Rapaport Weekly Market Comment Mar. 25, 2011

TRADE ALERT: KP authorizes export of Marange diamonds that violate U.S. OFAC regulations. Rapaport warns the trade not to deal in these diamonds or list them on RapNet. Rapaport calls on all U.S. trade organizations to expel members that deal in these diamonds. News: Melee prices surging with significant price increases for top quality, very small sizes (0.005-0.03 ct. stars), due to powerful demand from developing markets for watches and branded jewelry. High expectations for large stone demand at Basel show. Tiffany & Co. 4Q sales +12% to $1.1B, net earnings +31% to $181M. Harry Winston 4Q sales +61% to $215M, net earnings of $10M vs. net loss of $3.4M. India’s Feb. polished exports +62% to $3.1B, rough imports +8% to $1.1B.

RapNet Data: Mar. 24

Diamonds 701,402
Value $4,735,802,401
Carats 790,099
Average Discount -28.38%

Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS

March
25
Fri

Rapaport Conference at Baselworld

Special Presentation by Martin Rapaport
How to Make Money in the Diamond Business
9 a.m. - 10:30 a.m.

Rapaport Fair Trade Jewelry Conference
10:30 a.m. - 12:30 p.m.

Basel Congress Center, Montreal Hall
Register Now

April
4-13
Mon-Wed

Rapaport Single Stone Auction
New York & Israel
Diamonds in all shapes, sizes and qualities
E-mail: auctions@rapaport.com

April
4-8
Mon-Fri

Rapaport Melee Auction India
By appointment only
Auction Closes April 8 at 12 p.m. IST
E-mail: auctions@rapaport.com

QUOTE OF THE WEEK:
After a protracted reluctance to reach a consensus by specific Kimberley Process participants whose governments have imposed illegal sanctions on Zimbabwe, the current chair acted swiftly to remind the KP institution of its purpose for existence.

Obert Mpofu | Zimbabwe Mines Minister

Careers@Rapaport

The Rapaport Group is growing rapidly. If you wish to work with the best and brightest, join us. We have great opportunities for trading managers, gemologists, sales assistants, and entry level positions for our offices in New York, Antwerp, Mumbai, Dubai, and Shanghai. To get on the fast track, email your resume to careers@rapaport.com.

INDUSTRY

KP Chair Authorizes Marange Exports

Kimberley Process (KP) chair Mathieu Zamba has given Zimbabwe “unilateral authorization” to export diamonds from the Marange, but his decision was made without consensus. The U.S. and E.U. consider the forthcoming rough exports to be non-KP complaint. Diamond industry groups such as the World Diamond Council (WDC), Jewelers of America (JA), the Diamond Manufacturers & Importers Association of America (DMIA), the Gems & Jewellery Export Promotion Council (GJEPC) have told members not to risk product integrity.

Prudent traders will ask for written assurances from suppliers that diamonds were not from the Marange. The U.S. Office of Foreign Assets Control (OFAC) vows to list companies that buy these diamonds. RapNet, the Rapaport Diamond Trading Network, will not allow the trading of any diamonds sourced from the Marange. Members found to have knowingly offered Marange diamonds for sale on RapNet will be expelled and their names will be publicly communicated.

Russias Exports, ALROSAs Sales Jump in 2010

Russia exported approximately 40.4 million carats of rough diamonds in 2010 compared with 14.71 million carats in 2009, the Finance Ministry reported to Interfax. Rough diamond exports by value rose 126 percent to $2.78 billion while rough imports amounted to $61 million, a 51 percent decrease.

ALROSA produced a total of 34.3 million carats of rough, marking the second consecutive year that the mining giant surpassed De Beers diamond production. ALROSA reported combined sales of rough and polished diamonds of $3.48 billion up from approximately $2.2 billion in 2009. ALROSA also announced plans to issue an IPO in mid-2012 which could raise $3 billion and make the company the world’s largest listed diamond concern, its chief Fyodor Andreyev told Bloomberg Television.

Separately, the Financial Times reported that Rio Tinto may enter into a partnership with ALROSA, improving its access to rough supplies.

RETAIL & WHOLESALE

Rapaport Weekly Broadcast

WATCH NOW: Harry Winston reported a strong fiscal year with sales up 51 percent and profits of 27-cents per share, versus a loss of 99-cents per share one year ago. There were a number of key growth drivers in fiscal 2011, as well as strong rough price increases. Salons also produced impressive growth numbers from all regions. Tiffany & Co. reported a 14 percent increase in global sales, comp-store sales rose 8 percent and profits jumped 39 percent. Net inventories rose by double-digits in preparation for special store promotions this year.

U.S. Chain Stores Sales + 3%

Continuing their upward trend, U.S. weekly chain-store sales rose 3 percent compared with a year ago as reported by the International Council of Shopping Centers (ICSC). Overall ISCS Research expects widespread improvement in the retail sector as it claims that employment and economic conditions have improved enough to offset any negative effect from higher fuel and rising food prices.

Pandora Sales +93% in 2010, Profits +86%

For the fiscal year that ended December 31, Pandora reported sales of $1.3 billion, a jump of 93 percent from 2009. Net profit rose 86 percent to $354.5 million. Sales of charms rose 83 percent and silver and gold charm bracelets experienced 50 percent sales growth. Revenue from rings increased 282 percent.

H. Stern Launches New Diane von Furstenberg Collection

H. Stern introduced Sutras, an Indian-inspired assortment of bracelets, pendants, earrings and rings as part of the Diane von Furstenberg by H. Stern Collection. The gold and rock crystal jewelry features engravings with inspirational words from von Furstenberg such as Love, Laughter, Freedom, Harmony, Confidence, Truth and Life.

Christie’s New York Auction on April 12

More than 300 jewelry items, including fancy colored diamonds in pink, blue and yellow, will be featured at Christie’s New York Magnificent Jewels sale on April 12. The highlight of the sale will be a 10.09-carat, fancy vivid purple-pink diamond ring with a presale estimate of $12 million to $15 million. Other top lots include a 37.16-carat, D, internally flawless rectangular diamond flanked on either side by three-graduated baguette-cut diamonds and mounted in platinum, and a 50.29-carat fancy yellow diamond ring by Carvin French. Read more.

