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The 1,111-carat gem-quality stone, which is slightly smaller than a tennis ball, was dug out of Lucara’s Karowe mine in Botswana.

Lucara Diamond Corp.

Lucara Diamond Corp.'s stock soared by as much as 37 per cent after the Vancouver miner said it had unearthed the biggest diamond to be found in more than a century.

The 1,111-carat, gem-quality stone is slightly smaller than a tennis ball. It was dug out of Lucara's Karowe mine in Botswana.

The diamond, the second-largest in history, is one of several giant finds that the company has recently uncovered. Lucara, part of the mining and energy group headed by Lukas Lundin, also reported it had found an 813-carat stone that ranks as the sixth-largest ever discovered.

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"These are very impressive discoveries," said Matthew O'Keefe, a vice-president and senior analyst at Dundee Capital Markets. He credits the finds both to the unusual size of the stones in the Karowe mine and to Lucara's use of new x-ray transmission technology, or XRT, that helps it identify big stones before they are broken in the milling process.

The jump in Lucara's share price on Thursday provided a rare outburst of exuberance in the depressed commodity sector. Plunging prices for raw materials have battered miners, and diamond producers are no exception.

De Beers, the diamond giant that is now part of Anglo American PLC, slashed its production target last month. Cooling jewellery demand in China and a glut of stones from rivals such as Alrosa of Russia are dragging down diamond prices.

William Lamb, chief executive of Lucara, said large stones have been insulated from the general decline in prices – fortunately for his company, which has unearthed a string of jumbo-sized discoveries. In July, for instance, it sold a 342-carat stone for $20.5-million (U.S.).

"We produce 0.38 per cent of the world's diamonds; it's really a drop in the ocean," he said in an interview. "But our estimate, based on the available information, is that we're currently recovering north of 50 per cent of the world's stones larger than 100 carats."

Mr. Lamb would not estimate what Lucara's new diamond might be worth. In size, it ranks behind only the Cullinan, a 3,106-carat behemoth torn from a South African mine in 1905. The Cullinan was subsequently cut and polished into smaller gems that now form part of Britain's crown jewels.

If past prices are any guide, the new stone is worth tens of millions of dollars – a major development for a company with a market value of less than $800-million (U.S.)

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Mr. O'Keefe, the analyst, cautioned that the price will hinge on what buyers estimate they can make from cutting the stone and polishing the resulting gems. For now, he is estimating the value at anywhere between $22-million and $66-million.

Mr. Lamb said the diamond is being kept in "a secure place within a secure facility" in Botswana. He noted the company has $122-million in the bank and does not have to rush to sell. "It's a bit of shock and awe," he said. "People are still reeling" from the discovery of a stone this size.

Mr. Lamb said there is no guarantee Lucara will keep on finding stones of such exceptional size. However, he noted the decision to build the Karowe mine in 2010 was based on finding normal-sized diamonds, not super-sized outliers. "Even if we don't recover the large diamonds, we still have a mine that makes money."

Lucara is a rarity within the cash-strapped mining world. It has no debt and pays a dividend. All eight analysts who follow the company call it a "buy."

Still, the dim outlook for diamonds has weighed on its share price, which hit a high near $2.85 a share last year. Investors had cut the price nearly in half before the company announced its discovery of the giant stones after market close on Wednesday. The stock closed up 30 per cent on the day.

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