New diamond mine producing, then rough sold online.

[Karl_K]

This is interesting in several ways.
A new mine is online and from the article another is on the way.
So much for no new mines in the last 10 years.

They are selling the production in online auctions.

"Lucara Diamond Corp. yesterday (Tuesday) sold 26,196 carats of Karowe diamonds through its new online auction system. Total revenue from the sale was $5.64 million, averaging $215 per carat (p/c)"

This was interesting:
"25.9-carat stone sold for $5,022 p/c."

This is what I really found interesting:
"At the end of May, 2012, more than 33,500 carats of diamond were recovered from 85,000 tons of ore processed at Karowe. The recovered grade of 39 carats per hundred tons supports the resource grade estimate for the area of the pit being mined."

39cts per 100 tons of material.
Since it is the first year there was likely a lot of coverage material to remove, it will be interesting to see how that changes year to year.

Link:
http://www.idexonline.com/portal_FullNews.asp?id=36888

 

[TitanCi]

holy moly that's alot of carats.

 

[purplesilk]

I guess this helps the cutters and the sellers to get greater profits...I don't think it'll lead the final buyers to get beautiful diamonds at a much cheaper price.

 

[Paul-Antwerp]

26,000 carats/month is a drop in the ocean. That is 300,000/year compared to 160 million carats of yearly production.

The general statement, often repeated, is: There was no MAJOR diamond-find in the past 10 years. That statement definitely still stands.

As for the efficiency of the mine improving, it is standard practice to not calculate recovery on the basis of diamond-bearing ore, not including the non-diamond-top-layer.

What I find interesting is the relatively high average of 215 $/Ct. That may well prove strategic, with the owners putting lower quality stuff on the side for later, so that immediate dollar-output increases and the apparent attraction of the production is higher.

Live long,

 

[diagem]

26,000 carats/month is a drop in the ocean. That is 300,000/year compared to 160 million carats of yearly production.

The general statement, often repeated, is: There was no MAJOR diamond-find in the past 10 years. That statement definitely still stands.

As for the efficiency of the mine improving, it is standard practice to not calculate recovery on the basis of diamond-bearing ore, not including the non-diamond-top-layer.

What I find interesting is the relatively high average of 215 $/Ct. That may well prove strategic, with the owners putting lower quality stuff on the side for later, so that immediate dollar-output increases and the apparent attraction of the production is higher.

Live long,

It's true the Mine Karl is referring to is considered extremely small when compared to annual world rough production but Rio Tinto seems to expect "Madhya Pradesh to be in the top 10 diamond-producing regions of the world once the Bunder diamond mine is developed."

http://www.diamonds.net/Errors/404....alkani+to+Oversee+the+Bunder+Diamond+Project+

No proof yet but.....

 

[WinkHPD]

I guess this helps the cutters and the sellers to get greater profits...I don't think it'll lead the final buyers to get beautiful diamonds at a much cheaper price.

Perhaps Paul would come back to give us a lesson on how much of the diamond crystal is lost in cutting, on average and how small the finished goods are when you cut two or more pieces from a piece of rough. (More would be unusual, but in large and misshapen stones it does happen.)

I think you would be surprised how little profit there is at this time to the cutters and sellers and how narrow their margins are. It takes Billions to bring a mine to market and at least two of the major diamond mining houses have announced that they will sell or close their diamond investments as they are far too dangerous to waste money exploring for and not profitable enough to bother with compared to their other mining ventures.

Our current mines are declining in production and as stated their are as of yet no major new finds on the horizon. There is a significant Canadian mine scheduled to open in 2016, but it remains to be seen if that will equal the amount of decline in the current mines.

At the Vegas Show Tom Chatham predicted that in fifty years there would be no more natural diamonds being mined. I truly hope he is wrong.

Wink

 

[Karl_K]

Our current mines are declining in production and as stated their are as of yet no major new finds on the horizon. There is a significant Canadian mine scheduled to open in 2016, but it remains to be seen if that will equal the amount of decline in the current mines.