Sothebys New York Auction on April 14

Sotheby’s Magnificent Jewels auction in New York on April 14 includes 380 lots with major gemstones in every color. Highlights of the sale include a 30.52-carat, D, VVS1, emerald-cut diamond ring. Among the rarest diamonds on offer is a 3.18-carat, internally flawless, marquise-shaped fancy vivid blue ring with a presale estimate of $3 million to $4 million. The “Distinguished Family Collection” covers 47 lots and includes pieces by Cartier as well as gold tabletop accessories. Read more.

Bidz.com Reveals New Website Design

Bidz.com relaunched its website with new user-friendly features that include improved search capability, personalized recommendations and an enhanced check-out process. Designed to increase conversion, the website will also highlight daily deals.

WFDB Registration Closes on March 30

Registration for the 2011 WFDB Presidents meeting, to be held April 11-13, will close on March 30. In addition to the usual agenda, Peter Meeus, chairman of the Dubai Diamond Exchange (DDE), noted that the Dubai Multi Commodities Centre (DMCC) organized the "WFDB African Summit" for April 13 to bring together representatives from leading African diamond producing countries. A number of government reps have confirmed their participation.

MINING

Gemfields Nets $10M at Rough Emerald Auction

Gemfields achieved $9.9 million from the auction of its predominantly lower-quality rough emerald and beryl in Jaipur. Almost 13 million carats were sold out of the 16.8 million carats offered at auction. One year ago, this auction in Jaipur sold 22.8 million carats for $7.2 million.

Gem Diamonds Confirms Merger Talks with Lucara

Gem Diamonds confirmed that it was engaged in preliminary talks with Lucara Diamond Corp. regarding a potential merger. According to Bloomberg, talks began in February. Gem Diamonds owns the Letseng mine in Lesotho and the Ellendale mine in Australia. Lucara is in the trial mining phase at the Mothae mine and operates AK6 in Botswana.

Indicator Mineral Options Diamonds North Project

Indicator Minerals entered into an option agreement with Diamonds North Resources on the Barrow diamond project in Nunavut, Canada. Diamonds North can earn a 60 percent stake by investing $2 million in development that covers more than 72,000 acres of mineral claims.

Cameroon Awards License to Botswana Diamonds

Botswana Diamonds was awarded a 3,122 square mile diamond exploration reconnaissance license in Cameron. The license was issued for a 12-month period, with the option for automatic renewal based upon completion of work including samples and geological mapping. The company holds 85 percent of the concession, with the remaining 15 percent held by local Cameroon partners.

Afri-Can Charters Sampling Vessel

Afri-Can Marine Minerals Corporation signed a charter agreement with the International Mining and Dredging Holding company for a mining vessel capable of undertaking a diamond-sampling program on the EPL 3403 marine diamond concession located off the coast of Namibia. The program is scheduled to begin at the end of this month.

ECONWATCH

For the week ending Mar. 24

The diamond industry stock slide one week ago bounced back this week as gainers outnumbered the losers. Read the extended stock report for major retailer and miner stocks from India, the U.S., and Europe.

Mar. 24 Mar. 17 Chng.
$1 = Euro 0.705 0.710 -0.005
$1 = Rupee 44.63 45.10 -0.5
$1 = Israel Shekel 3.56 3.55 0.01
$1 = Rand 6.87 7.14 -0.27
$1 = Canadian Dollar 0.97 0.99 -0.02

Precious Metals
Gold $1,428.90 $1,404.80 $24.10
Platinum $1,751.00 $1,698.00 $53.00

Stock Indexes Chng.
BSE 18,350.74 18,149.87 200.87 1.1%
Dow Jones 12,170.56 11,774.59 395.97 3.4%
FTSE 5,880.87 5,696.11 184.76 3.2%
Hang Seng 22,915.28 22,284.43 630.85 2.8%
S&P 500 1,309.66 1,273.72 35.94 2.8%
Yahoo! Jewelry 988.92 946.27 42.65 4.5%

INDIA MARKET REPORT

Polished and rough trading activity

Local polished activity remains soft. Traders take a "wait and see" approach to prices. Liquidity concerns emerge as financial books prepare to close for the year on March 31. Rough diamond activity in Antwerp and from the local rough markets cools due to rumors of decreases of premium in rough goods

No konečně,
už jsem tu byl jak na trní.
😉

turtle 😈 něnězvôzňi😈 čeče...😆 😁

ja viem Tebe to nepovie nič,nakoniec aj dalším 99,8% návštevníkom, ale pre profíka občas stačí jedna veta.😲 😉

Proč March 31. ?
Finanční rok přece končí až June 31.
🙄
To se pak nemůžou divit že: "Local polished activity remains soft".
😎

Nie celkom je to tak turtle😉

V každom štáte je to inak..... 🙄

Rapaport Weekly Market Comment May 13, 2011

Polished shortages expected to linger as Indian diamond cutting slows during summer vacations. De Beers sells Namaqualand Mines to Trans Hex for $33m and reports softer rough demand at Diamdel April / May auctions. BHP Billiton approves $323m Ekati mine development and appoints Tim Cutt as president of diamonds and specialty products. U.S. 1Q online retail sales +12% to $38b. Sotheby’s 1Q revenues +17% to $120m, net income of $2.4m vs. net loss of $2.2m. U.S. March polished imports +25% to $1.9b, polished exports +28% to $1.6b.

