Rapaport TradeWire®
Friday, December 25, 2009

News: U.S holiday season jewelry sales look flat as bad weather puts a chill on retailer hopes for last minute shopping rush but online sales get a boost. Credit card companies report jewelry outperforming average luxury retail sales which have declined 4%. Trading centers quiet as cutters end the year with deep concerns about expanding rough price bubble and weak polished demand. Zale Corp cancels pre-holiday orders from suppliers and reports Nov. same-store sales decline of -18.6%. Responsible Jewelry Council launches certification system setting ethical standards for jewelry trade but does not embargo diamonds from Marange Zimbabwe in spite of obvious severe human rights abuses. Trade is warned not to rely on that organization for ethical standards. Dr. Akolang Tombale resigns as Botswana’s Diamond Hub coordinator.

ANNOUNCEMENTS:

RAPAPORT NEW YORK POLISHED TENDER

By Appointment Only
January 18-21, 2010

Large assortment of polished round and fancy
diamonds ranging in size from -2 sieve plate
to 1ct+. Qualities vary from promotional to
very fine. Excellent buying opportunity for
diamond and jewelry wholesalers and manufacturers.

Contact Kathryn Langner at NYTender@diamonds.net
or +1-212-354-9800

QUOTE OF THE WEEK:

“Mother Nature was very unkind to retailers on Saturday as the year-over-year sales decline was the largest we’ve seen since we began reporting this number in 2002. We originally predicted Super Saturday would be the number two sales day of the season just behind Black Friday....We’ll know next week if our original prediction of a 1.6 percent [total season] sales increase with a 4.2 percent total U.S. foot traffic decline is still intact.”

Bill Martin
Co-founder of ShopperTrak

RETAIL:

Rapaport Weekly Broadcast

See how the latest retail sales figures from comScore, ShopperTrak and the International Council of Shopping Centers match up, given the disappointing totals recorded for the final weekend before Christmas. Not all of the news was bad, though, as online sales improved and jewelry sales seem to be holding on in positive territory, even as luxury good sales continued to reflect single-digit declines. WATCH NOW.

Zale Struggles

Zale selected investment bank Rothschild to help the retailer weigh its choices in 2010, according to Bloomberg, citing sources who declined to be identified because the information isnt public. Both Zale and Rothschild declined comment.

Zale canceled some of its orders from suppliers ahead of Christmas and reported that its same-store sales tumbled 18.6 percent in November. The Wall Street Journal cited a source saying: "Zale refused to accept tens of millions of dollars of inventory at the end of November and is stretching payments."

Matt Appel, Zales chief financial officer (CFO), fired-back that while it has canceled some orders, it has cash on hand to pay suppliers. "Barring something catastrophic, we will pay our bills," Appel said.

Nicholas White, a former Zale executive who now advises Gerson Lehman Group, told the Journal that Zales lack of merchandise variety, higher prices, marketing and staffing moves "conspire together to create the problems theyve got."

Gem Diamonds to Supply Tiffany With Fancy Yellow Diamonds

Gem Diamonds will supply fancy yellow diamonds from its Ellendale mine in Australia to a subsidiary of luxury jeweler Tiffany & Co. The agreement between the miner and retailer will last through the economic lifespan of Ellendale. The yellow diamonds will be sold to Tiffanys polishing firm, Laurelton Diamonds. The agreement will satisfy Tiffanys supply needs for “some very exciting design initiatives beginning in 2010 that will require high-quality yellow diamonds.”

Diamdels Online Auctions Attract More Bidders

De Beers Diamdel reported that the number of bidders for its online rough diamond auctions rose in 2009, even though market conditions were weak. During 2009, 153 different nonsightholders from Europe, the Middle East and Asia participated in Diamdels auctions, with 88 different winners emerging from all regions. In 2008, 149 bidders participated, producing 79 different winners. Diamdel made 695 different lots available through 75 auctions and 580, or 83 percent, were sold. The company did not provide sales figures.

Theo Fennells 1H Sales -20%

Jeweler Theo Fennell reported that revenue for its first fiscal half fell 20 percent to $7 million through September. The U.K.-based retailer reported a pre-tax loss of $1.8 million, up from the loss of $1.4 million recorded one year ago. But with the second fiscal half now underway, Theo Fennell reported that its sales had increased 38 percent for the months of October and November, as its new collections exceeded expectations. Sales for the first two weeks of December were also up by 39 percent on a comparable-store basis.

RJC Launches Certification System

Jewellery Council’s (RJC) Certification System is ready and has been designed to ensure that its members adhere to ethically and socially responsible environmental practices throughout the diamond and gold jewelry supply chain. The foundation of the system is its use of independent, third-party auditing to verify conformance with the groups Code of Practices, guaranteeing that the process is objective, fair and transparent. Auditor accreditation is now underway, with training currently being delivered to members through sector-specific webinars. The Certification System also recently completed its Mining Supplement standards.

HRW Urges Diamond Retailers to Ban Marange Diamonds

Human Rights Watch (HRW) told diamond retailers to take more decisive action regarding diamonds from Marange, Zimbabwe. HRW found that nothing has changed in Zimbabwes diamond fields, despite reports to the contrary. "By any reasonable assessment, diamonds from Marange are blood diamonds and we are publicly calling upon retailers and interested consumers to boycott Zimbabwe diamonds," HRW’s statement noted.

HRW wants the diamond industry to pressure the Kimberley Process to suspend Zimbabwe until diamond mining meets its minimum standards. Due to the prevalence of smuggling, the lack of transparency within Zimbabwes diamond industry, insufficient controls at the countrys borders with neighboring countries and weak certification mechanisms, there is no way to guarantee that Marange stones are not being mixed with those produced at Zimbabwes other two mines.

Consumers are increasingly concerned about the issues surrounding diamonds. Retailers must publicly state that they will not buy or sell Zimbabwe diamonds as long as human rights violations continue at the Marange diamonds fields; urge national representatives and the World Diamond Council to broaden the definition of "conflict diamonds" to cover human rights; and ask suppliers to certify that diamonds are not from Zimbabwe by specifying the controls that are in place.

MINING:

ALROSA Launches Underground Operations at Aikhal Mine

ALROSA commissioned underground operations at its Aikhal mine in Yakutia. The mine has a life expectancy of 25 years and will produce 500,000 tons of diamond ore a year. The company developed the mine with an investment of $291 million and employs 380 people but that number will increase to 600 when the mine achieves full capacity.

Petra Diamonds Increases Stake in Cullinan

Petra Diamonds exercised an existing option to increase its direct ownership in the Cullinan mine from 37 percent to 74 percent, acquiring the additional stake from Al Rajhi Holdings. The mining firm also completed the second part of a previously announced placement designed to generate gross proceeds of $120 million.

Botswana Approves AK6 Sale to Lucara

Botswana approved Lucara Diamonds acquisition of a 70.268 percent interest AK6 from De Beers. AK6 is wholly owned by Boteti Exploration, the majority of which is now owned by Lucara, with African Diamonds holding 28.381 percent and Wati Ventures owning 1.35 percent. African Diamonds has a call option to acquire an additional 10.268 percent interest in AK6 from Lucara for $7 million and can also exercise an option to acquire Watis stake for $700,000.

Lucara closed a private placement of $103 million, which exceeded the companys earlier fundraising estimate of $94 million for the deal. The net proceeds of the offering have been released and the subscription receipts shall be converted into common shares on a one-for-one basis.

Peregrine Approves $13M for Chidliak Exploration

Peregrine Diamonds approved a $13.5 million budget for its Chidliak exploration project in Nunavut, Canada. The program will focus upon the discovery of new diamond-bearing kimberlites and further sampling of existing kimberlites. Peregrine will operate the 2010 exploration program. BHP Billiton has elected to exercise its earn-in rights for Chidliak and must solely fund exploration expenses of $22.3 million in order to earn a 51 percent interest.

ECON WATCH:

For week ending December 24, 2009
Dec. 24 Dec. 17 Chng.
$1 = Euro 0.696 0.697 -0.001
$1 = Rupee 46.58 46.94 -0.4
$1 = Israel Shekel 3.80 3.81 -0.01
$1 = Rand 7.56 7.55 0.01
$1 = Canadian Dollar 1.05 1.07 -0.02

Precious Metals
Gold $1,104.30 $1,092.10 $12.20
Platinum $1,461.00 $1,421.00 $40.00

Stock Indexes Chng.
BSE 17,360.61 16,894.25 466.36 2.76%
Dow Jones Avg. 10,520.10 10,308.26 211.84 2.06%
FTSE 5,402.41 5,217.61 184.80 3.54%
Hang Seng 21,517.00 21,347.63 169.37 0.79%
S & P 500 1,126.48 1,096.07 30.41 2.77%
Yahoo! Jewelry Index 1,162.80 1,138.34 24.46 2.15%

USA
Birks & Mayors $1.18 $0.90 $0.28 31.11%
Blue Nile $64.39 $59.01 $5.38 9.12%
Charles & Colvard $1.20 $1.20 $0.00 0.00%
DGSE Companies, Inc. $1.36 $1.35 $0.01 0.74%
Fuqi International $19.09 $18.53 $0.56 3.02%
JCPenney $27.02 $27.06 -$0.04 -0.15%
Kohls $54.65 $53.27 $1.38 2.59%
Lazare Kaplan $2.50 $2.50 $0.00 0.00%
LJ International $2.43 $2.40 $0.03 1.25%
Macys $17.57 $17.03 $0.54 3.17%
Man Sang $2.25 $2.36 -$0.11 -4.66%
Movado Group $9.35 $9.55 -$0.20 -2.09%
Nordstrom $37.37 $35.18 $2.19 6.23%
Saks $6.78 $6.59 $0.19 2.88%
Signet $26.29 $25.25 $1.04 4.12%
Sothebys $24.40 $22.53 $1.87 8.30%
Tiffany $43.80 $42.40 $1.40 3.30%
Walmart $53.60 $52.83 $0.77 1.46%
Zale $2.47 $2.53 -$0.06 -2.37%

EUROPE
Bulgari €5.77 €5.68 €0.09 1.58%
Bijou Brigitte €118.00 €116.40 €1.60 1.37%
Damiani €1.08 €1.05 €0.03 2.86%
LVMH €77.90 €75.73 €2.17 2.87%
Pinault P-R SA €84.01 €82.41 €1.60 1.94%
Richemont SA CHF 34.15 CHF 34.20 -CHF 0.05 -0.15%
Swatch Group CHF 258.00 CHF 256.60 CHF 1.40 0.55%
Theo Fennell (pence) 46.00 47.00 -1.00 -2.13%

INDIA (rupee)
Classic Diamond 22.75 22.40 0.35 1.56%
Gitanjali Gems 121.00 120.00 1.00 0.83%
Goldiam Intl 43.75 37.60 6.15 16.36%
Rajesh Exports 88.90 82.95 5.95 7.17%
Ren. Jewellery 55.50 51.05 4.45 8.72%
Su-Raj Diamonds 46.15 45.95 0.20 0.44%
Titan 1,415.70 1,323.75 91.95 6.95%
Zodiac JRD 23.95 24.15 -0.20 -0.83%
Suashish Diamonds 309.00 303.80 5.20 1.71%

NEW ZEALAND
Michael Hill NZD 0.66 NZD 0.64 NZD 0.02 3.13%

MINING STOCKS
CANADA
Harry Winston CAD 10.20 CAD 10.33 -CAD 0.13 -1.26%
Lucara Diamond CAD 1.00 CAD 1.00 CAD 0.00 0.00%
Mountain Province CAD 2.22 CAD 2.29 -CAD 0.07 -3.06%
Peregrine Diamonds CAD 1.97 CAD 1.85 CAD 0.12 6.49%
Rockwell Diamonds CAD 0.06 CAD 0.06 CAD 0.00 0.00%
Shore Gold CAD 0.93 CAD 0.79 CAD 0.14 17.72%
Stornoway Diamond CAD 0.56 CAD 0.39 CAD 0.17 43.59%
True North Gems CAD 0.09 CAD 0.09 CAD 0.00 0.00%
UK (pence)
African Diamonds 37.00 37.00 0.0 0.00%
Anglo American 2,695.00 2,594.00 101.0 3.89%
BHP Billiton 1,970.00 1,863.00 107.0 5.74%
Firestone Diamonds 34.05 34.50 -0.5 -1.30%
Gem Diamonds 221.80 197.00 24.8 12.59%
Gemfields 5.35 5.10 0.3 4.90%
Mwana Africa 12.66 13.06 -0.4 -3.06%
Namakwa Diamonds 30.95 30.00 0.9 3.17%
Petra Diamonds 62.50 57.00 5.5 9.65%
Rio Tinto plc 3,370.00 3,134.00 236.0 7.53%

INDIA MARKET REPORT:

JANUARY 8, 2010

Weekly RapUp

TRADE ALERT: WARNING - BLOOD DIAMONDS FROM MARANGE ENTERING MARKET with reports that Zimbabwean governments Mbada Diamonds will auction 300,000 cts this week. DO NOT BUY THESE DIAMONDS. Rapaport and RapNet will expel and name companies and individuals that buy Marange diamonds.

Rapaport Trade.
JANUARY 15, 2010

RapUp

Trading activity improves at cutting centers. Jewelry retailers report strong Christmas performance for Nov-Dec with Tiffany & Co sales +17%, Signet +7%, Birks & Mayors +6%. Zale Corp CEO Neal Goldberg steps down after Christmas sales lag behind competitors (-15%). Michael Hill Int’l FY1H sales +8% to $179m. Rio Tinto 4Q rough production -35% to 4.5m cts, full year production -33% to 14m cts. Petra Diamonds 1H revenues +43% to $48m, gross rough production +12% to 615K cts. U.S. Nov. polished diamond imports +10% to $1.2b, polished exports -3% to $951m. Belgium Dec. polished exports +13% to $780m, rough imports +100% to $484m, full year ’09 polished exports -30% to $8.6b, rough imports -39% to $2.4b. Lazare Kaplan to open Israel office. GIA to purchase 30,000 square foot space in new International Gem Tower in New York. Chinese authorities bust major diamond smuggling ring, detain 50, including 21 Indian nationals.

ANNOUNCEMENTS:

January 16-21, 2010
Rapaport at Vicenza First
Fiera Di Vicenza - Pavilion A, Stand A43
Rapaport Contact: Francesco Lopresti,
Tel:+39-02-40047274, francesco@diamonds.net

January 18-22, 2010
Rapaport Polished Diamond Tender
New York

Large assortment of polished round and fancy diamonds ranging in size from -2 sieve plate to 1ct+. Qualities vary from promotional to very fine. Excellent buying opportunity for diamond jewelry wholesalers and manufacturers.
By Appointment Only.

Contact: Kathryn Langner
Email: NYTender@diamonds.net
Phone: 1-212-354-9800

QUOTE OF THE WEEK:

"Our board is determined to do all in its power to put in place effective leadership to help return Zale to profitability. At the same time, these management changes will help facilitate renewed focus on Zale’s core diamond business. We are fortunate to have executives with Theo Killion’s and Gil Hollander’s experience to assume greater leadership responsibilities as we refocus on our core strengths."

