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by Will Purcell

The diamond and specialty minerals stocks box score for Thursday was a dismal 32-59-158. The TSX Venture Exchange fell fractionally to 942.05 while polished diamond prices fell 0.5 per cent. Rio Tinto PLC will auction some Diavik rough to buyers outside its "designated select diamantaires." (Diamond companies employ all sorts of puffy prose to describe customers.) Regular buyers are usually annoyed when their supplier decides to sell outside normal channels as it raises prices, but Rio Tinto claims its new auction is the result of "extensive customer feedback." Patrick Coppens, Rio's general manager of sales, says the majority of the company's rough will still be sold through existing deals with its regulars, and only specific diamonds will be auctioned. Unfortunately for the regulars, "specific diamonds" usually means a miner's best goods.

William Lamb and Lukas Lundin's Lucara Diamond Corp. (LUC), down three cents to 70 cents on 691,000 shares, can attest to the benefits of auctioning specific diamonds. The company wrapped up its special tender of 15 large and valuable gems Wednesday, selling all 816 carats for $24.85-million. The diamonds were choice stones from the Karowe mine in Botswana. Lucara had already sold 361,290 Karowe carats at an average of $269 (U.S.) per carat, significantly lower than its modelled value of $301 (U.S.) per carat. The latest sale boosts the average price to a pleasing $337 (U.S.) per carat, suggesting Karowe may be a cash cow. Mr. Lamb, a South African geologist by training but one who is equally at home on Howe Street, was "ecstatic" with his "exceptional" diamonds from the "remarkable" Karowe. The company expects to sell 400,000 carats in 2013 and another auction is likely before the end of the year. The presence of large diamonds -- the biggest so far weighed 239 carats -- has prompted Mr. Lamb to rejig the mine's processing facility to handle large gems. In the interest of efficiency, modern diamond plants have upper size limits. Stones exceeding those dimensions are typically crushed, hopefully into a few smaller stones but occasionally into dust.

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