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Mike de Wit2019 Junior Indaba
4th June 2019Johannesburg
In the world of diamonds, the Big and Beautiful –size does matter!
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12 Apr 2019 MW
18 Jan 2019 MW
The industry is changing, but sunset?.…..take your pick.
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Smoking gun and shrinking exploration funds.
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Bain (2018) however remains positive over the long-term.
Million Cts
Marquise Capital
Middle class in China and India (millions of people)
Bain 2018
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Pricing
PJGolds 2016
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De Beers sales in US$ m
De Beers records lower sales amid macroeconomic uncertainty
Mining Weekly 21 May2019
De Beers May 2019
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Polished Diamonds inventories - indexed
Edahn Golan 13 May 2019
Inventories rising – Golan/Rapnet
◊ The industry is supply and not demand driven (Rapaport 2019)
◊ Golan (2019): Diamond industry ‘out of balance’
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Paul Zimnisky May 2019
0.75 – 1.25 cts
0.13 – 0.42 cts
Rough Diamond price performance by size
3 – 4 cts
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◊ Most diamond mines produce a range of goods including very small low-quality stones to larger one.
◊ To make their operations worthwhile economically most miners need to sell the entire range.
◊ These mines will stop operating if they cannot sell low and mid-range goods.
◊ But only very few mines that also produce large high-value stunning.
Run of Mine production
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◊ Synthetics, disclosed and undisclosed.
◊ New supply from Gahcho Kué, Renard, Liqhobong, Ekati Misery pipe.
◊ Higher recoveries of smalls due to XRT technology.
◊ Indian manufacturer troubles, especially those that deal in smaller goods.
Catalysts for price dislocation
Gahcho Kué - 4.5 mct/a
Rapaport 2019
Mountain province Diamonds
Synthetic diamond
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Projected market share of Lab Grown Diamonds (LGD)FT Oct2017
• By 2030 LGD will have some 10% share of the market.
• “It all comes down to consumer choice - Uber did not hurt the taxi industry” (Amish Shah 2017).
• Producers of natural gems are unnerved by cheaper, cleaner synthetic jewels (FT 2017).
According to Chaim Even-Zohar (2017):
◊ Synthetics have become a real threat to the natural diamond producers.
◊ Exploration money will dry up because synthetics are increasingly considered a pure, more affordable economic substitute.
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Science & Sparkle
◊ Lab-grown diamonds share the same physical, chemical and optical characteristics as rare, natural diamonds.
◊ But the process to create them is different from nature, so while they are neither as valuable or precious, they are just as sparkly.
Hello, we're Lightbox (Element six – part of De Beers Group)
Lightbox 2019
‘Our diamonds are laboratory-grown. In soft shades of pink and blue and white’
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Lab Grown Diamond (LGD) prices
LGD wholesale transaction prices % change:
Q1 2019 vs Q4 2018
◊ Compared to wholesale transaction prices of natural diamonds, prices of LGD are on average 65–84% lower (Golan 2019).
◊ Rapaport (May 2019) shows that retailers can make higher profit margins selling synthetic diamonds.
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88.2 ct stone (size of a pigeon egg) sold for
US$ 13.8 M
GIA
The value of the big stones
Lesedi La Rona:• Found 2015• Uncut: 1,109 cts• Sold 2017 for US$53m
Graff
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Karowe Mine (Lucara Diamond)
Lucara 2019
Sold in 2017 for $53 M USD
◊ 7 ha kimberlite
◊ Orapa Kimberlite field, Botswana
◊ Discovered 1970: mine opened 2012
◊ 2nd (1,758 cts) and 3rd (1,109 cts) largest diamonds ever found in 2019 and 2015 respectively.
Apr 2019
Lesedi was cut into the largest square emerald cut diamond – 302.37 cts.
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◊ +10.8 cts (Specials), contribute ~5% by volume and 70% by revenue.
◊ Since 2012 some 181 diamonds +100 cts, and 13 diamonds +300 cts have been found.
◊ 187 diamonds sold for more than US$1 M each and 10 single diamond for more than US$10 M since 2012.
Lucara 2019
Karowe Mine (Lucara Diamond)
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121.3 ct2016
The Cullinan Diamond3,106.8 cts (0,62 Kg)
1905
424.9 and 209.2 cts2019
Cullinan Mine (Petra Diamonds)
Sold for US$15 M
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Found: Cullinan in 1986599 cts
Cut to 273.85 ct
Centenary Diamond
Cullinan Mine (Petra Diamonds)
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+100 +200 Tonnes
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404 cts2016
US$ 16 M
131 cts
129.6 ct
120.4 cts2018
Lulo mine (Lucapa Diamonds)
◊ An alluvial mining operation
◊ Exploring a large kimberlite field within its concession
◊ Cuango drainage basin in Angola
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◊ Proximal to the Lulo mine are numerous kimberlites which are being tested for the source of the large Type ll stones.
◊ In addition, Lucapa Diamond operates a second large diamond producing mine Mothae in Lesotho. This is next to Letšeng-la-Terae of Gem Diamonds
173ct
2016
Lulo mine (cont.) ◊ +10.8cts (Specials): 30% by weight, >85% of revenue.
◊ +5 cts: 45% by weight, 92% of value.
◊ Recently some large stones were valued in excess of ~25,000 US$/ct.
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Letšeng-la-Terae (Gem Diamonds)
603 cts2006
Sold for US$ 12.4 M
Cut in to 26 pieces76.4 cts largest
Valued US$ 60 M
Lesotho Promise
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138 cts495 ctsSold for
US$10.4 M
Letšeng-la-Terae (Gem Diamonds)
◊ Main pipe 17 ha, satellite pipe 5.2 ha in the highlands of Lesotho.