John B. Lowe Jr.
Chairman of Zale

INTERNATIONAL:

China Detains Alleged Diamond Smugglers
China’s Anti-Smuggling Bureau of Shenzhen Customs has detained 21 Indian nationals charged with the illegal transportation of diamonds from Hong Kong to Shenzhen. The individuals were apprehended as part of a major diamond smuggling bust conducted by Customs through which a total of 50 people were detained.

RETAIL:

Goldberg Resigns From Zale
Zales chief executive officer (CEO), Neal Goldberg, resigned from his post. The companys president, Theo Killion, was appointed as interim CEO until a permanent replacement is found. Goldberg (pictured) was Zales sixth CEO in ten years and held the position for two years. During his tenure, revenues continued their perpetual decline, with the company posting losses for the past eight quarters. Zale has seen its revenues fall from $2.4 billion in fiscal 2005 to $1.8 billion in 2009. The decline continued through Christmas, with revenue falling 15 percent to $494 million through November and December as competitor Signet Jewelers reported an increase in Christmas 2009 sales. Two other executives will also leave the company, including chief stores officer William Acevedo and chief merchandising officer Mary Kwan.

Rapaport Broadcast
Watch now: Signet, Tiffany & Co. and Zale reported on their stores performances during the Christmas 2009 season, with only Zale recording negative sales compared to last year. However, due to the ever-changing nature of the retail landscape, one-year comparisons dont provide a good measure of the long-term market trends currently underway. Given the dramatic sales drops that occurred over the Christmas 2008 season, in the wake of weak performances for Christmas 2007, watch the broadcast to see just how 2009 revenue compared with the previous years. The U.S. market had one less major jeweler in the fold this past Christmas - but who absorbed Finlays market share? The results for November and December 2009 combined were as follows: Signets sales rose 7.3 percent and its same-store sales were up 5.6 percent; Tiffanys sales rose 17 percent to $799 million, with its same-store sales rising 8 percent; and Zales revenue fell 15 percent to $494 million, while its same-store sales declined by 12 percent.

U.S. Weekly Chain-Store Sales +2%
Weekly chain-store sales in the U.S. rose 1.7 percent for the week that ended January 9, 2010, compared with one year ago, according to the International Council of Shopping Centers (ICSC) and Goldman Sachs weekly sales index. However, U.S. chain-store sales fell 3 percent from the previous week, which ICSC attributed to bargain-hunting consumers and depleted clearance merchandise. ICSC Research observed that 53 percent of consumers were looking for bargains, with two-thirds of those bargain hunters stating that they would most likely not buy anything that was not on sale. ICSC predicts that for January, U.S. comparable-store sales will remain flat or reflect a slight increase of up to 1 percent.

Birks & Mayors Christmas Sales +6%
Birks & Mayors Christmas sales rose 6 percent to $69.7 million, but its comparable-store sales in the U.S. fell 6 percent while in Canada, they rose 6 percent during the November through December 2009 period. Sales from Canada reflected a higher average transaction value, while the U.S. decrease was primarily the result of a decline in store traffic.

Michael Hills First-Half Revenue +8%
Michael Hill International reported that its preliminary first-half revenue rose 7.9 percent to $179.1 million and that on a same-store basis, its sales across all regions increased by 4.4 percent to $162.2 million. The retailers same-store sales in New Zealand rose 5.4 percent and were up by 3.6 percent in Australia, but in Canada, they were down by 4.9 percent. U.S. operations improved by 31 percent during the six-month period, albeit compared against only a four-month reporting cycle for fiscal 2008, which is when Michael Hill International first entered the U.S. market.

WHOLESALE:

Lazare Kaplan to Polish in Ramat Gan
Lazare Kaplan will open an office in Ramat Gan and transfer a substantial portion of its operations to Israel. The news follows last weeks report that the Antwerp Diamond Bank (ADB) terminated two credit facilities held by Lazare Kaplans Antwerp subsidiary, with $43 million outstanding. Lazare Kaplans chairman, Maurice Tempelsman (pictured), met with the Israel Diamond Exchanges (IDE) president, Avi Paz, to discuss plans to import large quantities of rough diamonds into Israel, as well as the companys intention to move a significant portion of its polishing business to Israel.

Stuller Hires Chief Technology Officer
Stuller hired Carol Skarlat to serve as its new chief technology officer. Her responsibilities will include leading the companys strategic and operational information technology (IT) planning, fostering innovation, prioritizing IT initiatives and coordinating the deployment and management of IT systems. Skarlat will also provide a strategic vision for Stullers future IT development. Skarlat is the former chief information officer (CIO) for Motorola’s global telecom business unit.

STATS:

U.S. Nov. Polished Imports +10%
U.S. polished diamond imports rose 9.7 percent to $1.19 billion during November 2009, while polished diamond exports fell 2.5 percent to $951 million for the month. The countrys net polished imports rose to $243 million from $113 million in November 2008. U.S. rough imports were up by 92 percent to $25 million as rough exports decreased by 45 percent to $6 million and net rough imports rose to $19 million from only $2 million one year ago. The U.S. net diamond account, reflecting net imports of polished and rough goods, increased to $262 million from $115 million in November 2008.

MINING:

De Beers Botswana: No Special Agreement With India
De Beers Botswana said there were "no agreements in place" for it to supply India with diamonds, other than its existing sales arrangement with the Diamond Trading Company (DTC). The statement came in response to press reports that new agreements had been reached with India. De Beers and the government of Botswana have a long-term commitment to sell all of the companys production to DTC Botswana.

Rio Tintos 4Q Production -35%
Rio Tintos diamond production fell 35 percent to 4.451 million carats during the fourth quarter of 2009. The decline came as the company reduced operating levels at its Diavik mine in Canada in response to weak market conditions. While Rio Tinto ramped up output at its flagship Argyle operation on the back of the recovery experienced during the quarter, the company noted that the markets remained below last years levels. Production at its Australia-based Argyle mine fell 33 percent to 3.504 million carats and at Diavik, which the company holds a 60 percent share in, output dropped 41 percent to 918,000 carats. Rio Tinto’s 77.8-percent-owned Zimbabwe operation, Murowa, saw production decline 33 percent to 37,000 carats during the quarter. For the full year, Rio Tinto’s diamond production fell 33 percent to 14.026 million carats.

Petras 2H09 Production +43%
Petra Diamonds reported that net revenues from its mining operations grew 43 percent to $48.2 million during the six months that ended on December 31, 2009. Petra noted a significant improvement in the market for rough diamonds, with the emerging consumer markets of India and China compensating for weaker activity in the U.S. and Europe. Through the second half of 2009, Petra Diamonds reported a strong increase in attendance at its diamond tenders as confidence returned to the market, with more financing filtering through the pipeline.

Namakwa Diamonds 1Q Production +100%
Namakwa Diamonds production rose 100 percent to 24,413 carats during its first fiscal quarter, which ended on December 31, 2009. Production was boosted by the trial mining conducted at the companys operations in the Democratic Republic of the Congo (DRC) after its acquisition of Kasai Resource Mining in December.

ACR Says It Owns Marange Diamonds
African Consolidated Resources (ACR), which is still embroiled in a battle with Zimbabwe over diamond-mining claims in the Chiadzwa area, told the diamond trade that any gemstones sold from the Marange diamond fields are "stolen." ACRs lawyer, Jonathan Samkange, said that Marange diamonds are legally the companys to sell. The statement came after Zimbabwe halted an auction of diamonds from Marange because the seller, Mbada Diamonds, failed to properly notify government officials and the Kimberley Process (KP) that it was auctioning the 300,000 carats.

African Minerals Divests Sierra Leone Property
African Minerals Ltd. (AML) divested from its diamond operations in Sierra Leone after signing an agreement with Obtala Resources. Obtala will issue 21,170,422 fully paid shares valued at $7 million, or a 9.9 percent stake, to AML in return for the entire share of Sierra Leone Hard Rock Limited (SLHR). This divestment will enable AML to focus its resources on the development of its Tonkolili iron-ore project. AML entered Sierra Leone in 2004 and commissioned the Konoma mine. By the end of 2007, approximately 30,000 carats with an average value of $408 per carat had been recovered there.

ECOWATCH:

For the week ending January 14, 2010:
Jan. 14 Jan. 7 Chng.
$1 = Euro 0.689 0.698 -0.009
$1 = Rupee 45.65 45.50 0.1
$1 = Israel Shekel 3.68 3.72 -0.04
$1 = Rand 7.39 7.43 -0.04
$1 = Canadian Dollar 1.03 1.03 0.00

Precious Metals
Gold $1,142.30 $1,130.60 $11.70
Platinum $1,610.00 $1,555.00 $55.00

Stock Indexes Chng.
BSE 17,584.87 17,615.72 -30.85 -0.18%
Dow Jones Avg. 10,710.55 10,605.19 105.36 0.99%
FTSE 5,498.20 5,526.72 -28.52 -0.52%
Hang Seng 21,716.95 22,269.45 -552.50 -2.48%
S & P 500 1,148.46 1,141.55 6.91 0.61%
Yahoo! Jewelry Index 1,039.55 1,067.57 -28.02 -2.62%

USA
Birks & Mayors $0.90 $0.95 -$0.05 -5.26%
Blue Nile $59.99 $62.17 -$2.18 -3.51%
Charles & Colvard $1.43 $1.29 $0.14 10.85%
DGSE Companies, Inc. $1.31 $1.35 -$0.04 -2.96%
Fuqi International $21.24 $20.70 $0.54 2.61%
JCPenney $26.00 $26.89 -$0.89 -3.31%
Kohls $41.70 $53.43 -$11.73 -21.95%
Lazare Kaplan $2.50 $2.50 $0.00 0.00%
LJ International $2.92 $2.66 $0.26 9.77%
Macys $16.53 $17.49 -$0.96 -5.49%
Man Sang $2.38 $2.50 -$0.12 -4.80%
Movado Group $11.69 $10.18 $1.51 14.83%
Nordstrom $36.70 $38.97 -$2.27 -5.82%
Saks $7.24 $7.18 $0.06 0.84%
Signet $28.45 $27.04 $1.41 5.21%
Sothebys $25.69 $22.86 $2.83 12.38%
Tiffany $45.34 $46.83 -$1.49 -3.18%
Walmart $54.18 $53.56 $0.62 1.16%
Zale $2.99 $2.68 $0.31 11.57%

EUROPE
Bulgari €6.14 €6.03 €0.11 1.82%
Bijou Brigitte €122.00 €119.00 €3.00 2.52%
Damiani €1.03 €1.07 -€0.04 -3.74%
LVMH €80.06 €79.99 €0.07 0.09%
PPR €89.77 €84.96 €4.81 5.66%
Richemont SA CHF 36.77 CHF 36.27 CHF 0.50 1.38%
Swatch Group CHF 288.30 CHF 277.40 CHF 10.90 3.93%
Theo Fennell (pence) 45.00 45.90 -0.90 -1.96%

INDIA (rupee)
Classic Diamond 24.40 23.75 0.65 2.74%
Gitanjali Gems 129.15 125.55 3.60 2.87%
Goldiam Intl 48.15 47.55 0.60 1.26%
Rajesh Exports 93.70 94.00 -0.30 -0.32%
Ren. Jewellery 71.10 67.40 3.70 5.49%
Su-Raj Diamonds 52.25 52.95 -0.70 -1.32%
Titan 1,517.50 1,509.80 7.70 0.51%
Zodiac JRD 26.76 25.65 1.11 4.33%
Suashish Diamonds 304.90 301.00 3.90 1.30%

NEW ZEALAND
Michael Hill NZD 0.72 NZD 0.66 NZD 0.06 9.09%

MINING STOCKS
CANADA
Harry Winston CAD 11.74 CAD 11.31 CAD 0.43 3.80%
Lucara Diamond CAD 1.00 CAD 1.02 -CAD 0.02 -1.96%
Mountain Province CAD 2.52 CAD 2.55 -CAD 0.03 -1.18%
Peregrine Diamonds CAD 2.43 CAD 2.26 CAD 0.17 7.52%
Rockwell Diamonds CAD 0.08 CAD 0.07 CAD 0.02 23.08%
Shore Gold CAD 0.95 CAD 1.00 -CAD 0.05 -5.00%
Stornoway Diamond CAD 0.59 CAD 0.60 -CAD 0.01 -1.67%
True North Gems CAD 0.10 CAD 0.09 CAD 0.01 11.11%
UK (pence)
African Diamonds 50.15 43.50 6.7 15.29%
Anglo American 2,749.00 2,844.00 -95.0 -3.34%
BHP Billiton 2,066.00 2,091.00 -25.0 -1.20%
Firestone Diamonds 46.80 34.65 12.2 35.06%
Gem Diamonds 248.00 244.40 3.6 1.47%
Gemfields 5.10 5.40 -0.3 -5.56%
Mwana Africa 14.05 13.43 0.6 4.62%
Namakwa Diamonds 38.01 34.95 3.1 8.76%
Petra Diamonds 62.00 63.75 -1.8 -2.75%
Rio Tinto plc 3,617.50 3,645.50 -28.0 -0.77%

INDIA MARKET REPORT:

RAPAPORT NEWS SERVICE | JANUARY 29, 2010 www.rapaport.com | news@rapaport.com

Industry Retail General Mining EconWatch India

RapUp January 29, 2010

January DTC sight estimated at $550m. Strong demand for rough and further price increases reported. Cutters pushing for higher polished prices with resistance from Far East buyers. Gem Diamonds’ Letseng mine 2009 sales -13% to $156m, average price -27% to $1,534/ct. Bulgari Group 4Q jewelry sales flat at $182m, full year ‘09 jewelry sales -10% to $563m. China 2009 polished diamond imports +31% to $699m to surpass Japan as second largest diamond consumer market, total polished trade +16% to $1.5b. Sierra Leone 2009 rough diamond exports reportedly -20% to $79m.

RapNet Data: January 29, 2010

Diamonds 618,057

Value $3,858,368,921

Carats 692,361

Average Discount -33.37%

Get Current Price List | Subscribe to Rapaport | Join RapNet

ANNOUNCEMENTS

February
22-26
Mon-Fri

Rapaport Polished Diamond Tender
New York

Polished round and fancy diamonds ranging in size from -2.5 sieve plate to 1ct +. Qualities vary from commercial to very fine including some breakout assortments. Excellent buying opportunity for diamond and jewelry manufacturers.

By Appointment Only.

Contact: Myles Schakler
Email: NYTender@diamonds.net
Phone: 1-212-354-9800

February
26
Fri
"The Diamond Decade: New Opportunities"
Martin Rapaport Presentation: Bangkok

2:30p.m.-4:30p.m.
4th Bangkok Gems & Jewelry Fair
Challenger Hall of Impact Convention Center
Bangkok, Thailand
Reserve your place: thailand@rapaport.com

March
7
Sun
"The Diamond Decade: New Opportunities"
Martin Rapaport Presentation: Hong Kong

11:00a.m.-12:00p.m.
Hong Kong International Jewellery Show
Hong Kong Convention & Exhibition Center
Wanchai, Hong Kong
Reserve your place: hongkong@rapaport.com

QUOTE OF THE WEEK:
Consumer spending plummeted 27 percent last week from one year ago, the lowest weekly average Gallup has found since it began measuring consumer spending in January 2008. Self-reported daily spending in stores, restaurants, gas stations, and online averaged $52, which was down 24 percent from the prior week. This marks the first time in 2010 that a full weeks spending has failed to match its year-ago comparable. It now seems likely that January 2010 spending may simply match the January 2009 average of $64 per day -- reflecting a continuation of what turned out to be something of a new normal in spending for most of 2009.