The dinos of the mining industry will sit back and lament our mines are depleted ooooh no no!
While the innovative people and companies will go out and find new ones.
Just like happened in Canada.
I have heard it all before, then all the Canada and many more mines around the world were brought online.
I didn't believe it then and I don't believe it now.
In my opinion we have just barely scratched the surface of diamond availability.
They are not rare here on earth and if you believe the hype they are not rare in the universe either.

 

[purplesilk]

Perhaps Paul would come back to give us a lesson on how much of the diamond crystal is lost in cutting, on average and how small the finished goods are when you cut two or more pieces from a piece of rough. (More would be unusual, but in large and misshapen stones it does happen.)
Wink

That would be very interesting.

I think you would be surprised how little profit there is at this time to the cutters and sellers and how narrow their margins are.
Wink

Please, surprise me!!!
A man I know lived in South Africa for 20 years: he bought high quality diamonds from the cutters and he paid 1/10 of the European average price.
What bothers me is the complaining sellers: I'm fine with the high price of diamonds-so expensive-that's why a lot of people find them desirable-but I'm sort of tired with jewellers claiming they have low margins.

 

[Paul-Antwerp]

Our current mines are declining in production and as stated their are as of yet no major new finds on the horizon. There is a significant Canadian mine scheduled to open in 2016, but it remains to be seen if that will equal the amount of decline in the current mines.

The dinos of the mining industry will sit back and lament our mines are depleted ooooh no no!
While the innovative people and companies will go out and find new ones.
Just like happened in Canada.
I have heard it all before, then all the Canada and many more mines around the world were brought online.
I didn't believe it then and I don't believe it now.
In my opinion we have just barely scratched the surface of diamond availability.
They are not rare here on earth and if you believe the hype they are not rare in the universe either.

Forgive me, Karl, but I do not appreciate being named a dynosaur, while I present facts here to which you only retort with beliefs, built on pure optimism only.

Fact is that most potentially diamond-bearing regions on this planet are pretty well-known.
Fact is that there has not been any MAJOR find in the past decade.
Fact is that two major diamond-mining companies are leaving the industry, because they see other commodities as strategically more interesting.
Fact is that the Oppenheimer-family is leaving the industry, with another multi-commodity-firm now calling the shots at De Beers'. Question is whether they eventually will follow the example of BHP-Billiton and Rio Tinto.
Fact is that global investment in diamond-exploration is reducing in the past 10 years, also because, in comparison, other commodities are more attractive to search for.
Fact is that nowadays environmental regulations add considerably to the development-time of a new diamond-find, both in the exploration-phase, the feasability-phase, the bankable phase and finally the exploitation-phase.

Now, all these facts are not to be lamented about. They will have both positive and negative effects and they will change our industry. They are realities, creating opportunities for flexible people.

If you send me one, I will gladly accept your apology for the name-calling.

Live long,

 

[denverappraiser]

A man I know lived in South Africa for 20 years: he bought high quality diamonds from the cutters and he paid 1/10 of the European average price.

I know quite a few people in South Africa. And I know quite a few people who are working hard at making a living buying and selling diamonds. Some are decently successful at it but most are just eeking by, just like everybody else. I’m talking about well-connected insiders working full time at the arbitrage opportunity that theoretically exists between difference in markets. Buy in one place, sell in another. Buy rough, sell cut. Buy damage, sell recuts. Buy in quantity, sell one at a time, etc. Maybe my friends are just dumber than average and there really is easy money here for anyone who can spring for a ticket to Africa to buy goods for ten cents on the dollar but I have to say, I’m not seeing it. The traders aren’t minting money, the mining companies aren’t minting money, the retailers aren’t minting money, the cutters aren’t minting money.

You don’t just have to take my word for it. An interesting general tidbit is that Forbes every year lists who they count as the 500 richest people in the world. They’ve done this for decades. There’s not a single person on that list who got there by their activities in the diamond business although there are a few that are connected to the industry. The CEO of DeBeers is on there through his grandfather’s efforts although he drops a few spots every year, there’s a big NYC landlord named Benny Steinmetz who started out as a diamond cutter and still runs a big diamond house, and Warren Buffet is connected to several large jewelry companies but that’s about it. If there’s that much money on the table and it’s that easy to do, why is it producing zillionaires?