RapNet Data: May 11

Diamonds 726,546
Value $4,910,663,333
Carats 809,589
Average Discount -26.74%

Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS

May
16-20
Mon-Fri

Rapaport Melee Auction
New York - by appointment only
Close: May 20 at 12 p.m.

email: auctions@rapaport.com

May
16-24
Mon-Tue

Rapaport Single Stone Auction & Buy Now Sale
New York & Israel
Diamonds in all shapes, sizes and qualities.

email: auctions@rapaport.com

June
5
Sun

Rapaport Conference at JCK Vegas
Mandalay Bay Resort

8 a.m. - 10 a.m.
Breakfast and presentation by Martin Rapaport, Chairman of the Rapaport Group

10 a.m. - 11 a.m.
Diamond Certification Conference

2 p.m. - 4 p.m.
Fair Trade Jewelry Conference

Participation is free, but seating is limited so register now. www.diamonds.net/jck2011

June
3-4
Fri-Sat

JCK Vegas Show
Shabbat dinner and lunch
Order now.

QUOTE OF THE WEEK:
Faced with rapidly rising gas prices and stubbornly high unemployment, consumers continued to take advantage of the Internet’s lower prices by shifting their spending from offline retail stores. In fact, in the first quarter, the growth in e-commerce spending was roughly double that observed at offline retail. While we would expect online buying to dampen slightly if gas prices continue to eat into discretionary spending, it’s clear that e-commerce has become a mainstay in consumer behavior, driven by the attraction of both lower prices and convenience.

Gian Fulgoni | comScore chairman

Careers@Rapaport

The Rapaport Group is growing rapidly. If you wish to work with the best and brightest, join us. We have great opportunities for trading managers, gemologists, sales assistants, and entry level positions for our offices in New York, Antwerp, Mumbai, Dubai, and Shanghai. To get on the fast track, email your resume to careers@rapaport.com.

INDUSTRY

April Sales Offer Mixed Results

U.S. department store sales in April 2011 were flat at $14.3 billion on an unadjusted basis compared with April 2010. On an adjusted basis however, the figure dropped 1.9 percent to $15.3 billion, according to the government. The figure was disappointing considering easy year on year comparisons due to Easter landing later in the month. Retail trade sales rose 7.9 percent year on year. MasterCard Advisors’ SpendingPulse on the other hand reported that Aprils retail sales in the U.S., excluding auto sales, grew by 8.8 percent year on year. But spending on gasoline helped drive overall sales figures higher. Retail sales, excluding both gasoline and autos, rose 6.7 percent year on year.

In separate quarterly reports, Macy’s recorded sales rose almost 6 percent year on year to $5.9 billion while same-store sales rose 5.4 percent and profit rose to $131 million from $23 million in 2010. Kohls reported sales rose 3 percent to $4.2 billion, same-store sales increased 1.3 percent and profit rose 5 percent to $211 million. Neiman Marcus recorded a sales increase of 10 percent at $984 million and same-store sales rose 9.7 percent.

Diamdel Sells All 218 Lots

Diamdel offered and sold 218 lots of rough diamonds at its second cycle of auctions, which was held from April 13 through May 3. Diamdel observed that rough demand remained strong across the board, but softer than it has been, with price growth experienced in sizes above 2-carat, as well as for grainers and smalls. Interestingly enough, prices for near-gem and large ranges stabilized from recent highs.

Rapaport Weekly Broadcast

Watch Now: Preview top lots from Sothebys Geneva for its upcoming Magnificent Jewels & Noble Jewels sale on May 17. An important emerald and diamond tiara and a superb fancy intense pink diamond weighing 10.99 carats will be up for auction. The sale also comprises fine jewels of noble provenance, and an impressive array of white diamonds and colored gemstones including Kashmir sapphires and two important Burmese rubies.

RETAIL & WHOLESALE

Bulgari Posts Strong Profit Increase

Bulgari Group posted a net profit of $13.4 million following the first quarter loss of $11.9 million one year ago. In April the luxury retailer reported group revenues rose 28 percent to $370.8 million with jewelry revenues up 29 percent to $166.6 million.

U.S. Online Retail +12% in April

Online retail sales during the first quarter of 2011 in the U.S. rose 12 percent year on year to $38 billion, according to metrics firm comScore Inc. There was a 4 percent decline in per-transaction receipts, but a 7 percent increase in the number of those who purchased products online, comScore found.

Swank 1Q Sales +2%

Swank reported less than a 2 percent year on year increase in first quarter sales at $26.1 million. But the company reduced cost of sales and managed to report a profit of $32,000 compared with a net loss of $457,000 one year ago. Sales of mens jewelry and belts declined, but total sales of leather goods were higher. Gross profit expressed as a percentage of net sales was 31.5 percent for the first quarter, up from 26.4 percent one year ago.

Thangamayil 1Q Sales +68%

Thangamayil Jewellery reported its fourth quarter revenue rose 68 percent year on year to $42 million for the three months that ended March 31. Net income rose 112 percent to $1.8 million. Fiscal year sales rose 46 percent to $147 million and profit nearly doubled year on year to $7 million.

Sotheby’s 1Q Revenue +17%

Revenue increased 17 percent to $119.6 million during Sothebys first quarter and expenses rose 15.6 percent year on year to $108.6 million, leaving operating income of nearly $11 million, which was up from $7.9 million one year ago. Sothebys reported net income of $2.4 million, up from a net loss of $2.2 million in first quarter 2010.

QVC 1Q Sales +4%

QVC reported first quarter revenue rose 4.4 percent year on year to $1.84 billion, with U.S. sales rising by 3.1 percent and international sales up 7 percent. Gross margin as a percentage of sales tightened for the U.S. market to 35.1 percent from 35.6 percent, but margin improved to 36.9 percent for international sales from 36.6 percent one year ago. QVC delivered operating income of $225 million to parent company Liberty Media, which was a 3 percent year on year decrease. Jewelry sales at QVC continued to decline, as they have for several quarters, while sales of electronics, beauty and accessories increased. The average selling price for the first quarter increased 7 percent to $54.83 while total units sold decreased 3 percent.

