(Bloomberg) -- Even in the world of rare stones, Foxfire is a freak.
It was buried in a place where big gem-quality diamonds aren’t supposed to exist. A Rio Tinto Group ore processor was configured to discard it. And what saved the diamond’s 187.7 carats from being pulverized was a fluke: Its unusual, elongated shape allowed it to slip sideways through a filtering screen.
“It really is a miracle that it was found,’’ said Alan Davies, chief executive officer of diamonds and minerals for Rio Tinto, the operator of Canada’s Diavik mine, Foxfire’s former home. “It’s a rare find, a really rare find.”
That’s the company’s marketing line as it shows Foxfire to prospective suitors on a worldwide tour and promotes it as the largest gem-quality diamond ever found in North America. Luckily for Rio Tinto, rare diamonds are hot, much hotter than bog-standard rough stones. Sales of those fell 18 percent last year, while their uncommon cousins rack up records. Lucara Diamond Corp. just sold an 813-carat jewel named the Constellation for $63 million, making it the most expensive of its kind—$77,649 a carat. Next month, Sotheby’s will offer one that could fetch more, the Lesedi la Rona, which at 1,109 carats is the size of a tennis ball.
“There’s a lot of latent demand for good quality that’s large,” said Geordie Mark, an analyst at Haywood Securities Inc. in Vancouver. “The larger you go, the better pricing protection you have, simply because of rarity.”
Foxfire may be less than a third the size of the Constellation, which like the Lesedi la Rona hails from the Lucara mine in Botswana, but Davies said he’s banking on its back-story capturing imaginations. “The providence is just superb.”
Named for an aboriginal description of the Northern Lights—roughly translated to an undulating fox’s tail—Foxfire escaped being crushed 130 miles (210 kilometers) south of the Arctic Circle in the Northwest Territories. The Diavik mine is remote, surrounded by rocks and too many lakes to count, with caribou and grizzly bears the nearest neighbors. In winter, daylight lasts fewer than six hours and the temperature can drop to minus 50 Celsius (minus 58 Fahrenheit). Approaching from the air, the Ice Road leading to the mine appears as a turquoise ribbon snaking across tundra and semi-frozen water. It’s been unseasonably warm in Canada’s north and this year the road was only open for eight weeks. The only other way in is from the sky.
Diavik exists because molten rock called kimberlite forced its way 100 miles up through cracks in the Earth 60 million years ago and erupted miles into the air, scattering diamonds in all directions. Over time, the stones were pushed back down into the volcanic pipes, which were scoured by glaciers and eventually topped with water. Foxfire was hiding where most such gems in the Northwest Territories lurk: beneath a lake.
The head of the mine is on an island in Lac de Gras, and the pit where Foxfire was buried is below the lake floor. Since Diavik began operating in 2003, it has produced more than 90 million carats of diamonds. Three kimberlite pipes are now being excavated, with a fourth scheduled to come on stream in 2018.
Mine processing systems are designed according to complex calculations about the likely size and distribution of gems waiting to be tapped. In Canada, diamond ore bodies tend to be quite consistent, said Kim Truter, CEO of De Beers Canada Corp. and a former head of Diavik. “For some reason, the quality of the stones at Diavik peaks at six carats but then thereafter actually gets worse.”
So Diavik wasn’t set up to handle big stones, and Foxfire pulled through in August by chance. Yuri Kinakin, superintendent of process technology, said he does think about another giant being crushed—“I get paid to be worried”—but views it as “a statistical question.” One anomaly isn’t enough to rejigger the whole place.
Foxfire looks like a pretty piece of glass with a slight yellow tinge, not the very white hue that’s ideal for engagement rings. That could knock down the value, although Rio Tinto’s experts figure the offending color can be polished away. Meanwhile, all the publicity surrounding the recent sale of the Constellation might be a boon. (The stone was purchased by a trading company in Dubai that will probably chop it into several pieces; even Elizabeth Taylor might not have wanted to wear a golf-ball sized diamond around her neck.)
Jordan Fine of JFine Inc., a dealer specializing in rare diamonds, had a look at Foxfire at New York’s Langham Place Hotel, where it was recently on display for prospective bidders; before that it was showcased at Kensington Palace in London, and its next stops are Antwerp and Tel Aviv. Fine represents a Canadian retailer who would like to burnish the stone in front of customers in his shop and “doesn’t believe that there’s anything higher-end that he could deliver, being from North America.”
Geography comes up again and again with Foxfire—born from volcanic force and buried under ice, it’s hard to imagine a more Canadian diamond. One potential bidder represented by David Shara, CEO of Optimum Diamonds, is considering shaping it into a 100-carat maple leaf.
The world’s biggest ever gem-quality diamond was the 3,106-carat Cullinan, found in 1905 in South Africa. It was fashioned into several polished gems, the two largest of which are part of Britain’s crown jewels. But Shara said Foxfire is unusual enough that it might be kept away from the cutters and remain unpolished as a rough stone, perhaps even in a museum. Bids will be unsealed on June 1, and the winner will be notified by telephone.
“It is something extraordinarily rare that has come from North America,” Shara said, “and it’s that particular story that makes it so interesting to the collectors.”
—With assistance from Thomas Biesheuvel and Jesse Riseborough.
To contact the author of this story: Danielle Bochove in Toronto at [email protected] To contact the editors responsible for this story: Anne Reifenberg at [email protected] Steven Frank at [email protected]