What bothers me is the complaining sellers: I'm fine with the high price of diamonds-so expensive-that's why a lot of people find them desirable-but I'm sort of tired with jewellers claiming they have low margins.

On this we agree. They chose their industry and every day that they go to work, they choose to remain in it. If they don't like the deal, they can find a different job.

 

[purplesilk]

If there’s that much money on the table and it’s that easy to do, why is it producing zillionaires?

From my real life experience, all the people who have their own diamond/gold business are millionaires...and they keep on complaining about the fact they don't earn good money.

 

[purplesilk]

To all the other posters: I didn't mean to be argumentative...my apologies to everyone who felt offended by my posts...

I meant to underline that I don't see any benefits for the final customer...I think it's like the lab created diamond business : what are the benefits for the final buyer if a lab created diamond has the same price of an earth mined one? Some people suggest there's one good reason to buy a lab created diamond: "the ethical answer to the poor countries exploitation"...but then again what about the pollution developed by the toxic chemicals used in the laboratories?

I really think that most of people find diamonds attractive because they are expensive; all of the people around me know nothing about diamonds except they are luxury items, so gals want diamonds as the proof of their men' s love and guys buy diamonds to show off both their commitment and money...so, I think it's a good thing that diamonds are expensive...

 

[denverappraiser]

If there’s that much money on the table and it’s that easy to do, why is it producing zillionaires?

From my real life experience, all the people who have their own diamond/gold business are millionaires...and they keep on complaining about the fact they don't earn good money.

This is not my experience but maybe I hang out with dumb people. Actually, I spent decades in the diamond/gold business before I sold the stores and became an appraiser. Unfortunately, I'm not a millionaire either.

If there's an easy million, why isn't there an easy billion? And if there's an easy billion, why aren't there ANY billionaires from it?

I agree they should quite whining.

 

[Karl_K]

Forgive me, Karl, but I do not appreciate being named a dynosaur, while I present facts here to which you only retort with beliefs, built on pure optimism only.

Hi Paul, I intentionally said diamond mining not to include you in it.
Because it does not fit you.
I am sorry you feel it included you.

 

[denverappraiser]

To all the other posters: I didn't mean to be argumentative...my apologies to everyone who felt offended by my posts...

I meant to underline that I don't see any benefits for the final customer...I think it's like the lab created diamond business : what are the benefits for the final buyer if a lab created diamond has the same price of an earth mined one? Some people suggest there's one good reason to buy a lab created diamond: "the ethical answer to the poor countries exploitation"...but then again what about the pollution

People manufacture diamonds because they can and because they think they can make money at it. Not to give a deal to consumers. Making gem diamonds is HARD but there are some smart people working at it. So far it’s not proven to be a particularly good business but who knows what the future will bring. If they could bring product to market at a price that would wipe out the miners you can bet they would do exactly that and they would laugh all the way to the bank. There’s no conspiracy going on here. They don’t because they can’t.

I agree that the ‘exploitation’ argument is specious. As far as I know, lab workers are treated fairly well but actually, MOST mine workers are too. Treatment of workers is a function of the companies involved, not the products. The cutting and distribution systems are basically the same for both synthetic and natural diamonds and, as with the above, the treatment of workers in those industries is a function of the companies, not the products. Mostly it seems to be pretty reasonable at the moment.

 

[shimmer]

I guess this helps the cutters and the sellers to get greater profits...I don't think it'll lead the final buyers to get beautiful diamonds at a much cheaper price.

Perhaps Paul would come back to give us a lesson on how much of the diamond crystal is lost in cutting, on average and how small the finished goods are when you cut two or more pieces from a piece of rough. (More would be unusual, but in large and misshapen stones it does happen.)


Wink

Hi Wink

I believe it's about 40-50% average yield depending on shape of rough and stone of course.