Wealthy Consumers Pick Graff as No.1

High-net-worth consumers in the U.S. chose Graff, Buccellati and Asprey, in that order, as the top luxury jewelers, according to the latest Luxury Brand Status Index (LBSI) issued by the Luxury Institute. The top luxury watch brands were Blancpain, Rolex and Vacheron Constantin. Consumers earning at least $200,000 a year rated each brand on quality, exclusivity, social status and overall ownership experience. They also rated brands’ price worthiness, their willingness to recommend it and the likelihood they’ll buy it next time they make a purchase in the category.

GENERAL

BHP Taps Cutt for Diamond Division

BHP Billiton appointed Tim Cutt as its president of diamonds and specialty products with an effective date of Jun 1. Cutt will be based out of BHPs Saskatoon offices in Saskatchewan, Canada. In addition, the mining giant will relocate the diamonds and specialty products business from Vancouver to Saskatoon in the coming months. Cutt is currently president of production in BHP Billiton’s petroleum business, a position he has held since joining the company in 2007.

Rockwell Names Campbell as CEO

Rockwell Diamonds appointed James Campbell as president and chief executive five months following the departure of John Bristow. Campbell is currently vice president of new business at Lucara Diamond Corporation. Campbell said that Rockwell has overcome a number of significant challenges in the past two years, and is on the verge of delivering on its growth potential.

Zale Names Appel as Chief Administrator

Zale Corporation appointed its chief financial officer, Matt Appel, as chief administrative officer. In this dual role, Appel will be responsible for real estate, supply chain and logistics, merchandise planning and allocation, information technology, warranty, repair and credit products, in addition to ongoing management of finance and control functions.

Antwerp Election Results

The Antwerp Diamond Bourse (Beurs voor Diamanthandel) announced the election results for its board of directors.

Yves Diamant received 436 votes
Jacques Roth received 431 votes
Jacques Korn received 373 votes
Kaushik Mehta received 347 votes
Abraham Pinchasi received 319 votes
Liran Horovitz received 302 votes

Sarin 1Q Revenue -10%

Sarin reported a 9.6 percent year on year decrease in revenue for its first quarter at $12.3 million. Profit fell 25 percent to $3.3 million. India represented the strongest geographic sector, representing $9.4 million in sales, which was a drop of 15 percent year on year, followed by Africa with sales of $1.1 million, which was 20 percent higher than one year ago. Sales in Europe jumped 36 percent to $437,000, but fell 15 percent in North America at $212,000. Research and development expenses rose 19 percent to $1.3 million and primarily reflected "refinement and enhancement" of its Galaxy and Solaris systems functionality along with other programs.

STATS

U.S. Imports & Exports

Figures are rounded Mar. $Mil. %Chng.
Polished imports $1,940 25%
Polished exports $1,560 28%
Net imports $387 15%

Rough imports $37 -18%
Rough exports $42 103%
Net imports ($5)

Net diamond account $382 6%

Belgium Imports & Exports

Figures are rounded Apr. $Mil. Chng.
Polished exports $1,000 45%
Polished imports $1,000 43%
Net exports $2

Rough imports $857 -5%
Rough exports $1,130 26%
Net imports ($272)

Net diamond acct. $274

MINING

BHP Funds Misery Project

BHP Billiton approved $323 million in funding for pushback on its existing Misery open pit project at the Ekati diamond mine and stripping operations are expected to begin in October 2011. BHP expects ore production to begin in late 2015 and final production from Misery pit in mid 2017.

Trans Hex Buys Namaqualand

De Beers agreed to sell it Namaqualand Mines to Trans Hex in a transaction valued at about $33.4 million. The purchase was described as a cash deal in which a 50 percent share would be held by Trans Hex; a 34 percent stake by major Trans Hex investor RECM and Calibre Limited; and an 11 percent share held by Dinoka Investment Holdings. Trans Hex`s management team hold all shares of Dinoka, with the majority being held by historically disadvantaged South Africans. The remaining 5 percent stake has been allocated to broad-based, historically disadvantaged groups of persons, which still has to be determined, according to Tran Hex.

The Namaqualand Mines are close to Trans Hex`s Baken alluvial mining operations on the West Coast of South Africa. In addition to the purchase agreement, Trans Hex will contribute ZAR 10 million, or about $1.5 million, towards costs associated with ongoing environmental rehabilitation activities to be undertaken by DBCM in relation to Namaqualand Mines.

Gahcho Kue Valuations Improve

Mountain Province Diamonds reported that its valuation of diamonds recovered from the Gahcho Kue project had increased 41 percent from April 2010 to $122 per carat. The stone with the highest value from the sampling was 9.90-carats, a makeable stone of high color (D/E), and valued at $24,000 per carat.

ECONWATCH

For the week ending May 12

Most diamond industry-related shares recovered this week from a widespread loss two weeks ago. But still, shaky ground with some very wide swings on certain stocks. Man Sangs parent company lost 44%, Zale gained 14%, Asian Star was up 12%, Ren. Jewellery gained 18%, Vaibhav Gems was up 10%, Gemfields was 13% higher, but Mwana Africa lost 12%. Also note how Tiffany has been up, up, and away of late as it tickles the $70 price mark. Read the extended stock report for major retailer and miner stocks from India, the U.S., and Europe.

May 12 May 5 Chng.
$1 = Euro 0.704 0.687 0.017
$1 = Rupee 44.79 45.99 -1.2
$1 = Israel Shekel 3.49 3.42 0.07
$1 = Rand 6.91 6.73 0.18
$1 = Canadian Dollar 0.97 0.96 0.01

Precious Metals
Gold $1,504.30 $1,474.10 $30.20
Platinum $1,766.00 $1,763.00 $3.00

Stock Indexes Chng.
BSE 18,335.79 18,210.58 125.21 0.7%
Dow Jones 12,695.92 12,584.17 111.75 0.9%
FTSE 5,944.96 5,919.98 24.98 0.4%
Hang Seng 23,073.76 23,261.61 -187.85 -0.8%
S&P 500 1,348.65 1,335.10 13.55 1.0%
Yahoo! Jewelry 1,071.06 1,021.93 49.13 4.8%

Rapaport Weekly Market Comment May 20, 2011

Strong polished demand as expectations rise for JCK Vegas show. Manufacturing profits under pressure as rough price increases continue. De Beers appoints Philippe Mellier as new CEO and lowers stake in Namibia marine operations to 50%. Sotheby’s Geneva sells $89.1m (90% by lot) with Leviev buying 10.99ct., fancy intense pink diamond ring for $10.8m ($986k/ct.). Christie’s Geneva sells $78.7m (84% by lot) with Graff buying heart shape, 56.15ct., D, IF for $10.9m ($195k/ct.). Richemont FY’11 sales +33% to $9.8b, profits +80% to $1.5b. India’s April polished exports +6% to $2b, rough imports +36% to $1.5b.