◊ Highest average dollar per carat kimberlite diamond mine.
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Hope Diamond (Type llb)◊ Found in the early 1600s, India◊ Cut: 45.5 ct◊ Insured for US$250m◊ At Smithsonian
Blue diamonds (Type llb)
Moon of Josephine (Type llb)◊ Found 2014 Cullinan as a 29.6 cts◊ Cut to 12.03 cts – sold for US$48.4 M
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122.5 cts Blue diamond recovered in 2014 sold for US$ 27.6 m
The Cullinan Dream
Cut into 24.18 cts fancy intense blue sold for US$25.4 M in 2016
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Diamond ‘Types’
◊ Type I Diamond
◊ Contain structurally bonded nitrogen
◊ Often yellow in colour
◊ Good crystal shapes
◊ Type lla/llb Diamond
◊ No or low Nitrogen content
◊ Usually colourless - Type lla
◊ Skewed to larger sizes
◊ High proportion of white stones (D colour)
◊ < 10% luminesce
◊ Type llb
◊ Blue (contain boron)
◊ No or low N content
◊ High value
Type llb
Type lla
Type l
Type ll producers include:
◊ Karowe◊ Letšeng◊ Mothae◊ Jagersfontein◊ Cullinan◊ Jwaneng◊ Luo (Alluvial)
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◊ Larger diamonds are more likely to be D colour
◊ Type ll diamonds are more abundant in the larger sizes
◊ Type ll diamonds very slightly included to flawless (substantially fewer inclusions than Type l)
Smith et al. 2017
227ctType ll represent a high proportion of large D colour diamonds
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A typical Kimberlite ProcessingPlant these days would include:
◊ Autogenous milling
◊ Hybrid Crusher
◊ XRT/BV recovery units
◊ Waste Sorting (if country rock rich)
Autogenous milling:
◊ Self grinding of the ore
◊ Not crushing
◊ Preservation of large diamonds
◊ Installed at Cullinan and Karowe
Autogenous Milling as Opposed to Conventional Crushing
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X-Ray Transmission (XRT)
◊ XRT – Sensor identifies the atomic number (C)
◊ XRT can recover low fluorescence and non-fluorescence diamonds
◊ 200 tph machines on the horizon
◊ Replaces DMS for + 8 mm material, shortly +4 mm material
◊ Recovers diamonds before secondary or tertiary crushers
◊ Diamond breakage minimised
◊ Feed preparation is critical
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Stachel and Harris, 2008
◊ Peridotitic: base of the thick Lithosphere
◊ Eclogitic: subduction related
The source of the Type ll diamonds
◊ Most of Type l diamonds form at the base of the lithosphere (150 200 km depth)
◊ The majority of the Type ll diamond form at 600 to 800 km depth and are also referred to as ‘deep’ diamonds
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Diamond inclusions
Garnet inclusion (Richardson 2017)
Silicate inclusion (Davies 2017)
Internal growth structures
Viljoen 2012
◊ Lithospheric inclusions: olivine, Cr-rich pyrope, CPX
◊ Sub-lithospheric inclusions: Ca-perovskite, majorite garnet, ferropericlase and even Fe-Ni-C-S inclusions
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Formation of CLIPPIR diamonds
Smith et al. 2016
CLIPPIR = Cullinan-Like, Inclusion-Poor, relatively Pure, Irregularly shaped, Resorbed.
200 km
650 km
◊ Metallic iron segregates aided by deformation of the subduction slab in transition zone.
◊ Liquid metal evolved to Fe-Ni-C-S.
◊ Diamond crystallization occurs within metallic liquid (P ~ 12 to 25 Gpa) under reducing conditions.
◊ CaSi-perovskite inclusions.
◊ C saturated by increase P, adding more C, or increasing S.
◊ After growth diamonds are physically separated and transported upwards.
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Smith et al. 2018
1. Serpentinization of seafloor introduces Boron into oceanic lithosphere
2. Subduction and metamorphism of serpentine to DHMS
3. Breakdown of DHMS yields hydrous Boron-rich fluids.
4. Crystallisation of Boron-bearing diamonds triggered by Redox reactions
5. Vertical transport by upwelling mantle and kimberlites
Formation of Type IIb (Blue) diamonds
Asteria
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Craton
Kimberlite intrusions
Diamond Bearing
Diamond Mines
Region
Point
Point
Point
0 1,000 2,000
kilometers
CLIPPIR diamonds are found:
◊ Near the edges of cratons: Lulo, Karowe, Jagersfontein, Letšeng, Mothae
◊ Close to major discontinuity within cratons: Cullinan, Jwaneng (?)
Where to explore for CLIPPIR diamonds
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Exploring for sources of large stones
◊ Approx. 7000 known kimberlites
◊ Some 70 have been or are mined (1%)
◊ Only a maximum of 10 diamond mines are known to produce CLIPPIR diamonds (0.1% of total kimberlites)
◊ Mainly primary kimberlites but also secondary deposits
• Kimberlites with large stones are found on the margin (Letseng, Mothea, Jagersfontein, Karowe) or major tectonic boundaries within (Cullinan, Jwaneng) the Kaapvaal Craton: and the alluvials of Lulo along the Kasai Craton.
• Large diamonds form in subducted blocks pushed deep down into the lower mantle.
• Exploration will have to refocus to identify those kimberlites that contain ‘deep large diamonds’.