 

[Karl_K]

Fact is that most potentially diamond-bearing regions on this planet are pretty well-known.
Fact is that there has not been any MAJOR find in the past decade.
Fact is that two major diamond-mining companies are leaving the industry, because they see other commodities as strategically more interesting.
Fact is that the Oppenheimer-family is leaving the industry, with another multi-commodity-firm now calling the shots at De Beers'. Question is whether they eventually will follow the example of BHP-Billiton and Rio Tinto.
Fact is that global investment in diamond-exploration is reducing in the past 10 years, also because, in comparison, other commodities are more attractive to search for.
Fact is that nowadays environmental regulations add considerably to the development-time of a new diamond-find, both in the exploration-phase, the feasability-phase, the bankable phase and finally the exploitation-phase.

Now, all these facts are not to be lamented about. They will have both positive and negative effects and they will change our industry. They are realities, creating opportunities for flexible people.

If you send me one, I will gladly accept your apology for the name-calling.

Live long,

It is no surprise that DeBeers is going down they are a dino and have several mines that are in serious decline and end of life. The did not make the investments to stay at the top.

Environmental problems are a huge issue in many areas but they will be worked around like they were in Canada.

Gold is really red hot right now so if I ran a mining company that is where I would put my efforts but it will come back down then I would go right back to looking for other things.

As far as there being no place else to look that was said before the Canada strikes and look what happened.
If someone said that the easy to find and get at diamonds have mostly been found then that is likely to be fairly true in some areas but there are vast areas of Russia, India, China and South America yet to be explored for diamonds.

 

[WinkHPD]

I guess this helps the cutters and the sellers to get greater profits...I don't think it'll lead the final buyers to get beautiful diamonds at a much cheaper price.

Perhaps Paul would come back to give us a lesson on how much of the diamond crystal is lost in cutting, on average and how small the finished goods are when you cut two or more pieces from a piece of rough. (More would be unusual, but in large and misshapen stones it does happen.)


Wink

Hi Wink

I believe it's about 40-50% average yield depending on shape of rough and stone of course.

I believe that you are correct, or maybe even a little high, but I know that Paul knows and could make an interesting and educational post if he chooses to do so. I know that so many stones are cut poorly because it allows the cutter, who is paid by finished weight, to save some of that weight. I am just curious what the real number might be for properly cut gems.

The average preice per carat from the new mine might be $215, which as Paul says sounds quite high, but you can bet that that $215 per carat rough is NOT producing one carat and larger finished goods.

Wink

 

[Karl_K]

I guess this helps the cutters and the sellers to get greater profits...I don't think it'll lead the final buyers to get beautiful diamonds at a much cheaper price.

Perhaps Paul would come back to give us a lesson on how much of the diamond crystal is lost in cutting, on average and how small the finished goods are when you cut two or more pieces from a piece of rough. (More would be unusual, but in large and misshapen stones it does happen.)


Wink

Hi Wink

I believe it's about 40-50% average yield depending on shape of rough and stone of course.

I am interested in Paul's answer also.
The key is going to be it depends on the rough.
However pricing wise this is taken into account when the rough is sold.
Take 2 2ct pieces of rough, one will yield 50% and one 10% , the one that will yield 50% is going to sell for a whole lot more.
Lets say they both have a potential yield of 50% but one potentially yields pears and the other rounds.
The potential round yielding rough will sell for much more than the other.

 

[denverappraiser]

Karl,

I’m no exploration geologist but my understanding is that Kimberlite and Lamproite, the rock types that contains diamonds, can be spotted from the air and even from space. That’s how the Canadian mines were discovered. Every square inch of the earth has been overflown and mapped at this point. Did they miss something? Maybe. Are there kimberlite pipes that have been mapped but not thoroughly investigated? Probably. Are there other sorts of formations that contain diamonds that haven’t been discovered? Unlikely but I suppose it’s possible. There are some big players in the mining business who devote a LOT of effort to this sort of thing and they are spending their geologic resources looking for other things. They SAY it’s because they think the odds of finding diamonds and the expected return if they do won’t justify the cost. This does seem like a plausible explanation. Are they wrong? Maybe. Predicting the future is difficult but this prediction is exactly what the exploration companies are doing and THEIR prediction is that the chances of finding more significant minable diamond deposits is low. That’s why they aren’t looking (or at least not looking very hard). Maybe they’re lying, they do that you know, but the ‘follow the money’ rule tells me that the mining companies, including some of the biggest players currently in the business, think diamond mining a dead end.

