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A 1,111 carat gem-quality diamond, second in size only to the Cullinan diamond cut into the British Crown jewels, has been unearthed by Lucara Diamond Corp. in Botswana.

The Type-IIa stone, just smaller than a tennis ball, is the largest diamond discovery for more than 100 years, according to Vancouver-based Lucara. It was recovered by machines at the south lobe of Karowe mine in central Botswana, the company said in a statement.

"The significance of the recovery of a gem-quality stone larger than 1,000 carats, the largest for more than a century and the continued recovery of high-quality stones from the south lobe, cannot be overstated," William Lamb, chief executive officer of Lucara, said in the statement.

Lucara’s Karowe mine in Botswana is rivaling Gem Diamonds Ltd.’s Letseng mine in Lesotho as a source of the world’s biggest and best stones. Gem Diamonds previously held the record for the largest discovered this century with the 603-carat Lesotho Promise.

"It is almost impossible to estimate a value for such an extraordinary stone given that a valuation is highly dependent on the color, clarity and cutting and polishing characteristics," Edward Sterck, a London-based analyst at BMO Capital Markets, wrote in a note Thursday.

Lucara sold a 341.9 carat Type-IIa diamond in July for $20.6m, or $60,000 a carat, Sterck said.

The value of the stone and who will want to buy it will depend on the size and quality of the polished stones that can be cut from it. While Lucara will likely sell it at a tender in Botswana, the cutting, polishing and eventual sale to a final owner may take many years. Antwerp and New York are the leading cutting centers for exceptional stones.

Typically a jeweler such as Graff Diamonds Corp. or a consortium of investors would buy the gem and use computerized scanning technology to decide how to most profitably cut the stone into several gems and mount them in jewelry, according to Maurice Mason, a mining analyst at Stifel Nicolaus Europe Ltd. in London.

Graff is the most prolific buyer of big stones including Gem Diamonds’s Lesotho Promise which it paid $12.4 million for. Graff cut it in to 26 flawless diamonds, including a 76.4 carat pear-shaped diamond, and fashioned them into a single necklace. The necklace has not yet been sold. The Cullinan diamond was cut by hand into nine major gemstones and 96 smaller stones.

"The end buyer will be likely be an ultra-ultra high net worth diamond collector," said Martin Potts, a London-based mining analyst at FinnCap Ltd. "There will be huge prestige in owning the largest diamond that’s not part of a royal collection."

Last week Hong Kong billionaire Joseph Lau paid 48.6 million Swiss francs ($48.4 million) at Sotheby’s in Geneva for a 12.03 carat blue diamond, the most ever spent on a jewel at auction. A day earlier he paid 28.7 million francs for a 16.08 carat pink diamond. Both purchases were for his 7-year-old daughter, his office said.

So far, the largest diamonds are resisting a price slump that has hit the wider industry. Prices for Gem Diamonds’ stones that are larger than 10 carats have fallen about 5 percent in the past year, Chief Executive Officer Clifford Elphick said last week. That compares with declines of as much as 30 percent for some smaller gems.

The biggest diamond discovered is the 3,106-carat Cullinan, found near Pretoria in South Africa in 1905. It was cut to form the Great Star of Africa and the Lesser Star of Africa, which are set in the Crown Jewels of Britain.

Lucara also said it found two other very large white diamonds,. The first weighs 813 carats before cleaning, meaning it’s likely to rank among the 10 largest ever found. The second is 374 carats.

“This is a balance sheet changing development ” for Lucara, Investec Plc said in a note on Thursday.

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