RapNet Data: May 19

Diamonds 713,748
Value $4,946,596,305
Carats 801,585
Average Discount -26.80%

Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS

May
16-24
Mon-Tue

Rapaport Single Stone Auction & Buy Now Sale
New York & Israel
Close: May 24 at 10 a.m. EDT

email: auctions@rapaport.com

June
3-6
Fri-Mon

Rapaport Buy Now Sale
June 3, 5 & 6
JCK Las Vegas Show
Booth B3553

email: auctions@rapaport.com

June
5
Sun

Rapaport Conference at JCK Vegas
Mandalay Bay Resort

8 a.m. - 10 a.m.
Breakfast and presentation by Martin Rapaport, Chairman of the Rapaport Group

10 a.m. - 11 a.m.
Diamond Certification Conference

2 p.m. - 4 p.m.
Fair Trade Jewelry Conference

Participation is free, but seating is limited so register now. www.diamonds.net/jck2011

June
3-4
Fri-Sat

JCK Vegas Show
Shabbat dinner and lunch
Order now.

QUOTE OF THE WEEK:
Global capital is highly mobile - and therefore investors will seek to put their money where they are likely to get the highest return on their investment. To be absolutely clear though; the magic that Namdeb management have performed year in and year out can no longer be sustained without significant fresh capital. [Namibia shall] lead the way in this venture by creating a long-term fiscal environment that will enable Namdeb to attract the new investment it will need to make this plan a reality.

Bruce Cleaver | acting CEO, De Beers Group

Careers@Rapaport

The Rapaport Group is growing rapidly. If you wish to work with the best and brightest, join us. We have great opportunities for trading managers, gemologists, sales assistants, and entry level positions for our offices in New York, Antwerp, Mumbai, Dubai, and Shanghai. To get on the fast track, email your resume to careers@rapaport.com.

INDUSTRY

De Beers Names Mellier as CEO

De Beers Group named Philippe Mellier as its new chief executive officer (CEO) some 10 months after the role was vacated by Gareth Penny. Mellier is expected to being in July, following eight years as president of Alstoms transport division. Group chair Nicky Oppenheimer stated that appointment signaled De Beers determination to lead in a rapidly changing world. Mellier oversaw a business unit with sales of almost $8.5 billion.

In a separate announcement, De Beers Diamond Jewellers appointed Devon Pike as CEO of its U.S. business. She joins the company after serving as senior vice president at Juicy Couture and prior to that as an executive at Polo Ralph Lauren. Pike noted that she would take the brand to the next level of success in the U.S.

Platinum Demand For Jewelry Weakens

Global demand for platinum in jewelry fell 14 percent in 2010, according to the “Platinum 2011" report by Johnson Matthey. Platinum for jewelry in China, which accounts for two-thirds of the global demand, dropped by more than 16 percent year on year to 1.65 million ounces. China, alongside Japan, also took the lead in platinum recycling – which, at 745,000 ounces, reflected a 32 percent increase from 2009, the report found. Platinum jewelry demand was marginally lower in Europe at 175,000 ounces, a decrease of only 6 percent, according to the report. The number of hallmarked jewelry pieces produced in the U.K. and Switzerland, however, increased in 2010, demonstrating some underlying growth in consumer demand. Bucking the down trend, the North American market experienced a 30 percent increase in platinum for jewelry at 175,000 ounces.

U.S. Jewelry Prices Rise

The U.S. consumer price index (CPI) for jewelry hit a record in April, jumping 9.6 percent year on year to 175.49 points. It was the fourth consecutive month for which the reading topped 170 points and the 39th consecutive month to post a reading higher than 150 points. The CPI for all product categories rose 3.1 percent year on year.

RETAIL & WHOLESALE

Rapaport Weekly Broadcast

Watch Now: Sothebys Geneva sold a very important and rare 10.99-carat fancy intense pink diamond ring for $10.84 million to Leviev. An emerald and diamond tiara that was formerly in the collection from Princes Katharina Henckel Von Donnersmarck fetched $12.74 million. In all, Sotheby’s garnered sales of $89.1 million with 90.4 percent by lot.

Christies Geneva Jewels Sale at $79M

Christies sale of magnificent jewels in Geneva achieved just shy of $78.7 million and was 84 percent sold by lot. The top lot was an unmounted 56.15-carat, D, IF, type IIa heart-shaped diamond, which sold to Graff for $10,946,522 or about $195,000 per carat. Christies sold a 130.50-carat, cushion-cut Burmese ruby to Ben Mellen & Son for $7,122,742. A private snatched-up a rectangular-cut, fancy intense blue, 6.60-carat, IF diamond for $5,465,814 or $828,000 per carat during the sale. Another important piece, an imperial Mughal spinel necklace, sold to a private for $5,210,902.

Richemont FY Profits +80%

Richemont closed a strong fiscal year spurred by record sales and profits at its jewelry maisons. Group sales rose 33 percent to $9.84 billion for the fiscal year that ended March 31, with growth recorded in all regions and product categories. Net profits jumped 80 percent to $1.54 billion. Sales at its jewelry maisons rose 29 percent to $4.96 billion with operating profits grew 43 percent to $1.52 billion. Sales at its specialist watchmakers business increased 22 percent to $959 million.