Gallup Inc. | Washington D.C.

INDUSTRY

Central Bank to Hold Marange Diamonds

Zimbabwes Supreme Court ordered the countrys central bank to safeguard millions of dollars worth of diamonds from the Marange area, or an estimated 129,000 carats. The ruling was the result of an ongoing battle between the government and junior miner African Consolidated Resources (ACR) over ownership of the Marange claims. The court also ruled that all of the diamonds extracted from the claims by the Zimbabwe Mining Development Corporation (ZMDC) should be returned to ACR. The government continues to contest the courts decision.

Industry Leaders Call for KP Action on Zim

A group of diamond industry leaders and nongovernmental organizations (NGOs) met with the U.S. State Department to urge the Kimberley Process (KP) to take tougher action in implementing and enforcing the joint work plan designed to bring Zimbabwe into full compliance with KP standards. Under this work plan, diamonds are not permitted to be exported from Zimbabwes Marange area until a designated KP monitor is in place.

The industry representatives also emphasized their interest in KP reforms, including the establishment of a permanent secretariat. This group also urged the enactment of KP enforcement measures for established instances of noncompliance.

The industry coalition consisted of representatives from the Diamond Manufacturers and Importers of America, Jewelers of America, the Diamond Dealers Club of New York, the World Diamond Council, the U.S. Kimberley Process Authority, the Responsible Jewelry Council, Global Witness, Human Rights Watch and the Jewelers Vigilance Committee, with Martin Rapaport of The Rapaport Group and Brian Leber of Leber Jeweler participating by phone.

Vicenzaoro First Sees Stronger Activity

The Vicenzaoro First jewelry show, the first major jewelry exhibition of the year, reflected marked improvement in business activity compared with the previous year. While attendees noted strong foot traffic, however, that trend did not necessarily translate into strong sales. This years buyers came mainly from Eastern Europe, with some traveling from Asia and the Middle East, while European and U.S. attendance was said to be disappointingly low.

Rapaport Broadcast

The Diamond Trading Companys (DTC) recent January sight estimate was five times larger than in January 2009; however, the rough market continues to remain uneasy as buyers strive to balance healthy manufacturing demand with high rough prices. Rapaport sight reporter Avi Krawitz discusses how insiders are negotiating the marketplace. Sightholders are preparing for further rough price increases in February. All eyes are on U.S. consumers as they continue to sweat the poor economy and reduce thier spending. The Conference Board found that while consumer confidence improved in January, the overall sentiment remains well below the more typical, pre-recessionary levels. Watch now.

RETAIL

U.S. Chain-Store Sales +2%

U.S. chain-store sales rose 1.9 percent this past week compared with one year ago, according to the International Council of Shopping Centers (ICSC) and Goldman Sachs. Chain-store sales in the U.S. fell 2.5 percent from the previous week. For the month of January 2010, ICSC is predicting that U.S. chain-store sales will increase by about 1 percent.

Japans Retail Sales Slump in 09

Japans department store sales fell to their lowest level since 1985 in 2009, while its supermarket sales declined to their lowest point since 1988. Meanwhile, the countrys same-store sales across both sectors registered their 13th consecutive annual decline. Department store sales fell 10 percent to $73 billion, marking a 24-year low. Sales of high-priced items, including artwork, jewelry and precious metals, were hit particularly hard by the recession, plummeting 15.3 percent. During the month of December, Japans department store sales slid 5 percent from a year earlier to $8.2 billion.

Bulgari 4Q Jewelry Sales Flat

Jewelry sales at Bulgari during its fiscal fourth quarter of 2009 were basically flat at $182 million and watch sales fell 4.5 percent to $96 million. Bulgaris total sales during fourth quarter fell 5.1 percent to $416 million. Fiscal year sales at Bulgari for its jewels division fell 10.3 percent to $563.2 million. Watch sales declined 19.5 percent to $297 million. Overall, Bulgari sales in 2009 fell 13.8 percent to almost $1.3 billion.

Lazare Kaplan Launches Simply Global

Lazare Kaplan is launching a new collection of seven bridal rings inspired by designs from seven different countries. The collection, crowned "Simply Global," will make its debut in Tucson, Arizona during the Centurion Jewelry exhibit to be held from January 30, 2010 through February 2, 2010.

Economy Remains Number One Issue

A poll conducted by CNN/Opinion Research found that 77 percent of the U.S. public feel that the U.S. economy is in the worst shape of their lifetime. Only 22 percent said that they have lived through more difficult economic times. The economy remains the number one issue facing consumers and voters alike. Sixty percent of those polled by CNN/Opinion Research said that fixing the economy this year, as opposed to later, was an extremely important undertaking that must be handled by both the White House and Congress.

Only one in eight believed that the U.S. economy had begun to recover from the current recession and about half felt that the recovery had not begun. Four in ten said the U.S. remains on a downward trend.

GENERAL

GIA Offers Diamond Sorting Service

The Gemological Institute of America (GIA) will offer a diamond sorting service for D-Z color diamonds weighing between 0.15 and 0.99 carat. This service is intended to help control clients’ costs by only providing grading reports for diamonds that fall within certain color and clarity parameters, as specified by the client. The stones must be submitted for sorting in bulk and there is a 50-stone minimum. The total parcel weight is also required, although the stones do not need to be individually parceled. All of the stones that meet the clients color and clarity criteria will continue through GIA’s grading and testing process to receive either a GIA Diamond Dossier® or a GIA Diamond Grading Report.

Stones that do not fit the latter criteria will be rejected and charged a fee. Grading information will not be provided for the rejected stones, which will also not be tested for treatments. Instead, the rejected stones will be returned in one common parcel.

EGL Asia Partners With NGGC

Hong Kong-based EGL Asia and NGGC, the state-owned diamond grading laboratory, have reached an exclusive agreement through which customers of the two labs can now receive a diamond-grading certificate from both simply by paying for an EGL certificate. Joseph Kuzi, the chief executive officer (CEO) of EGL Asia, said that the agreement reflected the companys continuing commitment to provide better service to its customers.

CIBJO Creates Networking Commission

CIBJO created a new commission, the CIBJO Association Executive Networking Commission (CAENCOM), to develop networking strategies to connect executives working in national jewelry associations within the CIBJO community.

The commission will sponsor a panel of three or four association executives who will share one of their own associations successful networking programs. The panel will also identify the networking challenges facing associations and suggest solutions.

STATS

Chinas Diamond Trade Up 16% in 2009

China’s trade in polished diamond imports and exports rose 16.4 percent to $1.52 billion in 2009, according to the Diamond Administration of China (DAC). Imports received through the Shanghai Diamond Exchange (SDE) rose 30.7 percent to a new high of $699 million, leading the country to surpass Japan in becoming the second-largest consumer market for diamonds. The countrys imports were spurred by China’s economic growth and the expansion of its domestic jewelry market, particularly for bridal goods. The DAC added that China’s lower tax policy for diamonds also contributed to the growth.

Sierra Leones Rough Exports -20%

Sierra Leone’s rough diamond exports fell 20 percent in 2009 to $79 million due primarily to the drop in price, Reuters reported, quoting an unnamed senior official in the countrys Ministry of Natural Resources. During 2008, Sierra Leone exported $99 million worth of rough that was valued at $266 per carat, according to data provided by the Kimberley Process (KP).

MINING

Gem Diamonds FY09 Revenue -20%

Gem Diamonds fiscal-year revenue fell 20 percent to $228 million in 2009. Revenue from Letseng dropped 13 percent to $155.8 million for an average of $1,534 per carat. Gem Diamonds also sold a total of 206.6 carats of polished diamonds from its beneficiation unit during the year for $12.5 million, or an average of $60,559 per carat. Ellendale mine revenue fell 27 percent to $72.4 million, or $232 per carat.

De Beers Agrees to Credit Terms

De Beers and its lenders have agreed to terms to renew the companys $1.5 billion credit facility, which was due to expire in March. The company has been negotiating for much of the second half of 2009 to renew the credit facility. In December, De Beers shareholders agreed to invest $1 billion in the diamond-mining company to reduce the level of debt it will need to take out for refinancing. Once the refinancing process is concluded, shareholders are expected to commit additional funding to help recapitalize the business.

Gahcho Kué Feasibility in Final Stage

Mountain Province Diamonds updated its feasibility study for Gahcho Kué, pinpointing the lifespan of the open-pit mine area at approximately 12 years and estimating that the mines average annual production rate will total 4.5 million carats. A final draft of the Gahcho Kué project description has been presented to the projects joint-venture partners, Mountain Province Diamonds and De Beers Canada.

Kopane to Co-Develop Liqhobong

Kopane Diamond signed a nonbinding memorandum with an "established mining company" to co-develop the Liqhobong kimberlite project in Lesotho. The yet-to-be-disclosed mining company will fund Liqhobong for Kopane and the resulting diamond sale revenues will be split between the two parties. The companies will also jointly fund the completion of the feasibility study being conducted on Liqhobong’s main pipe. Kopane is hoping to recover approximately 200,000 carats over the next 18 months. Once the study is completed, the unnamed mining company will have the option of acquiring 51 percent of Kopane’s interest in the main pipe in return for raising 80 percent of the cost for boosting Liqhobongs annual production to above one million carats.

ECONWATCH

For the week ending January 28, 2010:

Jan. 28 Jan. 21 Chng.
$1 = Euro 0.715 0.712 0.003
$1 = Rupee 46.28 46.08 0.2
$1 = Israel Shekel 3.74 3.73 0.01
$1 = Rand 7.61 7.51 0.10
$1 = Canadian Dollar 1.06 1.05 0.01

Precious Metals
Gold $1,085.50 $1,094.30 -$8.80
Platinum $1,507.00 $1,591.00 -$84.00

Stock Indexes Chng.
BSE 16,306.87 17,051.14 -744.27 -4.4%
Dow Jones Avg. 10,120.46 10,389.88 -269.42 -2.6%
FTSE 5,145.74 5,335.10 -189.36 -3.5%
Hang Seng 20,356.37 20,862.67 -506.30 -2.4%
S & P 500 1,084.53 1,116.48 -31.95 -2.9%
Yahoo! Jewelry Index 935.57 958.01 -22.44 -2.3%

USA
Birks & Mayors $0.82 $0.96 -$0.14 -14.6%
Blue Nile $53.43 $53.33 $0.10 0.2%
Charles & Colvard $1.24 $1.31 -$0.07 -5.3%
DGSE Companies, Inc. $1.43 $1.36 $0.07 5.1%
Fuqi International $16.90 $18.14 -$1.24 -6.8%
JCPenney $24.81 $25.45 -$0.64 -2.5%
Kohls $50.50 $51.26 -$0.76 -1.5%
LJ International $2.33 $2.50 -$0.17 -6.8%
Macys $15.76 $15.74 $0.02 0.1%
Man Sang $2.14 $2.40 -$0.26 -10.8%
Movado Group $10.92 $11.41 -$0.49 -4.3%
Nordstrom $34.85 $34.74 $0.11 0.3%
Saks $6.50 $6.67 -$0.17 -2.5%
Signet $27.31 $27.48 -$0.17 -0.6%
Sothebys $23.34 $24.33 -$0.99 -4.1%
Tiffany $40.75 $41.79 -$1.04 -2.5%
Walmart $52.64 $52.90 -$0.26 -0.5%
Zale $2.23 $2.51 -$0.28 -11.2%

EUROPE
Bulgari €5.81 €6.37 -€0.56 -8.8%
Bijou Brigitte €132.55 €128.75 €3.80 3.0%
Damiani €1.00 €1.03 -€0.03 -2.9%
LVMH €78.11 €78.44 -€0.33 -0.4%
PPR €87.80 €88.19 -€0.39 -0.4%
Richemont SA CHF 36.25 CHF 35.57 CHF 0.68 1.9%
Swatch Group CHF 278.50 CHF 287.10 -CHF 8.60 -3.0%
Theo Fennell (pence) 49.00 49.00 0.00 0.0%

INDIA (rupee)
Classic Diamond 20.90 23.25 -2.35 -10.1%
Gitanjali Gems 114.00 124.65 -10.65 -8.5%
Goldiam Intl 44.95 47.00 -2.05 -4.4%
Rajesh Exports 95.50 95.65 -0.15 -0.2%
Ren. Jewellery 57.80 64.70 -6.90 -10.7%
Su-Raj Diamonds 46.35 51.15 -4.80 -9.4%
Titan 1,520.85 1,530.65 -9.80 -0.6%
Zodiac JRD 24.65 25.65 -1.00 -3.9%
Suashish Diamonds 308.65 302.55 6.10 2.0%

NEW ZEALAND
Michael Hill NZD 0.69 NZD 0.70 -NZD 0.01 -1.4%

MINING STOCKS
CANADA
Harry Winston CAD 10.40 CAD 10.96 -CAD 0.56 -5.1%
Lucara Diamond CAD 1.02 CAD 1.00 CAD 0.02 2.0%
Mountain Province CAD 2.37 CAD 2.43 -CAD 0.06 -2.5%
Peregrine Diamonds CAD 1.52 CAD 2.28 -CAD 0.76 -33.3%
Rockwell Diamonds CAD 0.07 CAD 0.08 -CAD 0.01 -12.5%
Shore Gold CAD 0.90 CAD 0.91 -CAD 0.01 -1.1%
Stornoway Diamond CAD 0.53 CAD 0.59 -CAD 0.06 -10.2%
True North Gems CAD 0.10 CAD 0.10 CAD 0.00 0.0%
UK (pence)
African Diamonds 43.00 48.15 -5.2 -10.7%
Anglo American 2,300.00 2,488.00 -188.0 -7.6%
BHP Billiton 1,842.50 1,942.50 -100.0 -5.1%
Firestone Diamonds 41.25 44.25 -3.0 -6.8%
Gem Diamonds 222.00 240.20 -18.2 -7.6%
Gemfields 5.38 5.25 0.1 2.5%
Mwana Africa 13.83 14.94 -1.1 -7.4%
Namakwa Diamonds 38.50 38.75 -0.3 -0.6%
Petra Diamonds 52.00 59.00 -7.0 -11.9%
Rio Tinto plc 3,053.50 3,294.50 -241.0 -7.3%

RAPAPORT NEWS SERVICE | FEBRUARY 5, 2010 www.rapaport.com | news@rapaport.com

Industry Retail General Mining EconWatch India

RapUp February 5, 2010

Polished markets under pressure to increase prices due to speculatively high rough prices. Rough producers are creating artificial shortages which are driving up prices that are fueling speculative cycle. Far East trade quiets as wholesalers start Chinese New Year vacations with prices below that of cutting centers. Low expectations for U.S. Valentine’s Day sales. Gitanjali Group 3Q sales +63% to $391.5m, net profit +39% to $8.8m. Suashish Diamonds 3Q sales +117% to $67.4m, net profit of $3.7m vs. net loss of $6.6m a year earlier. Birks & Mayors 3Q sales +1% to $89m. Finlay Enterprises sells $122m of merchandise in Dec. Amazon 4Q sales +42% to $9.5b, net profit +71% to $384m. LMVH 09 revenue -1% to $24b with jewelry sales -13% to $1.1b, group profits -13% to $2.4b. Japan Dec. polished diamond imports -1% to $44m, full year ‘09 imports -20% to $619m. Clark McEwen appointed marketing manager of Rio Tinto Diamonds.

