South Africa's Cullinan Mine Yields Another Mega-Diamond

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--The Cullinan diamond mine, situated between Johannesburg and Pretoria in South Africa, has produced another mega-stone. Mine owner Petra Diamonds (LSE:PDL.L) (St Helier, Channel Islands) said the 232-carat stone was of "exceptional size and clarity, and is a magnificent example of large, high-quality diamonds for which the mine is known."

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Petra has not given a price estimate for the new stone, but Gem Diamonds (LSE:GEMD.L) (London, England) recently sold a Type 11 white diamond at about $70,000 per carat. "Some losses for cutting/polishing are assumed," an industry analyst said.

Petra also has a 122.5-carat blue diamond, which was recovered from Cullinan in June and is in the process of being sold. Estimates for the value of this stone are about $35 million.

Earlier this year, Petra sold a 29.6-carat blue diamond for more than $25 million. The new stone has no measureable nitrogen impurities and is expected to be sold sometime between October and December.

Cullinan has a long history of producing such large diamonds, with more than 750 at 100 carats or more. In 1905, the 3,100-carat Cullinan Diamond was found and ended up as two gems in the British Royal Crown.

Since Petra acquired Cullinan in 2008, such diamonds have added $18 million to the company's average annual income, which could rise to $20 million. With growth in production planned, the recovery of exceptional diamonds will increase, giving the company another upside to its long-term target.

Petra has five mines in production in South Africa and one in Tanzania. Its shares have increased 7%.

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