Flawless Posts FY Loss

Flawless Diamond Ltd. reported that net sales fell 38 percent to $87.1 million, during the fiscal year that ended March 31. Expenses fell by 36 percent to $85.8 million, but the company posted a net loss of $432,981 compared with a profit of $3.3 million.

Su-Raj FY Profit +61%

Su-Raj Diamonds reported that net sales rose 42 percent to $1.07 billion for its fiscal year that ended March 31. Jewelry sales increased 18 percent to $187.7 million while diamond sales grew 47 percent to $757.7 million. Expenses grew 43 percent to $1.04 billion and net profits rose 61 percent to $30.5 million.

Suashish FY Profit -14%

Suashish Diamonds Limited reported that fiscal year sales fell 16 percent to $234.9 million for the period that ended March 31. Expenses fell 18 percent to $225.6 million and net profits decreased by 14 percent to $13.4 million.

Pandora 1Q Profit +91%

Pandora reported a first quarter sales increase of 41 percent year on year to $334.8 million and net profit growth of 91 percent to $98.5 million. The cost of sales for the first quarter rose 20 percent to $94.7 million and gross margin as a percentage of sales increased to 71.6 percent from 70.8 percent one year ago. Roughly 70 percent of Pandoras revenue came from the sale of charms, which rose 39 percent year on year. Sales of rings rose 149 percent during the first quarter.

LJ Intl. 1Q Profit +89%

LJ International reported that operating revenue for its first quarter, which ended March 31, rose 62 percent to $43.4 million and cost of goods sold increased 58 percent to $24.9 million. Net income for the quarter jumped 89 percent to $3.5 million. Revenues from LJs retail chain ENZO improved 69 percent year on year to $27.8 million while wholesale revenue rose 49 percent to $15.6 million, according to the company. ENZOs gross profit increased 75 percent to $15.3 million while wholesale gross profit rose 36 percent to $3.2 million. Gross margins for retail operations rose to 55 percent of net sales from 53 percent one year ago, while wholesale gross margins decreased two percentage points to 20 percent.

Bergio 1Q Loss Narrows

Bergio International reported that sales during the first quarter that ended March 31, rose 144 percent to $270,551 and cost of sales jumped 706 percent to $181,053. Bergio reported a net loss of $177,830, which was an improvement from the loss of $195,358 reported one year ago.

GENERAL

WDC to Address KP Issues in Vegas

The World Diamond Council (WDC) will host a briefing at JCK on the efforts underway to resolve current challenges to the Kimberley Process. The event also will cover the implementation of the WDCs System of Warranties. The panel presentation, which is entitled "Diamond Dialogue: The Challenges of a Robust Kimberley Process," will take place on June 2, 1:30 p.m. to 2:45 p.m., in the Tradewinds AB room at the Mandalay Bay Convention Center, in Las Vegas.

GIA Symposium Creates Shipwrecked! Debate

The GIA Symposium 2011 will feature a "Shipwrecked!" theme debate on May 30, where (hypothetically) stranded industry players must reconcile fair trade standards with the realities of politics and the marketplace in order to be rescued. The debate platform will enable discussion on issues affecting the industry, but without prepared statements or speeches.

Debate participants include Dr. Brian Nattrass, managing partner of Sustainability Partners; Susan M. Jacques, president of Borsheims; Tom Cushman, managing director of Richfield Investor Services; Richard Drucker, president of Gemworld International; Martin Rapaport, chairman of the Rapaport Group; and Dr. George Rossman, professor of mineralogy at Cal Tech.

AGS Names Honorees

The American Gem Society (AGS) announced its 2011 Circle of Distinction Honorees, all of whom will be recognized at the 11th Circle of Distinction Dinner on July 26 in New York. The recipients of the prestigious Lifetime Achievement Award are David and Sybil Yurman of David Yurman. The 2011 recipients of the Triple Zero Awards are Kathryn Kimmel, vice president and chief marketing officer of the Gemological Institute of America; and David L. Rocha, executive director of Jewelers for Children.

Antwerp Election Results

The Antwerp Diamond Bourse, Beurs voor Diamanthandel, appointed Maurice Fischler as its new president following biennial elections. Jacques Roth was elected vice president, and Jacques Korn and Bernard Weinberg were named executive directors. In addition, the following elected officials join the bourse executives on the board: Yves Diamant, Alain Majerczyk, Liran Horovitz, Kaushik Mehta, David Pienica, Marcel Pruwer and Raphael Rubin.

STATS

India Imports & Exports

Figures are rounded April $Mil. Chng.
Polished exports $2,040 6%
Polished imports $1,480 16%
Net exports $553 (16%)

Rough imports $1,310 36%
Rough exports $95 20%
Net imports $1,220 38%

Net diamond acct. ($667)

Israel Imports & Exports

Figures are rounded April $Mil. Chng.
Polished exports $256 (47%)
Polished imports NA
Net exports NA

Rough imports NA
Rough exports $249 7%
Net imports NA

Net diamond acct. NA

MINING

De Beers, Namibia Reach Agreement

De Beers and Namibia reached an agreement in which the country will increase its shareholding in De Beers Marine Namibia (DBMN) to 50 percent from 15 percent. As part of the agreement, the shareholders have agreed to establish a new 50/50 joint venture holding company for Namdeb and DBMN. The new firm will hold all operating licenses both for land and sea and will own the diamonds mined from those areas. Currently, operations are controlled by Namdeb.

All diamonds produced by Namdeb and DBMN will continue to be sorted, valued and marketed exclusively by the Namibia Diamond Trading Company (NDTC), which is also a joint venture between Namibia and De Beers. The new structure will be implemented after statutory, regulatory and other commercial conditions have been met, which is expected during the second half of 2011.

Harry Winston Deal to Secure Additional Supply

Harry Winston Diamond Corporation entered into a business relationship with Diamond Asset Advisors AG, a group that is in the process of establishing a polished diamond investment fund. The fund will be structured as a limited partnership, of up to $250 million, offering institutional investors direct exposure to the wholesale market price of polished diamonds.