RapNet Data: February 5, 2010

Diamonds 589,712

Value $3,972,059,404

Carats 689,066

Average Discount -32.15%

Get Current Price List | Subscribe to Rapaport | Join RapNet

ANNOUNCEMENTS

February
22-26
Mon-Fri

Rapaport Polished Diamond Tender
New York

Polished round and fancy diamonds ranging in size from -2.5 sieve plate to 1ct +. Qualities vary from commercial to very fine including some breakout assortments. Excellent buying opportunity for diamond and jewelry manufacturers.

By Appointment Only.

Contact: Myles Schakler
Email: NYTender@diamonds.net
Phone: 1-212-354-9800

February
26
Fri
"The Diamond Decade: New Opportunities"
Martin Rapaport Presentation: Bangkok

2:30 p.m. - 4:30 p.m.
4th Bangkok Gems & Jewelry Fair
Challenger Hall of Impact Convention Center
Bangkok, Thailand
Reserve your place: thailand@rapaport.com

March
7
Sun
"The Diamond Decade: New Opportunities"
Martin Rapaport Presentation: Hong Kong

11:00 a.m. - 12:00 p.m.
Hong Kong International Jewellery Show
Hong Kong Convention & Exhibition Center
Wanchai, Hong Kong
Reserve your place: hongkong@rapaport.com

QUOTE OF THE WEEK:
What I’ve seen with [couples-to-be] who don’t have the money is they skip the engagement ring, but will do a nicer wedding band. And then they’ll upgrade later, when they’re more financially stable.

Todd Scanlon | Scanlon Jewelers, Williamsville, NY

INDUSTRY

Marange Diamonds are in the Pipeline

An airstrip reportedly is being built in Zimbabwes Chiadzwa diamond fields, which observers believe will be used to deliver weapons in exchange for diamonds. Aerial photographs show construction underway, adding to concerns that conflict diamonds from the Marange fields are making their way into the market illegally. Diamonds from the area have been found to be noncompliant with the Kimberley Process (KP) and may not be exported legally.

The Centre for Research and Development (CRD), a local nongovernmental organization (NGO), told Rapaport News that the absence of a local KP monitor has resulted in a great deal of corruption. Mbada Diamonds and Canadile, which were given the green light to extract diamonds, have been airlifting them to Harare International Airport in violation of the KP work plan. CRD also alleged that directors at Mbada fled the country with two boxes containing diamonds worth hundreds of millions of dollars.

“On this particular day, the two directors loaded the boxes into the helicopter and fled with the the precious stones,” the centre explained. The NGO cited unnamed sources who claimed that the two were acting in collaboration with some very senior government officials. "There is no way the scam could have succeeded without the cooperation of some powerful individuals within government. Further, no police report was filed about the theft.”

Soldiers continue to mine diamonds and “commit gross human rights violations in and around Chiadzwa,” despite the KP work plan agreement, according to the centre. Soldiers “ran amok, beating everyone on sight with logs and gun butts” after prospective diamond buyers would not meet their asking prices. Soldiers have reportedly raided beer halls and shops, seizing women and detaining them for one to two days, using them as sex slaves.

The Minerals Marketing Corporation of Zimbabwe (MMCZ) has postponed its plans to transport 300,000 carats of diamonds to the Reserve Bank of Zimbabwe after armed robbers raided African Consolidated Resource (ACR) offices in Harare. The Supreme Court ordered that the diamonds it says rightfully belong to ACR be moved to the reserve bank for safekeeping by a neutral body pending the resolution of the ownership dispute.

ECONOMIC & RETAIL

Rapaport Broadcast

Continuing weak U.S. chain store sales reflect how little consumer spending trends have changed since the recession hit bottom. Based upon consumer spending habits, the consumer recession is far from over as the daily spending average, on a rolling 14-day cycle, continues to decline.Even more telling is how a number of economic indicators measured by the Gallup Organization, including economic confidence, consumer spending and job creation, have stagnated during the past ten months. Watch now.

U.S. Economy Shrunk 2% in 2009

The U.S. economy contracted by 2.4 percent in 2009, the biggest drop since 1946, according to the U.S. Commerce Department. This decrease in the countrys real gross domestic product (GDP) primarily reflects negative contributions from nonresidential fixed investments, exports, private inventory investments, residential fixed investments and personal consumption expenditures. Spending decreases by the private sector, however, were partially offset by increased federal government spending. Imports, which are not included in GDP calculations, also decreased.

The Commerce Department also reported that the price index for gross domestic purchases increased 0.6 percent during 2009, compared with an increase of 1.9 percent in 2008. Wages and benefits were up only 1.5 percent in 2009, representing the weakest growth since 1982. Current-dollar GDP decreased 1.3 percent, or $182.7 billion, in 2009, compared to an increase of 2.6 percent, or $363.8 billion, in 2008.

U.S. Retailers Report Jan. Sales Increases

U.S. retail sales at the largest brand stores during the month of January 2010 came in positive for the most part, with easy comparison figures from the dramatic drops recorded one year ago. In summary: Macys same-store sales rose 3.4 percent as did total sales to $1.26 billion; JCPenney same-store sales fell 4.6 percent and total sales fell 4.4 percent to $940 million; Kohls same-store sales rose 6.5 percent and total sales rose 10.7 percent to $798 million; Nordstrom same-store sales rose 14 percent and total sales rose 15.8 percent to $543 million; Neiman Marcus same-store sales rose 6.8 percent and total sales rose 8.3 percent to $242 million; Saks same-store sales rose 7 percent and total sales rose 8 percent to $159 million.

Comparable-store sales at the nations chains rose 3 percent during the month, according to the International Council of Shopping Centers. "Despite lean clearance inventories and some adverse weather that held back sales in January, industry sales posted an impressive gain," said Michael P. Niemira, chief economist and director of research for ICSC.　Comparisons were however easy given the 4.8 percent decline in January 2009.

LVMH 09 Revenue -1%, Profits -13%

LVMH reported that revenue for fiscal 2009 fell 1 percent to $24 billion while the groups share of net profit fell 12.5 percent to $2.4 billion. By business group, sales of watches and jewelry fell 13 percent to $1.06 billion. The figure was down by 19 percent using comparable exchange rates. The jewelry division was hardest hit during the year.

Wines and spirits experienced a 12 percent decline in revenue and perfume sales slid 4 percent. Increases were registered for fashion and leather goods, and selective retailing categories. Operating profits for the year fell 8 percent to $4.6 billion. The jewelry and watch division fared worse of all with a 47 percent drop in operating profits at $87.2 million.

Amazon.com 4Q Sales +42%

Fourth-quarter sales at Amazon.com grew by 42 percent to $9.52 billion, while the cost of sales rose by almost as much to $7.5 billion. The companys quarterly net profits increased by 71 percent to $384 million. Amazons sales across North America rose 36 percent to $4.96 billion, while its international sales — in the U.K., Germany, Japan, France and China — rose 48 percent to $4.56 billion.

For fiscal 2009, consolidated net sales rose 28 percent to $24.51 billion and the cost of sales increased by 27 percent to $18.98 billion. Net income rose 40 percent to $902 million. North American sales rose 25 percent to $12.83 billion, while its international sales jumped 31 percent to $11.68 billion.

Finlay Dec. Sales Reach $122M

Finlay Enterprises sold $122 million worth of merchandise during December 2009, according to its monthly bankruptcy court filing. Filings for previous months, since filing Chapter 11 in August, reflect revenues of $56.6 million in November and $37 million in October. Cumulative revenues since August total $276.6 million. Finlay reported a net profit of $27,419 for December, but net losses since August total $85 million. The company had cash on hand of $92.9 million as of January 2, 2010, compared with $78.8 million at the end of November. Its total liabilities at the beginning of 2010 stood at $301.1 million, down from the $341.7 million it reported in August.

Birks & Mayors 3Q Sales +1%

Birks & Mayors reported that sales rose 1 percent to $89.3 million during its third quarter of fiscal 2010, although this figure reflected a $6.2 million boost derived from converting Canadian sales into U.S. dollars. The companys comparable-store sales fell by 4 percent overall, led by a 9 percent decline in the U.S. Same-store sales increased by 2 percent in Canada. Birks & Mayors closed two of its retail store locations in Florida during January and plans to close two locations in Canada in March. It will open a new Mayors store in West Palm Beach, Florida, later this month.

Hong Kong Dec. Jewelry Sales +47%

Hong Kong retail sales in December jumped 16 percent by value to $3.8 billion, the strongest growth since April 2007. Sales of big-ticket items gained the most, with jewelry surging 47.4 percent, cosmetics 16.7 percent and electrical goods 16.2 percent. Auto sales soared 30.9 percent.

Retail sales for all of 2009 edged up 0.6 percent by value, while volume dropped 0.8 percent. In separate news, an HKRMA survey reported that most retailers will raise employees salaries this year.

Valentines Jewelry Sales to Fall 5%

Expect U.S. consumers to spend about $1.3 billion on jewelry for Valentines Day this year, 4.6 percent less than they spent on the holiday in 2009, according to IBISWorld. Jewelry, candy and flowers registered declines in the groups annual Valentines Day spending forecast, but spending gains were predicted for clothing, greeting cards, romantic getaways and dining out. Total spending for the holiday was projected at $17.6 billion, 3.3 percent higher than 2009.

In a separate forecast provided by the National Retail Federation (NRF), couples are expected to spend an average of $63.34 on gifts for their significant other or spouse, compared with $67.22 in 2009. The average expenditure on traditional Valentine’s Day merchandise this year will be $103, similar to what was spent in 2009. NRF predicts total spending for the holiday will reach $14.1 billion.
NRF determined that "personal and practical" gifts would resonate and that sweaters, winter accessories and other clothing options would replace gifts of jewelry or an evening out.

GENERAL

GIA Finds Counterfeit Grading Report

The Gemological Institute of America (GIA) has discovered a counterfeit GIA report in Hong Kong that was traced back to Antwerp. The bogus document, which resembles an authentic GIA report, has been taken out of circulation and currently is in GIAs possession. GIA is diligently working behind the scenes to obtain more information concerning this report and its origin. Noting that it takes such violations seriously and is engaged with law enforcement agencies worldwide to help prevent, detect and prosecute illegal activities, GIA urged the trade and the public to use its Report Check as the most effective way to identify counterfeit reports. Report Check is available only for diamonds graded after January 1, 2000. www.gia.edu/reportcheck/

McEwen Joins Rio Tinto

As part of the reorganization of its Antwerp-based sales and marketing management team, Rio Tinto has appointed Clark McEwen to the position of marketing manager, where he is expected to play a key role in the restructuring effort. The industry veteran will report to Jean-Marc Lieberherr, Rio Tinto Diamonds general manager of sales and marketing.

McEwen will be based in Antwerp, effective March 1, 2010. He brings a wealth of international experience to the job, a strong knowledge of the entire diamond pipeline and the proven trading, manufacturing, branding and retail skills acquired in more than 25 years in the diamond industry.

STATS

Japan Dec. Polished Imports -1%

Japan’s polished diamond imports fell 1 percent to $43.9 million in December 2009. For the full year of 2009, Japan’s polished diamond imports declined 20 percent to $619.2 million, with volume down 5 percent to 2.168 million carats. The average price for polished imports fell 17 percent to $285 per carat for the year.

MINING

Petra Names 507-Carat Diamond

Petra Diamonds has named the 507-carat white diamond recovered at its Cullinan mine this past September "The Cullinan Heritage." The stone was named to reflect the date of recovery, September 24, which is Heritage Day in South Africa. The Cullinan Heritage is being placed on tender in Johannesburg and its sale is expected before the end of the month.

“The Cullinan Heritage is not only exquisitely beautiful, but also of true historical importance,” said Johan Dippenaar, Petra’s chief executive officer (CEO). “Since we announced the recovery of the diamond in September 2009, we have experienced a high level of interest from the trade and we look forward to announcing the results of the sale before the end of the month.”

De Beers Canada Signs On to Conduct Code

De Beers Canada joined the Voluntary Code of Conduct for Authenticating Canadian Diamond Claims, a code established in 2002 to track diamonds in Canada from mine to market. The code is endorsed by the Competition Bureau of Canada and the World Jewellery Confederation (CIBJO). The announcement was made by the Canadian Diamond Code Committee (CDCC).

De Beers Canada operates the Snap Lake diamond mine in the Northwest Territories and the Victor diamond mine in the province of Ontario.