 

[Karl_K]

Karl,

I’m no exploration geologist but my understanding is that Kimberlite and Lamproite, the rock types that contains diamonds, can be spotted from the air and even from space.

That only works if you know what to look for.
The land was scanned in the area of the Canada mines and nothing was found.
That is why the big companies said the guy that discovered it was a nut, until he found them.
The breakthrough came when it was discovered the pipes were in the lakes in the area.
Once they knew what to look for more were found quickly.
Because kimberlite is softer than the surrounding rocks it was ground away more than the other areas by glaciers creating lakes. The diamonds were under the lakes, not on dry land which had been scanned many times.
They were not found because they did not know what to look for to find them in the previous scans.

 

[denverappraiser]

I think it was actually a woman who found them but that doesn't actually have much to do with it. So now they know to look at lakes. I suppose there's also the possibility that something is under an ice cap, a glacier or an ocean, but these all present significant mining challenges. I agree that it's not impossible but the big money and the well-informed insiders seem to be betting against.

 

[Karl_K]

I think it was actually a woman who found them but that doesn't actually have much to do with it. So now they know to look at lakes. I suppose there's also the possibility that something is under an ice cap, a glacier or an ocean, but these all present significant mining challenges. I agree that it's not impossible but the big money and the well-informed insiders seem to be betting against.

You got me curious because I thought it was a guy they interview on NOVA that discovered it.
It was a guy, his name is Chuck Fipke.

It will be interesting to see what happens that is for sure.
For now its just something interesting to talk about when I should be working on boring stuff!

 

[Jim Summa]

The story I heard is that Fipke was flying back in a floatplane from an exhausting day of looking for diamonds, that he and his partner were using prospecting methods borrowed from looking for oil, that is, looking for other minerals in a region that have been found around known diamond pipes (or oil fields) your chances are better to find whatever you are looking for (diamonds).

So on this particular flight he is dog tired and staring out the window at tundra and lakes...when one of the lakes catches his attention because it is very round.

These folks used some new ways to find the diamond producing area...but effort and a little luck found the first (Ekati) mine.

 

[Paul-Antwerp]

I guess this helps the cutters and the sellers to get greater profits...I don't think it'll lead the final buyers to get beautiful diamonds at a much cheaper price.

Perhaps Paul would come back to give us a lesson on how much of the diamond crystal is lost in cutting, on average and how small the finished goods are when you cut two or more pieces from a piece of rough. (More would be unusual, but in large and misshapen stones it does happen.)


Wink

Hi Wink

I believe it's about 40-50% average yield depending on shape of rough and stone of course.

I am interested in Paul's answer also.
The key is going to be it depends on the rough.
However pricing wise this is taken into account when the rough is sold.
Take 2 2ct pieces of rough, one will yield 50% and one 10% , the one that will yield 50% is going to sell for a whole lot more.
Lets say they both have a potential yield of 50% but one potentially yields pears and the other rounds.
The potential round yielding rough will sell for much more than the other.

You are right, Karl, it all depends on the rough.

Looking at all the rough produced, the average yield is probably 5%, with the 80% industrial diamonds yielding nothing and the 20% remaining yielding an average of 25%. That general figure is about as meaningful as stating that the worldwide average monthly salary is about $200.

The rough really needs to be very high quality to get a yield of around 50%. The paradox is that many cutters tend to overpay for such goods.

Interesting side-notion: even when looking at older round brilliants, cut say 30 years ago, it is not uncommon to find stones that re-cutting them to today's top-standards, they lose 30% of the weight. That, I find shocking.

Live long,

 

[Karl_K]

Interesting side-notion: even when looking at older round brilliants, cut say 30 years ago, it is not uncommon to find stones that re-cutting them to today's top-standards, they lose 30% of the weight. That, I find shocking.

Live long,

That is shocking!
Thanks Paul for the info.