Under the terms of the agreement, Harry Winston will source diamonds that have the same high quality characteristics that it uses in jewelry and timepieces, with a portion coming from the companys existing inventory. The fund will purchase these diamonds and then consign them to Harry Winston, acting as custodian. Harry Winston will use the polished diamonds in the manufacturing of its jewelry and timepieces. The price paid to replace polished diamonds sold by Harry Winston in its finished products will be used by the fund as a basis for determining the market value of the fund.

Prior to this announcement, UBS analyst Brian MacArthur upgraded his price target on Harry Winston Diamond to $17.75 per share from $16.50 citing improved rough and polished diamond prices. He also wrote that the company expects higher production from Diavik this year and that the luxury goods trade was strengthening, especially for jewelry. Harry Winston shares opened on May 19 at $15.13.

Gem Diamonds Resource Valuation Improves

Gem Diamonds updated investors on its mineral resources and reserves and pricing. Total diamond resource was reported as 28.89 million carats with an average value of $536 per carat, which was an increase of 45 percent from previous valuation. The Letšeng mine in Lesotho has a total resource of 3.66 million carats; Gope in Botswana has total resource of 20.5 million carats; Ellendale in Australia holds total resource of 4.7 million carats.

De Beers Canada Releases Annual Report

In its annual sustainability report, De Beers Canada stated that it employed 1,087 people and had injected approximately $474 million into Canadas economy during 2010. The group mined 1.75 million carats, with 926,000 carats coming out of Snap Lake and 826,000 carats from Victor. Snap Lake service contracts totaled $119 million and $104 million in services were supplied by northern businesses while $48 million of that amount came from Aboriginal suppliers. At Victor, $93 million was spent on goods and services and $49 million of that amount was supplied by Aboriginal businesses.

ECONWATCH

For the week ending May 19

Tiffany & Co. broke the $70 per share mark this week. Most U.S. jewelry-related shares were weaker though, with Birks & Mayors dropping the most, by 13%, and Zale was off by 7% this week. European shares were basically flat, except Damiani rose 9%. In India, Ren. Jewellery jumped 19%, while Suashish Diamonds lost 11%. Mining stocks were stable except for a 10% gain on shares of Truth North, and an 11% loss for Mwana Africas shares. Read the extended stock report for major retailer and miner stocks from India, the U.S., and Europe May 19 May 12 Chng.
$1 = Euro 0.700 0.704 -0.004
$1 = Rupee 44.99 44.79 0.2
$1 = Israel Shekel 3.49 3.49 0.00
$1 = Rand 6.88 6.91 -0.03
$1 = Canadian Dollar 0.96 0.97 -0.01

Precious Metals
Gold $1,494.40 $1,504.30 -$9.90
Platinum $1,765.00 $1,766.00 -$1.00

Stock Indexes Chng.
BSE 18,141.40 18,335.79 -194.39 -1.1%
Dow Jones 12,605.32 12,695.92 -90.60 -0.7%
FTSE 5,955.99 5,944.96 11.03 0.2%
Hang Seng 23,163.38 23,073.76 89.62 0.4%
S&P 500 1,343.60 1,348.65 -5.05 -0.4%
Yahoo! Jewelry 1,067.59 1,071.06 -3.47 -0.3%

Rapaport Weekly Market Comment June 17, 2011

Rough markets overheating with polished prices firming rapidly. Indian sellers are holding back goods until they get replacement cost. Shortages developing due to strong Indian, Chinese and Far East buying, good trading ahead of next week’s Hong Kong show and rising demand from U.S. and European jewelry manufacturers. DTC June sight est. at $650M with about 12% price increase for better-quality rough. ALROSA’s 2Q sales +30% to $1.3B. Christie’s New York sells $11.7M (94% by lot) with oval, 46.51ct., E, VVS2 diamond selling for $4.2M ($91,000/ct). Caution: While current price levels appear sustainable, markets may be heading towards speculative bubble.

RapNet Data: June 16

Diamonds 681,199
Value $4,961,092,287
Carats 768,261
Average Discount -23.83%

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RAPAPORT ANNOUNCEMENTS

June
21-26
Tue-Sun

Rapaport Buy Now Sale
Hong Kong

email: auctions@rapaport.com

Jun-Jul
27-5
Mon-Tue

Rapaport Single Stone Auction
New York & Israel

email: auctions@rapaport.com

QUOTE OF THE WEEK:
[Washington failure to understand why small-business owners are not hiring or investing has resulted in a set of policies that have not been very effective, and Main Street is suffering. The icing on the cake: The growing debt, large deficits, threats of higher taxes, regulations being spewed out by state and local administrations, and the uncertainty of the new health care law—is it any wonder that optimism is down?

Bill Dunkelberg | NFIB chief economist

Careers@Rapaport

The Rapaport Group is growing rapidly. If you wish to work with the best and brightest, join us. We have great opportunities for trading managers, gemologists, sales assistants, and entry level positions for our offices in New York, Antwerp, Mumbai, Dubai, and Shanghai. To get on the fast track, email your resume to careers@rapaport.com.

INDUSTRY

DTC Sight Estimate at $650M

The Diamond Trading Company (DTC) June sight had an estimated value of $650 million with the De Beers unit reportedly raising prices on certain items. Sources at the sight indicated that prices of fine, better-quality rough rose approximately 12%, while cheaper, Indian goods remained relatively stable.

The sight, which concluded on Wednesday, was the fifth of 10 sights hosted by the company during the year. DTC sales have increased by 14% year on year to approximately $3 billion in the first half of 2011, according to Rapaport estimates.

