machine will start up next month, with Lucapa understandably excited about just what might be found among that over-size material.
The diamond mining business is infamously unpredictable, but the miraculous story of the 404-carat diamond means Lucapa and its shareholders believe they’ve got a good shot at finding more mega-gems. The likelihood that the only stone of such size from Lulo was also the only one with the right shape and orientation to fall through the sorting screen simply feels too remote.
The upside of success is huge given diamond prices increase almost exponentially with size. The $US16m Lucapa received for its 404-carat stone compares with the $US63m sale price in May for an 812-carat monster from the Botswanan diamond mine of rival company Lucara Diamond Corp. (Lucara also found the tennis ball-sized 1111 carat Lesedi La Rona diamond, the second-biggest ever unearthed, although that failed to sell at an auction earlier this year.)
Lucapa will start off by processing the oversized material it has stockpiled at Lulo since February. If that leads to the recovery of more giants, then Lucapa will begin digging up the roads.
Lucapa chairman Miles Kennedy already jokingly (and perhaps optimistically) refers to the tracks around Lulo as “the diamond highways”.
“It will be interesting to see what that stockpile gives us,” Mr Kennedy says. “We’re quietly confident we’re going to see some big stones but we have to wait and see.”
The processing upgrade at Lulo has cost Lucapa and its partners $US2.75m. The recovery of a single big stone from the over-size material would pay for that a number of times over.
Even leaving the potential monster stones aside, Lulo has already had a track record of yielding big gems.
So far Lucapa has already found six stones of 100 carats or more, including two in the past fortnight.
The diamonds it is finding are also of very high quality, reflected in its average sale price of around $US2,100 per carat. Uncut diamonds typically averaging $120 a carat. “There’s no doubt at all that there is no diamond deposit anywhere in the world which is producing stones of this calibre and value,” Mr Kennedy said.
That, he says, includes Lucapa and its record-breaking gems.
“They’ve had the biggest stone, obviously, but they’re processing a lot of material and incurring a lot of cost to do that whereas we’re mining a couple of meters below the surface,” he said. “On the cost curve we are way ahead of anyone, and we’re getting the big diamonds. Our costs are $1.3m a month; you can see us generating between $5 and $12m a month, so it’s looking pretty spectacular.”
By Paul Garvey
With many thanks to The Australian
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