ECONWATCH

For the week ending Feb. 4, 2010:

Feb. 4 Jan. 28 Chng.
$1 = Euro 0.727 0.715 0.012
$1 = Rupee 46.57 46.28 0.3
$1 = Israel Shekel 3.71 3.74 -0.03
$1 = Rand 7.55 7.61 -0.06
$1 = Canadian Dollar 1.07 1.06 0.01

Precious Metals
Gold $1,062.40 $1,085.50 -$23.10
Platinum $1,505.00 $1,507.00 -$2.00

Stock Indexes Chng.
BSE 16,224.95 16,306.87 -81.92 -0.5%
Dow Jones Avg. 10,002.18 10,120.46 -118.28 -1.2%
FTSE 5,139.31 5,145.74 -6.43 -0.1%
Hang Seng 20,341.64 20,356.37 -14.73 -0.1%
S & P 500 1,063.11 1,084.53 -21.42 -2.0%
Yahoo! Jewelry Index 917.12 935.57 -18.45 -2.0%

USA
Birks & Mayors $0.81 $0.82 -$0.01 -1.2%
Blue Nile $49.97 $53.43 -$3.46 -6.5%
Charles & Colvard $1.33 $1.24 $0.09 7.3%
DGSE Companies, Inc. $1.46 $1.43 $0.03 2.1%
Fuqi International $16.03 $16.90 -$0.87 -5.1%
JCPenney $25.15 $24.81 $0.34 1.4%
Kohls $50.07 $50.50 -$0.43 -0.9%
LJ International $2.29 $2.33 -$0.04 -1.7%
Macys $16.66 $15.76 $0.90 5.7%
Man Sang $2.15 $2.14 $0.01 0.5%
Movado Group $10.39 $10.92 -$0.53 -4.9%
Nordstrom $35.11 $34.85 $0.26 0.7%
Saks $6.44 $6.50 -$0.06 -0.9%
Signet $27.43 $27.31 $0.12 0.4%
Sothebys $22.92 $23.34 -$0.42 -1.8%
Tiffany $40.00 $40.75 -$0.75 -1.8%
Walmart $52.97 $52.64 $0.33 0.6%
Zale $2.06 $2.23 -$0.17 -7.6%

EUROPE
Bulgari €5.60 €5.81 -€0.21 -3.6%
Bijou Brigitte €138.10 €132.55 €5.55 4.2%
Damiani €0.98 €1.00 -€0.02 -2.0%
LVMH €77.96 €78.11 -€0.15 -0.2%
PPR €85.79 €87.80 -€2.01 -2.3%
Richemont SA CHF 36.17 CHF 36.25 -CHF 0.08 -0.2%
Swatch Group CHF 274.30 CHF 278.50 -CHF 4.20 -1.5%
Theo Fennell (pence) 45.00 49.00 -4.00 -8.2%

INDIA (rupee)
Classic Diamond 21.50 20.90 0.60 2.9%
Gitanjali Gems 117.05 114.00 3.05 2.7%
Goldiam Intl 43.60 44.95 -1.35 -3.0%
Rajesh Exports 108.55 95.50 13.05 13.7%
Ren. Jewellery 67.15 57.80 9.35 16.2%
Su-Raj Diamonds 47.85 46.35 1.50 3.2%
Titan 1,700.75 1,520.85 179.90 11.8%
Zodiac JRD 24.35 24.65 -0.30 -1.2%
Suashish Diamonds 298.00 308.65 -10.65 -3.5%

NEW ZEALAND
Michael Hill NZD 0.68 NZD 0.69 -NZD 0.01 -1.4%

MINING STOCKS
CANADA
Harry Winston CAD 9.82 CAD 10.40 -CAD 0.58 -5.6%
Lucara Diamond CAD 1.02 CAD 1.02 CAD 0.00 0.0%
Mountain Province CAD 2.25 CAD 2.37 -CAD 0.12 -5.1%
Peregrine Diamonds CAD 1.69 CAD 1.52 CAD 0.17 11.2%
Rockwell Diamonds CAD 0.07 CAD 0.07 CAD 0.00 0.0%
Shore Gold CAD 0.85 CAD 0.90 -CAD 0.05 -5.6%
Stornoway Diamond CAD 0.46 CAD 0.53 -CAD 0.07 -13.2%
True North Gems CAD 0.09 CAD 0.10 -CAD 0.01 -10.0%
UK (pence)
African Diamonds 42.50 43.00 -0.5 -1.2%
Anglo American 2,280.50 2,300.00 -19.5 -0.8%
BHP Billiton 1,853.50 1,842.50 11.0 0.6%
Firestone Diamonds 41.95 41.25 0.7 1.7%
Gem Diamonds 245.00 222.00 23.0 10.4%
Gemfields 5.38 5.38 0.0 0.0%
Mwana Africa 12.90 13.83 -0.9 -6.7%
Namakwa Diamonds 39.00 38.50 0.5 1.3%
Petra Diamonds 51.75 52.00 -0.3 -0.5%
Rio Tinto plc 3,094.00 3,053.50 40.5 1.3%

RapUp February 12, 2010

Tight rough supplies encourage continued speculation that is spreading to polished markets. While some optimism is warranted given steady increases in trading volume, higher prices may not be sustainable. Strong demand for rough ahead of Feb. sights as aggressive Indian buyers and shortages fuel higher prices. De Beers posts 2009 net loss of $743m, production -49% to 24.6m cts., DTC sales -45% to $3.3b. Rio Tinto 2009 diamond revenues -46% to $450m, net loss of $68m vs. profit of $137m in 2008. BHP Billiton 1H diamond revenues +76% to $383m, earnings (EBIT) rise to $174m vs. $15m. U.S. Dec. polished diamond imports +23% to $1.2b, full year ‘09 polished imports -34% to $12.5b. Belgium Jan. polished diamond exports +16% to $648m, rough imports +66% to $764m. The Rapaport Group wishes our Chinese customers a prosperous New Year.

RapNet Data: February 12, 2010

Diamonds 610,743

Value $4,003,262,787

Carats 701,910

Average Discount -32.75%

Get Current Price List | Subscribe to Rapaport | Join RapNet

ANNOUNCEMENTS

February
22-26
Mon-Fri

Rapaport Polished Diamond Tender
New York

Polished round and fancy diamonds ranging in size from -2.5 sieve plate to 1ct +. Qualities vary from commercial to very fine including some breakout assortments. Excellent buying opportunity for diamond and jewelry manufacturers.

By Appointment Only

Contact: Myles Schakler
Email: NYTender@diamonds.net
Phone: 1-212-354-9800

February
26
Fri
"The Diamond Decade: New Opportunities"
Martin Rapaport Presentation: Bangkok

2 p.m. - 4 p.m.
4th Bangkok Gems & Jewelry Fair
Challenger Hall of Impact Convention Center
Bangkok, Thailand
Reserve your place: thailand@rapaport.com

March
7
Sun
"The Diamond Decade: New Opportunities"
Martin Rapaport Presentation: Hong Kong

11:00 a.m. - 12:00 p.m.
Hong Kong International Jewellery Show
Hong Kong Convention & Exhibition Center
Wanchai, Hong Kong
Reserve your place: hongkong@rapaport.com

QUOTE OF THE WEEK:
Without the upturn in gas spending, the recovery of retail sales over the past several months looks a lot more tentative. January was generally a slower month than December, which saw a strong pick up in holiday related spending. Although the pace of retail sales growth slowed, it still follows a general trend of improving longer-term growth rates for retail spending.

Kamalesh Rao | SpendingPulse

INDUSTRY

Chiadzwa Diamond Consignment Disappears

A consignment of diamonds from Zimbabwes Chiadzwa diamond field disappeared after being removed from the central bank by the police. This confiscation marked the latest incident in the long-running legal dispute between African Consolidated Resources (ACR) and the countrys mines minister, Obert Mpofu, over the ownership of the Chiadzwa claims in eastern Zimbabwe. The Supreme Court ruled that ACRs claims were valid in September, but that ruling became unclear when a statement was issued in January, overturning the decision.

The missing rough diamonds, held in three strongboxes, were part of a much larger collection of diamonds that were mined by ACR before the company was evicted from Chiadzwa and after that, by the state-owned Zimbabwe Mining Development Corporation (ZMDC) until late 2009.

Blood Diamonds Cast Shadow Over Valentines Day

Diamonds mined illegally in conflict zones are still finding their way onto the international market and being sold in cities such as London, New York and Paris, Global Witness warned. The continued existence of "blood diamonds" poses a serious problem for consumers looking to demonstrate their love with a diamond ring this Valentine’s Day.

“Consumer pressure will be vital to ensure that the diamond industry finally acts to eliminate conflict diamonds once and for all,” said Elly Harrowell, a campaigner at Global Witness. “Some progress has been made in recent years, but the unpalatable truth is that around the world, civilians are still suffering terribly as a consequence of the diamond trade.”

One significant challenge currently facing the industry is posed by Zimbabwe, which, despite evidence of widespread human rights abuses and a military presence at the mines, remains a Kimberley Process (KP) member and continues to export diamonds.

“Kimberley Process members need to get serious about stamping out the systematic abuse of civilians in countries like Zimbabwe; otherwise, the credibility of the whole scheme will be undermined,” Harrowell stated. “They will be more inclined to act if they hear a strong message from retailers and consumers that continued links with such violence will no longer be tolerated.”

UN Urges Calm in Cote dIvoire

The UN deplored recent violence in Katiola and Divo, Cote dIvoire, where voter registration is currently underway for the March presidential election. The UN peacekeeping mission in Cote dIvoire, UNOCI, appealed for calm during the preparation of the final voters list, a vital step in the process of holding the long-delayed presidential polls. The UN Security Council pledged to review diamond sanctions only after a free and fair presidential election had been held in Cote dIvoire. The election has been postponed numerous times in the past four years.

RETAIL

Rapaport Broadcast

What were the important online marketing trends of 2009? To answer that question, metrics firm comScore recently released its annual findings on the ever-changing virtual world of branding and marketing. While e-commerce sales fell slightly during the year, brands made great progress toward tapping into an evolving virtual landscape, led by social media and videos. WATCH NOW

According to comScore, the year ahead will be characterized by the increased use of mobile technology, stronger applications of social media websites and the continued growth of online video channels, especially given the rise of niche market players. Stay on top by creating content that adapts to mobile phone devices, utilizing content and applications that ensure both real-time and specific vertical results, and employing cutting-edge targeting techniques to place your brand before an online audience.

U.S. Weekly Chain-Store Sales +2%

Super Bowl Sunday preparations boosted chain-store sales this past week as U.S. shoppers hit grocery stores ahead of game day, according to the International Council of Shopping Centers (ICSC) and Goldman Sachs. Overall, comparable chain-store sales in the U.S. rose 1.8 percent compared with one year ago. Same-store sales rose 1.4 percent from the previous week. ICSC Research is anticipating that sales will increase by 2 percent for the month of February due mainly to easy year-over-year comparisions and an improving underlying retail economy.

U.S. Retail Sales Soften in Jan.

U.S. retail sales were flat for January when gasoline and automobile sales were removed from the retail sales mix, according to MasterCard Advisors’ SpendingPulse report. When the same calculation was performed for December 2009, the results reflected an increase of 2.1 percent.

For the third consecutive month, retail figures in January continued to follow a general trend of "modestly improving long-term growth" and that some of the apparent chill at the counter was a result of the spending levels against which January’s data were being compared.

Blue Nile 4Q Sales +20%, Profits +55%

Blue Niles fourth quarter sales rose 20 percent to $102.9 million and cost of sales rose 18 percent to $80.6 million. Net income for the fourth quarter rose 55 percent to $5.4 million. As a percent of net sales, gross profit improved 110 basis points to 21.7 percent. International sales during the fourth quarter rose 70 percent to $11.7 million and U.S. sales rose 16 percent to $91.2 million.

Full year results reflected a net sales increase of 2 percent to $302.1 million, while cost of sales rose 0.6 percent to $236.8 million. Profits rose 10 percent to $12.8 million. International sales rose 20 percent to $33.2 million, while U.S. sales rose 0.4 percent to $268.9 million.

Swatch Groups Sales -9% in 2009

Swatch Groups net sales fell 9.4 percent to $4.82 billion in 2009. The company attributed the decline to its divestment from the Sokymat and Michel automotive businesses. The groups net income dropped 9 percent to $715 million, while its watch and jewelry sales were down by 7.9 percent to $3.93 billion.

Zale Hires Retail Advisory Company

Zale Corporation hired financial advisor Peter J. Solomon Company to help it identify how its financial position can be strengthened. The move comes one month after Zale’s board fired chief executive Neal Goldberg in the wake of reporting disappointing Christmas sales. Zale saw its sales decline 15 percent to $494 million through November and December 2009, as many of its competitors in the U.S. recorded sales increases. In an effort to raise cash, the company reportedly requested that diamond merchants and other vendors purchase some of its old inventory in exchange for their assurances of future orders.

Hearts on Fire to Close Accounts

The Hearts on Fire brand will close a number of its underperforming retail accounts in order to consolidate and strengthen its family of independent retail jewelers. More than 120 locations will be closed as the companys focus turns to retail partners that can "best represent the complete Hearts on Fire brand experience in both product offering and brand presentation." Positioning itself in this manner also enables the retailer to place the Hearts on Fire brand in a new group of strategically defined accounts in order to complement the existing 650 locations around the world.

eBay, Brides Magazine Promote Build Your Bling

Auction website eBay, in conjunction with Brides magazine, launched a joint U.S. contest titled "Build Your Bling." The personal designs submitted by participants will afford one the opportunity to win a diamond and ring of his or her own design with a value of up to $25,000. Contestants will configure their "dream diamond ring" using the eBay Diamond Ring Designer, which accesses the certified, conflict-free, loose diamonds and ring settings offered through eBay, according to the company.

Through the websites share function, the entrants can also encourage others to vote for their design through 50 social media channels. The winner of Build Your Bling will be determined by a public poll that culminates on February 19, 2010. The winner will be announced at diamonds.ebay.com on February 26. Two runners-up will be awarded an eBay gift card for $100.

Bidz.com Launches Private Retail Site

Jewelry auction website Bidz.com launched Modnique, www.modnique.com, as an exclusive, members-only shopping site. The website offers authentic, brand name merchandise and runs special sales events. Modniques first sales event featured Ed Hardy mens and womens apparel.

GENERAL

Botswana Taps India For Diamond-Cutting Training

Botswana is seeking cutting and polishing training from Indian companies as part of its effort to develop beneficiation. Synergies between the two countries’ diamond industries should encourage more Indian firms to set up shop in Botswana, according to Dorcas Ana Kgosietsile, the countrys High Commissioner to India. So far, two of the 16 Indian cutting operations in the country have established factories in Botswana and many currently have Indian employees training their workers in this skill.

WFDB Pays Tribute to Goldschmidt

The World Federation of Diamond Bourses (WFDB) paid tribute to the memory of the groups honorary life secretary Gerson Goldschmidt, who died in Antwerp on Monday, February 8, 2010 at the age of 89. Goldschmidt served two long terms as secretary-general of the WFDB, first from 1984 to 1986 and again from 1990 to 2002. Upon his retirement from the post, he was awarded the distinguished lifetime title.

In building a career as an industrial diamond dealer, Goldschmidt also became a leader in the Belgian diamond sector. He served as president of the Antwerpsche Diamantkring, the citys rough diamond exchange, from 1999 to 2003 and as vice president and treasurer from 1987 to 1999. He was a board member at the bourse from 1978 to 1999.

Weinman Leads 2010 WJA Board

The Women’s Jewelry Association (WJA) appointed Kendra Bridel Weinman incoming president. Weinman succeeds Yancy Weinrich of Luxury by JCK and JCK Las Vegas, who completed her two-year term. Weinman is the president of Luscious International and has a bachelor’s degree in business administration. She has more than 11 years of experience in the jewelry industry, including at Montblanc and Taché Jewelry, where she ran Taché’s luxury division. Weinman said that her main priority would be to add value to the WJA membership.

STATS

U.S. Dec. Polished Diamond Imports

For the month of December and full year (FY) 2009.

$Mil. Chng. FY $Mil. Chng.
Polished Imports $1,190 23% $12,450 -34%
Polished Exports $931 16% $9,700 -32%
Net Imports $256 58% $2,740 -42%

Rough Imports $37 28% $290 -61%
Rough Exports $68 400% $237 -39%
Net Imports ($31) $53 -85%

Diamond Acct. $225 29% $2,790 -45%

Belgiums Jan. Polished Diamond Exports

For month of January 2010:

$Mil. Chng.
Polished Exports $648 16%
Polished Imports $737 12%
Net Exports ($89) 10%

Rough Imports $764 66%
Rough Exports $817 168%
Net Imports ($53)

Diamond Acct. ($36) 86%

MINING

De Beers Posts Net Loss of $743M in 2009

De Beers reported a net loss of $743 million in 2009, compared with net earnings of $90 million for the previous year, due to the impairment of its Canadian mining assets. The diamond mining giant saw all of its numbers drop significantly during the year due to the strain exerted on the industry by the economic downturn. De Beers group sales fell 44 percent to $3.84 billion, with the rough sales conducted through its Diamond Trading Company (DTC) down 45 percent to $3.24 billion.

