Arko Datta/ReutersLucara Diamond Corp. began trading on the TSX Venture Exchange on Monday.

LukasLundin is one of the world's top mining entrepreneurs, but he is thefirst to admit that he is no expert on the diamond industry.

Soit was only natural that for his first big move into the world ofultra-precious stones, he brought along Canada's most celebratedexperts on the subject: Catherine McLeod-Seltzer and Eira Thomas ofStornoway Diamond Corp.

The result was a diamond exploration firm whose name is a combination of the first name of each founder: Lucara Diamond Corp.

"Weexplored doing something together, but we weren't initially thinking ofdiamonds," Ms. McLeod-Seltzer said. "But then the opportunity camealong. And as is typical of Mr. Lukas, he grabbed it and ran with it."

Lucarabegins trading on the TSX Venture Exchange today after several quietmonths on the CNQ exchange. It could provide a much-needed shot in thearm for the junior diamond sector, which has been neglected in recentyears as investors turned to gold and base metals.

WhileMs.McLeod-Seltzer and Ms. Thomas helped the company get off the groundand acquire its key asset, Lucara really belongs to the Lundin Group ofCompanies, and it is Mr. Lundin and his management team who are tryingto make it go. Lukas himself is chief executive.

Lucara's soleasset is the Mothae diamond project in Lesotho, an under-explored buthighly prospective country embedded in South Africa. Lucara can buy upto 70% of the project.

Mothae was found in the early 1960s, buthas gone largely unexplored since then. It sits just a few kilometresaway from the world-famous Letseng diamond mine, a low-grade,large-tonnage operation that produces very large stones.

Lucarais confident that Mothae is on the same trend as Letseng. The companyhas recovered a total of 480 diamonds so far from six bulk samples, andis encouraged with what it is seeing.

"The grades are verysimilar to what we expected, based on our original targets," saidWilliam Lamb, Lucara's general manager and a former De Beers employee.

Theproject is challenging, because the low grade requires the company toprocess huge amounts of material. But the quality of diamonds mightmake it worth the effort-- Mr. Lamb pointed out that Letseng sold adiamond last week for a ridiculous US$62,000 a carat.

"The demand for large, high-quality stones, which is what we hope to recover from Mothae, is definitely growing," Mr. Lamb said.

However,the grade concerns some onlookers, who question whether Mothae canreplicate the success of Letseng. At this point, that is still an openquestion, and Lucara has been a relatively weak performer since it wentpublic on the CNQ last year (it is currently worth about $55-million).

"Thisthing doesn't make it on the grade. It makes it on these randomlyoccurring fantastic stones that are in these types of kimberlites,"said John Kaiser, publisher of the Bottom Fish Online report.

"Nobody's demonstrated that if you mine enough of this stuff, you will get fantastic diamonds."

Thatis the gamble that Mr. Lundin is making, but he is never one to shyaway from a challenge. The Lundin Group has achieved much of itssuccess by taking on projects that scare away the competition andmaking them work for shareholders.

And while Mr. Lundin may not be a diamond expert, it never takes him long to seize a good opportunity.

"He's picking it up very quickly," Mr. Lamb said.

pkoven@nationalpost.com