The De Beers Diamond Jewellers (DBDJ) retail segment saw its sales drop 30 percent during the year, while sales at Element Six, the companys industrial diamond business, fell 34 percent. De Beers did not report separate sales figures for its Diamdel unit, which supplies rough to nonsightholders.

Net earnings before once-off items, such as impairment charges, fell to a loss of $37 million from a profit of $294 million in 2008, while the companys earnings before interest, taxation, depreciation and amortization (EBITDA) decreased by 46 percent to $654 million. De Beers created a provision of $696 million for the impairment of its Snap Lake and Victor mines, which were launched in Canada in 2008. Other one-off items included $25 million toward restructuring its debt, sinking the companys net earnings deep into the red.

BHP Billitons Diamond Revenues +76%

BHP Billitons first-half revenue from its diamond operations grew by 76 percent to $383 million. The rise was the result of the higher prices realized for diamonds mined at the companys Ekati mine in Canada. The diamond unit’s earnings before interest and tax jumped to $174 million from $15 million in the same period a year earlier, with the higher revenues and better cost efficiencies at Ekati driving this improvement. BHP Billiton noted that lower spending on exploration activities also boosted its earnings by $19 million. The companys production rose by 13 percent to 1.54 million carats during the half year.

Rio Tinto’s Diamond Revenues -46% in 2009

Rio Tintos gross sales revenues from its diamond operations fell 46 percent to $450 million in 2009 as the price of — and demand for — diamonds remained severely impacted by the economic downturn. The group’s diamond unit recorded a net loss of $68 million for the year, compared with net earnings of $137 million in 2008.
Total production fell 33 percent to 14.026 million carats as the company temporarily shut down its Argyle and Diavik mines during the year “to balance production with market demand,” according to the statement.

Rio Tinto’s Murowa diamond mine in Zimbabwe has the capacity to increase its production sixfold, however. The companys diamonds and minerals chief executive, Harry Kenyon-Slaney, has pledged support for the project. Murowa’s production fell 53 percent to 97,000 carats in 2009. The group holds a 78 percent stake in the operation, with Zimbabwe acting as a minority shareholder.

ECONWATCH

For the week ending Feb. 11, 2010:

Feb. 11 Feb. 4 Chng.
$1 = Euro 0.730 0.727 0.003
$1 = Rupee 46.49 46.57 -0.1
$1 = Israel Shekel 3.74 3.71 0.03
$1 = Rand 7.69 7.55 0.14
$1 = Canadian Dollar 1.05 1.07 -0.02

Precious Metals
Gold $1,094.10 $1,062.40 $31.70
Platinum $1,523.00 $1,505.00 $18.00

Stock Indexes Chng.
BSE 16,152.59 16,224.95 -72.36 -0.4%
Dow Jones Avg. 10,114.19 10,002.18 112.01 1.1%
FTSE 5,161.48 5,139.31 22.17 0.4%
Hang Seng 20,290.69 20,341.64 -50.95 -0.3%
S & P 500 1,078.47 1,063.11 15.36 1.4%
Yahoo! Jewelry Index 949.71 917.12 32.59 3.6%

USA
Birks & Mayors $0.63 $0.81 -$0.18 -22.2%
Blue Nile $52.56 $49.97 $2.59 5.2%
Charles & Colvard $1.39 $1.33 $0.06 4.5%
DGSE Companies, Inc. $1.68 $1.46 $0.22 15.1%
Fuqi International $16.99 $16.03 $0.96 6.0%
JCPenney $24.79 $25.15 -$0.36 -1.4%
Kohls $49.44 $50.07 -$0.63 -1.3%
LJ International $2.32 $2.29 $0.03 1.3%
Macys $17.13 $16.66 $0.47 2.8%
Man Sang $2.05 $2.15 -$0.10 -4.7%
Movado Group $11.44 $10.39 $1.05 10.1%
Nordstrom $33.81 $35.11 -$1.30 -3.7%
Saks $6.68 $6.44 $0.24 3.7%
Signet $27.37 $27.43 -$0.06 -0.2%
Sothebys $23.34 $22.92 $0.42 1.8%
Tiffany $41.54 $40.00 $1.54 3.9%
Walmart $53.08 $52.97 $0.11 0.2%
Zale $1.94 $2.06 -$0.12 -5.8%

EUROPE
Bulgari €5.53 €5.60 -€0.07 -1.2%
Bijou Brigitte €141.40 €138.10 €3.30 2.4%
Damiani €0.96 €0.98 -€0.02 -2.0%
LVMH €77.58 €77.96 -€0.38 -0.5%
PPR €84.59 €85.79 -€1.20 -1.4%
Richemont SA CHF 35.46 CHF 36.17 -CHF 0.71 -2.0%
Swatch Group CHF 293.50 CHF 274.30 CHF 19.20 7.0%
Theo Fennell (pence) 44.00 45.00 -1.00 -2.2%

INDIA (rupee)
Classic Diamond 20.70 21.50 -0.80 -3.7%
Gitanjali Gems 120.85 117.05 3.80 3.2%
Goldiam Intl 43.65 43.60 0.05 0.1%
Rajesh Exports 104.90 108.55 -3.65 -3.4%
Ren. Jewellery 67.75 67.15 0.60 0.9%
Su-Raj Diamonds 49.60 47.85 1.75 3.7%
Titan 1,734.30 1,700.75 33.55 2.0%
Zodiac JRD 26.45 24.35 2.10 8.6%
Suashish Diamonds 301.20 298.00 3.20 1.1%

NEW ZEALAND
Michael Hill NZD 0.68 NZD 0.68 NZD 0.00 0.0%

MINING STOCKS
CANADA
Harry Winston CAD 10.61 CAD 9.82 CAD 0.79 8.0%
Lucara Diamond CAD 1.01 CAD 1.02 -CAD 0.01 -1.0%
Mountain Province CAD 2.27 CAD 2.25 CAD 0.02 0.9%
Peregrine Diamonds CAD 1.64 CAD 1.69 -CAD 0.05 -3.0%
Rockwell Diamonds CAD 0.08 CAD 0.07 CAD 0.01 14.3%
Shore Gold CAD 0.99 CAD 0.85 CAD 0.14 16.5%
Stornoway Diamond CAD 0.50 CAD 0.46 CAD 0.04 8.7%
True North Gems CAD 0.09 CAD 0.09 CAD 0.00 0.0%
UK (pence)
African Diamonds 49.50 42.50 7.0 16.5%
Anglo American 2,343.00 2,280.50 62.5 2.7%
BHP Billiton 1,901.50 1,853.50 48.0 2.6%
Firestone Diamonds 39.00 41.95 -3.0 -7.0%
Gem Diamonds 248.50 245.00 3.5 1.4%
Gemfields 5.05 5.38 -0.3 -6.1%
Mwana Africa 11.07 12.90 -1.8 -14.2%
Namakwa Diamonds 37.00 39.00 -2.0 -5.1%
Petra Diamonds 53.45 51.75 1.7 3.3%
Rio Tinto plc 3,216.00 3,094.00 122.0 3.9%

RapUp February 19, 2010

De Beers raises rough prices again (about 7% in Feb. and 10% so far this year) and signals they are not planning further increases barring major market changes. Rough dealers celebrating as speculative spiral continues with big stone bubbles developing and spreading into polished. Starting to look like 2008. India’s Jan. polished exports +96% to $1.7b, rough imports +302% to $876m. Israel’s Jan. polished exports +84% to $563m, total rough and polished imports +257% to $505m. Martin Rapaport to present “The Diamond Decade – New Opportunities” Bangkok - Feb. 26; Hong Kong - Mar. 7.

RapNet Data: February 19, 2010

Diamonds 624,644

Value $4,080,730,019

Carats 715,387

Average Discount -32.33%

Get Current Price List | Subscribe to Rapaport | Join RapNet

ANNOUNCEMENTS

February
19-22
Fri-Mon
Rapaport at Inhorgenta Europe
New Munich Trade Fair Centre
Hall C, Booth 401
Munich, Germany
For information contact Francesco Lopresti:
+39-02-40047274 or email francesco.lopresti@diamonds.net

Feb-Mar
22-4
Mon-Thu

Rapaport Tender Auctions
New York

Melee Auction -- Feb. 22-26
Polished round and fancy diamonds ranging in size from -2.5 sieve plate to 1ct +. Qualities vary from commercial to very fine including some breakout assortments. Excellent buying opportunity for diamond and jewelry manufacturers.

Single Stone Auction -- Mar. 1-4
Certified and non-certified diamonds ranging in sizes 0.5ct through 5ct +. Excellent buying opportunities for retailers, wholesalers, and diamond manufacturers.

Both By Appointment Only

Contact: Jackie Chan
Email: NYTender@diamonds.net
Phone: 1-212-354-9800

February
26
Fri
"The Diamond Decade: New Opportunities"
Martin Rapaport Presentation: Bangkok

2 p.m. - 4 p.m.
4th Bangkok Gems & Jewelry Fair
Challenger Hall of Impact Convention Center
Bangkok, Thailand
Reserve your place: thailand@rapaport.com

March
7
Sun
"The Diamond Decade: New Opportunities"
Martin Rapaport Presentation: Hong Kong

11:00 a.m. - 12:30 p.m.
Hong Kong International Jewellery Show
Hong Kong Convention & Exhibition Center
Wanchai, Hong Kong
Reserve your place: hongkong@rapaport.com

March
18-25
Thu-Thu
Rapaport at Baselworld 2010

"State of the Diamond Industry"
Martin Rapaport Presentation
Friday, March 19
9:30 a.m.-11 a.m.

Rapaport Fair Trade Conference
Friday, March 19
2 p.m.-4 p.m.

Rapaport Booth
March 18-25
Messe Basel
Hall 3.1 Stand F01

For information contact Francesco Lopresti:
+39-02-40047274 or email francesco.lopresti@diamonds.net

QUOTE OF THE WEEK:
Clearly, it would be premature to say that the period of uncertainty is over, but the industry does appear to be moving in the right direction. [Diamond Trading Company] sights in [the second half of] 2009 and into 2010 have seen demand consistently increase and we are confident that this trend will continue throughout 2010.

Mahiar Borhanjoo | DTC exec. director of sales, sightholder services

INDUSTRY

De Beers Raises Prices Nearly 10%

De Beers sales division, Diamond Trading Company (DTC), increased its prices by 7 percent to 9 percent at this week’s February sight, but said that it expects prices to remain stable in the short term. Based upon the companys assessment of prevailing market conditions, there have been "some incremental adjustments to DTC box prices over the past few sights and a further and higher single-digit increase for sight 2,” Mahiar Borhanjoo, DTC’s executive director of sales and sightholder services, explained in a letter to sightholders. “We now anticipate a period of stability in respect of our prices, subject, of course, to any further major changes in market conditions.”

The DTC has been able to adjust its prices recently due to the more positive economic and supply-demand developments that have been observed in the market of late, Borhanjoo added. Reports from BHP Billiton customers indicated that prices rose by an average of 3 percent at the company’s rough tender this past week.

Mugabe Threatens to Defy Kimberley Process

Zimbabwes President Robert Mugabe threatened to defy the Kimberley Process (KP) and sell diamonds from the countrys Marange diamond fields, where the KP alleges that the military enacted forced labor and other abuses against civilians. The KP has given Zimbabwe until June to rectify these abuses, but Mugabe nonetheless threatened to sell the diamonds without the watchdogs permission.

"We are trying to play it their own way; that is, following the KP, but we can do it otherwise," Mugabe told reporters in the capital. "We can sell our own diamonds elsewhere."

Gokhran to Tender Special Size Diamonds

Russia’s state repository, Gokhran, plans to tender special size rough diamonds that are larger than 10.8 carats on March 16. Applications to participate in the tender close on February 26. Gokhran purchased approximately $924 million worth of rough diamonds from ALROSA in 2009 and is reportedly planning to buy around $872 million worth this year.

RETAIL

Rapaport Broadcast

WATCH NOW. Chain-store sales fell slightly this past week; De Beers results were of little surprise given market conditions and investors were not pleased with "good enough" results from Blue Nile, even though the online diamond retailer posted double-digit increases for the fourth quarter. It is important to keep tabs on consumer sentiment, given the mixed economic messages in the U.S. The latest Gallup polls suggest that consumer spending and the overall economic outlook remain fairly stagnant; many indicators have not moved much since April 2009.

Jan. U.S. Retail Sales Drop

The National Retail Federation (NRF) reported that U.S. retail sales, excluding automobile, gas station and restaurant sales, fell 0.2 percent during January 2010 compared with one year ago. January sales rose 0.5 percent over their December 2009 level, however.

“We continue to see the economy show subtle signs of improvement,” said Rosalind Wells, the chief economist for NRF. “While the recovery still has a long way to go, we remain encouraged by the latest retail sales figures.”

This January, retailers offered special deals designed to entice shoppers to hit their stores and use the gift cards they received for Christmas to stock up on clearance items.

Verragios Facebook Fans Name New Bridal Collection

Bridal jewelry designer Verragio reached out to its fan base on Facebook, offering them the opportunity to vote on the name of its new collection of engagement rings and wedding bands. In one week of voting, Verragios fans overwhelmingly selected “Evermore” as the name of this new collection. The Evermore Collection of engagement rings will officially launch in the spring, joining Verragios other distinct collections, such as Couture, Insignia, Classico and Paradiso.

GENERAL

U.S. Indicts Bout, Chichakli

The U.S. issued a new indictment against Viktor — also known as Victor — Bout, who, according to the United Nations Security Council (UNSC) Sanctions Committee on Liberia, supported former President Charles Taylors regime in an effort to destabilize Sierra Leone and gain illicit access to its diamonds. Bout has been in custody in Thailand since March 2008. Since that time, the U.S. has actively pursued his extradition on a separate set of arms-related allegations.

The new indictment also named Bouts associate, Richard Ammar Chichakli — also known as Robert Cunning and Raman Cedorov — for allegedly conspiring to violate the International Emergency Economic Powers Act (IEEPA), based on their combined efforts to purchase two aircrafts from companies located in the U.S. The indictment charged Bout and Chichakli with money laundering conspiracy, wire fraud conspiracy and six separate counts of wire fraud in connection with these financial transactions.

Israeli Industry to Offer Largest Pavilion at HK Show

The Israeli diamond industry will boast its largest presence to date at the upcoming Hong Kong International Jewellery Show to be held from March 5 to March 9, 2010. The Israel Diamond Pavilion, organized by the Israel Diamond Institute Group of Companies (IDI), will be the largest national pavilion, featuring 60 companies, 20 of whom will be exhibiting for the first time. In addition, 20 more Israeli companies will be exhibiting at various show locations.

The unprecedented participation from Israeli companies attests to the local industrys overwhelming interest in expanding its business within the Asian markets. The Israel Diamond Pavilion will located in Hall 3F at the show, while IDI’s information booth, 3FF29 will be situated in the heart of the pavilion. Learn more about the exhibitors.

AWDC Links Buyers with HK Show Exhibitors

The Antwerp World Diamond Centre (AWDC) launched a dedicated and interactive website for the March 2010 Hong Kong show that features exhibitors from Belgium. The website provides users the ability to reach out to exhibitors along with providing an interactive map of the Hong Kong Convention & Exhibition Centre and the exact location of 55 participating Antwerp firms. Log on now to view company profiles and schedule appointments.

GIA Names Winners of Schuetz Design Contest

Sung Woo Hong of Seoul, Korea, took the first-place prize in the Gemological Institute of Americas (GIA) annual George A. Schuetz Jewelry Design Contest. Hong designed a tie tack and cuff links set made of emerald-cut, tapered sapphires and radiant, princess-cut diamonds in 18-karat yellow gold. The first prize award is $500 and a crystal trophy.

The second place award went to Joana Miranda of Glendale, Wisconsin, for her “Dog Tags with Hidden Pico Drive.” Her design used polished white metal, channel-set rubies and a black onyx inlay. Miranda received a crystal trophy in recognition of her achievement. Amit B. Kurdekar of Mumbai, India was awarded third place for a men’s ring made of enamel and 24-karat white and yellow gold.

Nielsen Jewelry Appoints Landis to Run Couture

Joan Landis was hired by Nielsen Expositions’ Jewelry Group to run the companys upcoming Couture show. The Couture Show celebrates its 15th year from June 3 through June 7, 2010 at the Las Vegas Wynn Hotel.

JCK Awards Grant to DDII

The JCK Industry Fund awarded a grant to the Diamond Development Initiative International (DDII). The funds will be used by DDII to create development diamond standards intended to comprise a verifiable certification system for artisanally mined diamonds.

The standards will be utilized to address industry issues, formalize the artisanal sector and serve as a foundation to enhance the effectiveness of the Kimberley Process (KP). Development standards could also enable artisanal diggers to play active roles as agents of change within their own communities.

STATS

India Imports & Exports

For month of January 2010:

$Mil. Chng.
Polished Exports $1,710 95%
Polished Imports $1,034 63%
Net Exports $673 141%

Rough Imports $876 302%
Rough Exports $59 2%
Net Imports $817 417%

Diamond Acct. ($144) NA

Israels Jan. Polished Diamond Exports

For month of January 2010:

$Mil. Chng.
Polished Exports $563 84%
Polished Imports NA NA
Net Exports NA NA

Rough Imports NA NA
Rough Exports $303 215%
Net Imports NA NA

Diamond Acct. NA NA

MINING

ALROSAs 2009 Output Falls Slightly

Unaudited production results from ALROSA revealed that its rough diamond output fell slightly to $2.265 billion in 2009, whereas the miners production totaled more than $2.3 billion in 2008. These results were shared during an executive board meeting held on February 12. In December 2009, ALROSA estimated that its rough sales for 2009 would amount to about $2.13 billion, but the final report has not yet been released.

Russias cut and polished diamond output has dropped more than three-quarters in the past three years as demand has dwindled. The countrys production neared $1.2 billion in 2006 and 2007, but in 2009, that figure dropped closer to $330 million. Russias diamond cutters have the potential to raise their output in 2010; however, this potential is dependent on the level of global demand for diamonds.

Pangea DiamondFields Sale Nets $160 per Carat

Pangea DiamondFields sold 2,813 carats this past week in Luanda, Angola for an average price of $160 per carat before sales tax. This per-carat amount comprised approximately 89 percent of Pangeas long-term target price of $180 per carat. The target price was set prior to the drop in rough diamond prices that occurred during 2009. Pangea stated that the average price achieved for the goods it sold in Angola was "well in excess of the currently budgeted level of $140 per carat."

Zimbabwe Cancels ACRs Marange Licenses

Zimbabwe has canceled African Consolidated Resources (ACR) mining licenses to the Marange diamond fields, the companys lawyer said on Tuesday. The decision to cancel ACRs licenses came days after the government unveiled new regulations designed to force foreign firms to give locals a majority stake in major corporations.

ACR has been embroiled in a legal battle with mining authorities since it was ordered to suspend its operations in Marange in 2006. The minefields then fell into illegal mining activity, including that conducted by foreign nationals. Security agents used brute force to evict the diamond panners, resulting in deaths and serious injuries. In January, the Supreme Court ordered the countrys central bank to keep the 129,400 carats of diamonds seized from ACR in 2007, but that decision was also reversed.

This week, the Supreme Court ruled that the diamond mining being conducted at the disputed claims by the governments partners, Mbada Diamonds Ltd. and Candile Miners Pvt., must cease until appeals are heard.

ECONWATCH

For the week ending Feb. 18, 2010:

Feb. 18 Feb. 11 Chng.
$1 = Euro 0.736 0.730 0.006
$1 = Rupee 46.17 46.49 -0.3
$1 = Israel Shekel 3.75 3.74 0.01
$1 = Rand 7.61 7.69 -0.08
$1 = Canadian Dollar 1.04 1.05 -0.01

Precious Metals
Gold $1,122.50 $1,094.10 $28.40
Platinum $1,528.00 $1,523.00 $5.00

Stock Indexes Chng.
BSE 16,327.84 16,152.59 175.25 1.1%
Dow Jones Avg. 10,392.75 10,114.19 278.56 2.8%
FTSE 5,325.09 5,161.48 163.61 3.2%
Hang Seng 20,422.15 20,290.69 131.46 0.6%
S & P 500 1,106.75 1,078.47 28.28 2.6%
Yahoo! Jewelry Index 990.41 949.71 40.70 4.3%

USA
Birks & Mayors $0.68 $0.63 $0.05 7.9%
Blue Nile $49.56 $52.56 -$3.00 -5.7%
Charles & Colvard $1.42 $1.39 $0.03 2.2%
DGSE Companies, Inc. $1.61 $1.68 -$0.07 -4.2%
Fuqi International $17.32 $16.99 $0.33 1.9%
JCPenney $26.00 $24.79 $1.21 4.9%
Kohls $51.38 $49.44 $1.94 3.9%
LJ International $2.49 $2.32 $0.17 7.3%
Macys $18.19 $17.13 $1.06 6.2%
Man Sang $2.00 $2.05 -$0.05 -2.4%
Movado Group $12.63 $11.44 $1.19 10.4%
Nordstrom $35.03 $33.81 $1.22 3.6%
Saks $6.99 $6.68 $0.31 4.6%
Signet $28.95 $27.37 $1.58 5.8%
Sothebys $24.33 $23.34 $0.99 4.2%
Tiffany $43.31 $41.54 $1.77 4.3%
Walmart $53.34 $53.08 $0.26 0.5%
Zale $1.87 $1.94 -$0.07 -3.6%

EUROPE
Bulgari €5.89 €5.53 €0.36 6.5%
Bijou Brigitte €139.50 €141.40 -€1.90 -1.3%
Damiani €0.95 €0.96 -€0.01 -1.0%
LVMH €79.60 €77.58 €2.02 2.6%
PPR €85.55 €84.59 €0.96 1.1%
Richemont SA CHF 36.76 CHF 35.46 CHF 1.30 3.7%
Swatch Group CHF 298.60 CHF 293.50 CHF 5.10 1.7%
Theo Fennell (pence) 45.00 44.00 1.00 2.3%

INDIA (rupee)
Classic Diamond 21.55 20.70 0.85 4.1%
Gitanjali Gems 121.50 120.85 0.65 0.5%
Goldiam Intl 42.75 43.65 -0.90 -2.1%
Rajesh Exports 100.95 104.90 -3.95 -3.8%
Ren. Jewellery 71.25 67.75 3.50 5.2%
Su-Raj Diamonds 49.50 49.60 -0.10 -0.2%
Titan 1,825.35 1,734.30 91.05 5.2%
Zodiac JRD 24.95 26.45 -1.50 -5.7%
Suashish Diamonds 303.50 301.20 2.30 0.8%

NEW ZEALAND
Michael Hill NZD 0.69 NZD 0.68 NZD 0.01 1.5%

MINING STOCKS
CANADA
Harry Winston CAD 11.35 CAD 10.61 CAD 0.74 7.0%
Lucara Diamond CAD 1.00 CAD 1.01 -CAD 0.01 -1.0%
Mountain Province CAD 2.18 CAD 2.27 -CAD 0.09 -4.0%
Peregrine Diamonds CAD 1.57 CAD 1.64 -CAD 0.07 -4.3%
Rockwell Diamonds CAD 0.07 CAD 0.08 -CAD 0.01 -12.5%
Shore Gold CAD 0.91 CAD 0.99 -CAD 0.08 -8.1%
Stornoway Diamond CAD 0.50 CAD 0.50 CAD 0.00 0.0%
True North Gems CAD 0.09 CAD 0.09 CAD 0.00 0.0%
UK (pence)
African Diamonds 45.37 49.50 -4.1 -8.3%
Anglo American 2,502.00 2,343.00 159.0 6.8%
BHP Billiton 2,016.00 1,901.50 114.5 6.0%
Firestone Diamonds 38.50 39.00 -0.5 -1.3%
Gem Diamonds 256.60 248.50 8.1 3.3%
Gemfields 5.40 5.05 0.4 6.9%
Mwana Africa 13.00 11.07 1.9 17.4%
Namakwa Diamonds 36.70 37.00 -0.3 -0.8%
Petra Diamonds 58.06 53.45 4.6 8.6%
Rio Tinto plc 3,441.00 3,216.00 225.0 7.0%

INDIA MARKET REPORT

Polished and rough trading activity

RAPAPORT NEWS SERVICE | FEBRUARY 26, 2010 www.rapaport.com | news@rapaport.com

Industry Retail Mining EconWatch India Jobs

RapUp February 26, 2010

February DTC sight estimate at $525m with slightly softer premiums. Rough price speculation may be easing although demand still strong. Cutters and polished dealers holding back goods in anticipation of better prices at Hong Kong show. ALROSA pledges to raise supplies to Indian manufacturers. Petra Diamonds 1H net profit of $38m vs net loss of $88m, revenues +48% to $48.4m. Jewelry retail sales reportedly +19% year over year through Chinese New Year Golden Week. Zale 2Q sales -14% to $582.3m, net profit of $6.7m vs. net loss of $32m. Gareth Penny appointed Debswana chairman, and David Noko to step down as managing director of De Beers Consolidated Mines.

RapNet Data: February 26, 2010

Diamonds 631,887

Value $4,096,120,288

Carats 726,410

Average Discount -32.44%

Get Current Price List | Subscribe to Rapaport | Join RapNet

ANNOUNCEMENTS

March
1-4
Mon-Thu

Rapaport Tender Auctions
New York

Single Stone Tender
Approximately 150 certified and non-certified diamonds ranging in sizes 0.5ct to 5ct +. Excellent buying opportunities for retailers, wholesalers, and diamond manufacturers.

By Appointment Only

Contact: Jackie Tan
Email: NYTender@diamonds.net
Phone: 1-212-354-9800

March
7
Sun
"The Diamond Decade: New Opportunities"
Martin Rapaport Presentation: Hong Kong

11:00 a.m. - 12:30 p.m.
Hong Kong International Jewellery Show
Hong Kong Convention & Exhibition Center
Wanchai, Hong Kong
Reserve your place: hongkong@rapaport.com

March
15-18
Mon-Thu

Rapaport Tender Auctions
New York

Diamond Melee Tender
Over 45,000cts of polished round and fancy diamonds ranging in size from -2.5 sieve plate to 1ct +. Qualities vary from commercial to very fine. Excellent buying opportunity for diamond and jewelry manufacturers.

By Appointment Only

Contact: Jackie Tan
Email: tenders@diamonds.net
Phone: 1-212-354-9800

March
18-25
Thu-Thu
Rapaport at Baselworld 2010

"State of the Diamond Industry"
Martin Rapaport Presentation
Congress Center/Montreal Hall
Friday, March 19
9:30 a.m.-11 a.m.

Rapaport Fair Trade Conference
Congress Center/Montreal Hall
Friday, March 19
1:30 p.m.-4 p.m.

Rapaport Booth
Messe Basel
Hall 3.1 Stand F01

For information contact basel@diamonds.net

QUOTE OF THE WEEK:
Economic recovery is driven by high earners benefiting from recovering stock markets. Its really an extraordinarily unbalanced system because were dealing with small businesses who are doing badly, small banks in trouble, and of course there is an extraordinarily large proportion of the unemployed in the .S.] who have been out of work for more than six months and many more than a year. With housing and auto sales dead in the water, it would be difficult to make the case that the economy is poised for a strong rebound.

Alan Greenspan | Former U.S. Fed Chairman

INDUSTRY

DTCs Feb. Sight Estimated at $525M

The Diamond Trading Companys (DTC) February sight achieved an estimated value of $525 million. While the DTC, De Beers marketing and sales unit, had announced a price increase in the high single digits prior to the sight, the company also changed its assortment of goods to enable sightholders to profit on their boxes. Sight participants noted higher increases in the cheaper Indian goods, as well. Nonetheless, their comments were mixed, with some observers suggesting that De Beers left room for sightholders to profit and others saying that premiums were still inflated.

In February, when premiums were softer, buyers were willing to pay based on the existing scarcities in rough, one sightholder noted. Others disagreed, assuming that the large quantities of rough coming to the market reflected DTC’s commitments under sightholder’s intentions to offer (ITOs), rather than strong demand. Sightholders submitted their ITOs in 2009 at the height of the downturn, so DTC filled a large portion of their orders early in the contract period, according to a market participant. The March sight will comprise the final sale of the current ITOs.

U.S. Jewelry Prices +1% in Jan.

The consumer price index (CPI) for jewelry in the U.S. dropped slightly in January compared with its recent highs. The January reading of 155.92 points was 1.1 percent higher than the level achieved one year ago, but the CPI shed 4.6 points from the December 2009 reading.

This past months measure marked the 24th consecutive cycle for which the jewelry CPI was higher than 150 points. The index is based upon the reference point of average prices in 1986, which is set at 100 points.

U.S. Consumer Confidence Weakens

U.S. consumer confidence remained poor in February, as the employment outlook offered no immediate hope for economic recovery. The Conference Board Consumer Confidence Index,® which had shown signs of improvement in January, declined sharply in February to 46 points, down from 56.5 in January. One year ago, however, the measure hit a record low of 25.3 points.

The Conference Boards Present Situation Index decreased to 19.4 points in February, compared with 22.3 points one year ago, while the Expectations Index rose to 63.8 from 27.3 points one year ago. Lynn Franco, the director of The Conference Board, said that consumers were concerned about business conditions and the job market and that with fewer consumers anticipating an improvement, they would likely curb their spending.

RETAIL

Rapaport Broadcast

WATCH NOW. Zales second-fiscal-quarter results were in line with the double-digit drops reported during the Christmas sales cycle. The retailers revenue declined 14 percent to $582.3 million, while its cost of sales fell by 23 percent to $292.5 million, which helped it achieve a quarterly profit of $6.7 million, compared with a loss of $32 million one year ago. In this weeks broadcast, see how Zales figures have changed in the past five years. In other news, The Knot released the results of its annual wedding expense survey and while the average budget fell by 5 percent in 2009, planned spending on engagement rings remained consistent with the results of past surveys.

U.S. Chain-Store Sales +1%

U.S. chain-store sales rose 0.9 percent year over year this past week, according to the International Council of Shopping Centers (ICSC) and Goldman Sachs, while improved weather conditions helped boost sales by 2.3 percent on a week-to-week basis.

Michael Niemira, ICSCs director of research and chief economist, said that sales volatility has been amplified by recent inclement weather conditions. However, he expects Februarys chain-store sales to reflect a 2 percent increase over 2009.

Chinas Spring Festival Sales +17%

Chinas retail sales rose 17.2 percent to $49.8 billion during the countrys annual Golden Week, while jewelry sales rose 19.1 percent for the period. The weeklong Spring Festival holiday, which commenced on February 13, 2010, is Chinas closest equivalent to the Christmas shopping season.

Macao Jewelry, Watch Sales +33% in 2009

Macaos retail sales rose 16 percent to $2.8 billion during 2009. Notable increases were recorded in department store sales, which were up 41 percent, while watch, clock and jewelry sales rose 33 percent and adults clothing jumped 25 percent. The sale of fuel for household and automotive use decreased by 24 percent and 22 percent, respectively, according to the government.

Thangamayil Launches IPO in India

Thangamayil Jewellery launched its initial public offering (IPO) on the National Stock Exchange (NSE) in India, where its shares opened at Rs 75.70. On the Bombay Stock Exchange (BSE), Thangamayil opened at Rs 70. Proceeds from the IPO will be used for retail expansion in India. Thangamayil trades and sells gold, platinum and diamond jewelry.

Charles & Colvard 4Q Sales -33%

Fiscal fourth quarter sales at Charles & Colvard fell 33 percent to $2.36 million, while total costs fell by only 2 percent to $2.8 million. The creator of moissanite reported a net loss of $440,150, which was quite an improvement from a loss of $1.25 million reported one year ago. Net sales for the full fiscal year fell 44 percent to $8.31 million, total costs dropped by 46 percent to $11.67 million, leaving the company with a net loss of $3.4 million. The loss reported for fiscal year 2008 was $6.15 million.

GENERAL

Noko to Step Down From De Beers

David Noko, the managing director of De Beers Consolidated Mines (DBCM), will step down after eight years with the company. Noko said that the time was right to step aside so that a new leader could move the company into its next phase of transformation.

Barend Petersen (pictured) will become DBCMs acting chief executive officer (CEO) at the beginning of April 2010 while the process of appointing the permanent CEO is finalized. Peteresen is a chartered accountant with broad business and commercial experience, as well as a nonexecutive director at Anglo American.

Debswana Names Penny New Board Chairman

Debswana named Gareth Penny its new chairman of the board. Penny, who serves as the managing director of De Beers, takes over the role from Eric Molale, the permanent secretary to Botswanas president. Molale will serve as Debswanas new deputy chairman, responsible for rotational arrangements between shareholders.

Major Fraud, Robbery Unfold

Two major crime stories broke this week in the U.S. In Manhattan, the owners of Dialite Imports on West 46th Street were charged with staging a $4 million robbery of their own offices on December 31, 2008. The owners reportedly planned the armed robbery and hired two men to perform the operation. The robbers, who remain at large, were dressed to appear Hasidic.

In California, thieves made off with $1 million in jewels from a San Juan Capistrano jewelry store after they dismantled the store security system. The robbery occurred either late Tuesday or early Wednesday at Mission Jewelers, marking the historic citys second $1 million jewelry theft in less than one year.

AGL to Conduct On-Site Testing in Hong Kong

American Gemological Laboratories (AGL) will be performing on-site testing of colored stones for identification, enhancement and origin reports March 5-9, during the Hong Kong Show. Staff members Christopher P. Smith and Sun Chung will be available to provide the same high-quality reporting services that are a staple of AGLs New York based operations. Stones will be accepted on a first-come, first-served basis, so make an appointment. 1.212.704.0727 or agl@aglgemlab.com

MINING

Petra Diamonds Posts $38M Profit for Fiscal 1H

Petra Diamonds profits reached $37.9 million during the first fiscal half, compared with a net loss of $88 million one year ago. Profits from its mining activity fell 22 percent to $8 million as the companys mining and processing costs rose 72 percent to $40.5 million.

Revenues from its operations rose 48 percent to $48.4 million. Petra previously reported that its gross production grew 12 percent to 614,594 carats during the half year. The company also increased its cash position by more than sixfold on a year-to-year basis.

Gemfields Discovers 6,225-Carat Emerald

Gemfields uncovered an exceptional 6,225-carat rough emerald at its Kagem mine in Zambia. The stone has been named “Insofu,” which means “elephant” in the local vernacular of the indigenous Benda people.

Ian Harebottle, Gemfields chief executive officer (CEO), said, “Its sheer size, rich color and fine protective biotite shell makes it difficult to see deep into the gem; however, all indications suggest that the core of the emerald is competent and that it should yield a number of cut gems of significant size.”

Rio Tinto Transitions Customers to RJC

Rio Tinto will open a representative office in Hong Kong and has appointed Rita Maltez to head the office. Maltez brings extensive marketing experience across a number of Rio Tinto products, combined with strong analytical skills and an in-depth involvement in the development of Rio Tintos emerging-markets strategy for diamonds, according to the company.

Meanwhile, Rio Tinto’s Antwerp-based diamond sales and marketing organization announced that it will be working with its customers to ensure that they are certified members of the Responsible Jewellery Council (RJC) by 2011. When the RJC Code of Practices is implemented across Rio Tintos entire customer channel, the miner will discontinue its own business excellence model (BEM) in its current form.

Lucara Parcel Valued at $162 per Carat

Lucara Diamond reported the results of a recent valuation performed for diamonds recovered from the AK6 kimberlite at its recently acquired Boteti project, located in the Orapa-Lethlakane diamond district of Botswana. This valuation of 1,760 carats of rough revealed that the stones had an overall value of $162 per carat.

Shlomo Tidhar of Mercury Diamonds, who performed the valuation, noted that the diamonds were of "very good quality and very attractive to diamond buyers." Their colors were generally very white and the samples showed numerous examples of strong, "blocky" crystal forms that tend to yield strong polished stone, which generate good premiums. Type IIA stones were also prominent in the parcel, including 12-plus-carat stones that had been broken into eight or more fragments.

ECONWATCH

Stellar Diamonds Trades on Londons AIM

Stellar Diamonds was admitted to Londons Alternative Investment Market (AIM) under the ticker symbol "STEL" (LON: STEL). Shares were offered for 20 pence each, with 25 million shares issued, which represents 26 percent of the companys share capital.

Just one week ago, West African Diamonds (WAD) shareholders approved a reverse takeover bid from Stellar Diamonds. As part of that takeover, WAD changed its corporate name to "Stellar" and its chairman and founder, John Teeling, stepped down from his post.

For the week ending Feb. 25, 2010:

Feb. 25 Feb. 18 Chng.
$1 = Euro 0.739 0.736 0.003
$1 = Rupee 46.50 46.17 0.3
$1 = Israel Shekel 3.80 3.75 0.05
$1 = Rand 7.88 7.61 0.27
$1 = Canadian Dollar 1.06 1.04 0.02

Precious Metals
Gold $1,105.80 $1,122.50 -$16.70
Platinum $1,530.00 $1,528.00 $2.00

Stock Indexes Chng.
BSE 16,254.20 16,327.84 -73.64 -0.5%
Dow Jones Avg. 10,322.02 10,392.75 -70.73 -0.7%
FTSE 5,278.23 5,325.09 -46.86 -0.9%
Hang Seng 20,399.57 20,422.15 -22.58 -0.1%
S & P 500 1,102.98 1,106.75 -3.77 -0.3%
Yahoo! Jewelry Index 1,003.05 990.41 12.64 1.3%

USA
Birks & Mayors $0.63 $0.68 -$0.05 -7.5%
Blue Nile $51.33 $49.56 $1.77 3.6%
Charles & Colvard $1.36 $1.42 -$0.06 -4.2%
DGSE Companies, Inc. $1.68 $1.61 $0.07 4.3%
Fuqi International $17.98 $17.32 $0.66 3.8%
JCPenney $28.00 $26.00 $2.00 7.7%
Kohls $54.15 $51.38 $2.77 5.4%
LJ International $2.59 $2.49 $0.10 4.0%
Macys $19.33 $18.19 $1.14 6.3%
Man Sang $2.95 $2.00 $0.95 47.5%
Movado Group $13.08 $12.63 $0.45 3.6%
Nordstrom $36.93 $35.03 $1.90 5.4%
Saks $7.24 $6.99 $0.25 3.6%
Signet $28.90 $28.95 -$0.05 -0.2%
Sothebys $23.52 $24.33 -$0.81 -3.3%
Tiffany $43.69 $43.31 $0.38 0.9%
Walmart $54.19 $53.34 $0.85 1.6%
Zale $2.45 $1.87 $0.58 31.0%

EUROPE
Bulgari €5.63 €5.89 -€0.26 -4.4%
Bijou Brigitte €138.50 €139.50 -€1.00 -0.7%
Damiani €0.92 €0.95 -€0.03 -3.2%
LVMH €76.76 €79.60 -€2.84 -3.6%
PPR €81.55 €85.55 -€4.00 -4.7%
Richemont SA CHF 35.50 CHF 36.76 -CHF 1.26 -3.4%
Swatch Group CHF 293.80 CHF 298.60 -CHF 4.80 -1.6%
Theo Fennell (pence) 44.00 45.00 -1.00 -2.2%

INDIA (rupee)
Classic Diamond 20.30 21.55 -1.25 -5.8%
Gitanjali Gems 115.95 121.50 -5.55 -4.6%
Goldiam Intl 46.40 42.75 3.65 8.5%
Rajesh Exports 101.60 100.95 0.65 0.6%
Ren. Jewellery 71.15 71.25 -0.10 -0.1%
Su-Raj Diamonds 47.10 49.50 -2.40 -4.8%
Titan 1,722.70 1,825.35 -102.65 -5.6%
Zodiac JRD 23.95 24.95 -1.00 -4.0%
Suashish Diamonds 298.00 303.50 -5.50 -1.8%

NEW ZEALAND
Michael Hill NZD 0.71 NZD 0.69 NZD 0.02 2.9%

MINING STOCKS
CANADA
Harry Winston CAD 10.55 CAD 11.35 -CAD 0.80 -7.0%
Lucara Diamond CAD 1.03 CAD 1.00 CAD 0.03 3.0%
Mountain Province CAD 2.14 CAD 2.18 -CAD 0.04 -1.8%
Peregrine Diamonds CAD 1.52 CAD 1.57 -CAD 0.05 -3.2%
Rockwell Diamonds CAD 0.07 CAD 0.07 CAD 0.00 0.0%
Shore Gold CAD 0.90 CAD 0.91 -CAD 0.01 -1.1%
Stornoway Diamond CAD 0.46 CAD 0.50 -CAD 0.04 -8.0%
True North Gems CAD 0.09 CAD 0.09 CAD 0.00 0.0%
UK (pence)
African Diamonds 43.75 45.37 -1.6 -3.6%
Anglo American 2,306.50 2,502.00 -195.5 -7.8%
BHP Billiton 1,961.00 2,016.00 -55.0 -2.7%
Firestone Diamonds 38.75 38.50 0.3 0.6%
Gem Diamonds 232.50 256.60 -24.1 -9.4%
Gemfields 5.50 5.40 0.1 1.9%
Mwana Africa 11.98 13.00 -1.0 -7.8%
Namakwa Diamonds 33.00 36.70 -3.7 -10.1%
Petra Diamonds 58.75 58.06 0.7 1.2%
Rio Tinto plc 3,244.00 3,441.00 -197.0 -5.7%
Stellar Diamonds 18.00 19.25 -1.3 -6.5%

INDIA MARKET REPORT

India Jewelry Show Ends on Upbeat Note

The final day of the IIJS Signature show in Goa, India proved to be a positive one for exhibitors, despite the small number of visitors and exhibitors that attended this years show. After a quiet opening day on Friday, activity picked up over the weekend. Binay Goenka, the vice president of sales at Kama Schachter, which manufactures and exports diamonds and diamond jewelry, agreed that it was a good show.

“The show gave us an opportunity to meet new clients and strengthen existing relationships in the domestic market,” he explained.

In its third year, the IIJS Signature show hosted 68 exhibitors and an estimated 350 visitors, including seven foreign delegations from Armenia, Bangladesh, Iran, Russia, Uzbekistan, Poland and Azerbaijan. Despite some disappointment regarding the low international turnout, most traders viewed the event as an opportunity to further penetrate the growing Indian market, which they say has proved to be "recession-proof."

Za tieto prispevky dakujem🙂
Keby som mal dost prostriedkov aby som to kvalitne vyuzil
takto mi to sluzi len ako info

Rapaport Fair Trade Conference

Participation is free and open to all.
To confirm your seat, please RSVP to: basel@diamonds.net

The conference is sponsored by RapNet - the Rapaport Diamond Trading Network

Dear Friends,

The global economy will experience massive growth over the next decade. More people will accumulate more wealth than ever before in the history of mankind. Hundreds of millions of new middle class consumers will create unprecedented demand for diamonds and jewelry.

The great changes restructuring the global economy are also bringing about complex challenges. Those that learn to surf the great waves of change and embrace the challenges of the future will prosper beyond expectation. Those that don’t won’t.

Now more than ever you must think strategically. I invite your participation. Learn how to turn challenges into opportunities. Smart people won’t just survive the recession they will reposition themselves as winners.

Rapaport Fair Trade Conference - Basel

This year’s Rapaport Fair Trade Conference will address the issue of human rights and the jewelry industry with special focus on the situation in Zimbabwe. What can and should the diamond industry do about continuing human rights violations? How can we exclude blood diamonds from our distribution system?

We will also discuss what the jewelry industry is doing to develop Ethical, Development and Fair Trade diamonds, gems, metals and jewelry products. Speakers and panelists will include; Dr. Gaetano Cavalieri - CIBJO - The World Jewellery Confederation, Patrick Schein - Association for Responsible Mining, Michael Rae - RJC - Responsible Jewellery Council, Jean Claude Michelou - ICA - International Colored Gemstone Association, Damien Cody- ICA - International Colored Gemstone Association, Elisabetta Molina - Garavelli Aldo, Robin Smith - Host Universal, Assheton Stewart Carter - PACT, Dr. Elizabeth Umlas - SMART.

While reservations are not necessary, we encourage you to RSVP to: basel@diamonds.net.

For those of you attending the Hong Kong International Jewelry Show,- Martin Rapaport’s “The Diamond Decade – New Opportunities” presentation will be taking place at on Sunday, March 7, from 11.00am-12.30pm at the Grand Hyatt Hong Kong - Salon III-IV, Mezzanine Floor, 1 Harbour Road, Hong Kong.

I take this opportunity to wish all of our friends a successful show season.

Yours truly,

Martin Rapaport