Sightholders were also focused on completing their contract proposal questionnaires (CPQ), which are due on July 7, as part of the application process to gain a three-year contract for DTC supply beginning April 1, 2012

Diamdel Sells 251 of 256 Lots

Diamdel sold 251 of 256 lots of rough at its most recent auction, which ended June 9. Goods offered spanned near-gem, smalls, grainers, 2-carat plus, and large categories. By value, 54% of the lots were sold to non-sightholders with sightholders winning the balance. Demand was concentrated in large, 2-carat plus, grainers and smalls, whereas near-gem products experienced deterioration in demand.

ALROSA Sales to Increase 30%

ALROSA expects its diamond sales to reach $1.25 billion in the second quarter of 2011, which would represent a 30% year on year increase. This would also be the first time ALROSAs quarterly sales have exceeded $1 billion, according to Rapaport calculations. ALROSA sold $1.84 billion worth of rough and polished diamonds during the first five months of 2011. At current market prices, ALROSA forecasted that full year sales should increase by approximately 18% to $4.7 billion in 2011.

RETAIL & WHOLESALE

Small Businesses Feel Economic Pinch

Small business owner optimism is holding at "recession level," according to an index tracked by the National Federation of Independent Business (NFIB). With the index settling at 90.9 points for May, the index found that small business owners were growing more pessimistic as the so-called "recovery" progressed. Other findings from the monthly index included deteriorating capital spending and inventory investment plans; price increases passed on to customers; and 36% reporting weaker sales versus only 23% reporting sales growth. More than 70% of small business owners contended that the U.S. economy remains very weak.

U.S. Department Store Sales -3%

Department store sales fell 3.1% year on year in May to $14.6 billion on an unadjusted basis, according to U.S. government figures. On an adjusted basis, U.S. department store sales slipped 0.5% to $15.4 billion. Retail trade sales, however, rose 8% and total retail and food services sales, excluding motor vehicles, rose 8.3% to $331.6 billion.

Arjav Auction Nets $12.5M

Arjav Diamonds sold $12.5 million worth of rough at its first online auction. The auction focused exclusively on stones larger than 5 carats with 3,664.27 carats selling for an average price of $3,411.32 per carat. The two largest stones sold were the 74.70 carat "Star of Surat" and the 61 carat "Star of Gujarat."

Christies NY Sale Nears $12M

Christie’s New York held its "Important Jewels" sale on June 14 for a total of $11,727,625 and it was 94% sold by lot. The top lot was a 46.51-carat, E, VVS2 oval-cut diamond, which sold for $4,226,500 or $91,000 per carat. A 10.01-carat, D, IF, pear-shaped diamond fetched $1,314,500, or $131,000 per carat.

Rapaport Weekly Broadcast

WATCH NOW: DTC sight correspondent Avi Krawitz shares observations from London; Unity Marketing contends that luxury brands must actively pursue the consumer wallet with value-add and unique products to win market share.

Tara Opens New Concept Store

Tara Jewellers opened its new format store in Indore, India. The store boasts 1,650 square feet of retail space, uses modern lighting to showcase jewelry, and is decorated in shades of purple to give a warm, inviting feeling, according to the retailer. The new format was also designed for the Bhopal and Jabalpur locations. The store displays jewelry in a vertical fashion on walls for easy viewing and shopping, and it has an open workshop area that enables clients to watch the craftsmen at work.

GENERAL

Brown to Leave De Beers

Stuart Brown, De Beers Group chief financial officer and acting joint chief executive, will leave on July 31. Brown served De Beers for nearly 20 years. Brown said that he leaves with "fond memories" and that it was the right time to move on and find a new challenge.

Jovella Dates: July 5, 6

Israel will host the eight annual Jovella show, July 5–6, in Tel Aviv, which will feature novel designs and original materials at "Designer Boulevard." This year’s exhibition will feature 20 original Israeli designers, in addition, 50 students of jewelry design at Shenkar College will be exhibiting.

Rohit Mehta to Head SGCCI

Rohit Mehta, former president of the Surat Diamond Association (SDA), has been appointed president of the Southern Gujarat Chamber of Commerce and Industry (SGCCI). The group is an umbrella organization which aims to further business development in the state of Gujarat, India.

Authorities Arrest Eight Suspects in Florida

Eight suspects involved in a high-end burglary ring that stole an estimated $6 million worth of merchandise from jewelry stores and pawn shops in Florida, North Carolina, Tennessee, Virginia, West Virginia and Connecticut, were recently arrested in Florida, accordign to the Florida Department of Law Enforcement (FDLE) in Jacksonville. The arrest marked a turning point in an almost two-year multi-agency investigation into the organized burglary ring based out of Miami-Dade County, Florida.

STATS

Russia

1Q2011 000s Cts. %Chng.
Rough exports 9,234 -26%
Rough imports 45
$Mil.
Export value $792.6 4%
Import value $12.8

Australia

1Q2011 000s Cts. %Chng.
Rough production 1,700 -35%
Rough exports 2,500 -35%
$Mil
Rough exports $93 -26%

Hong Kong

1Q2011 $Mil. %Chng.
Polished imports $3,960 35%
Polished exports $3,230 49%
Net imports $729 -6%

Rough imports $289 14%
Rough exports $297 40%
Net imports ($8)

Net diamond account $737 0%

MINING

Vaaldiams Loss Widens

Vaaldiam Mining reported a 256% year on year jump in its first quarter net loss at $7.6 million, or 11-cents per share. The junior mining company closed the quarter on March 31, with a cash position of $5.6 million and working capital of $3.7 million.

Just before the quarter closed, Vaaldiam entered into an arrangement with the joint venture partners of its Brauna diamond project in Brazil to increase ownership interest from 20% to 51% by paying $6.5 million over 15 months to the existing partners and financing the project development cost to production.

Vaaldiam produced 4,355 carats from its Duas Barras Mine in first quarter along with 221 troy ounces of gold. But these figures were below grade and with escalating fuel costs and other operating costs, production was suspended until such time that rising diamond prices may improve the mines economics, according to the company.

Rockwell Plans Recapitalization

Rockwell Diamonds entered into an agreement with Daboll Consultants Ltd., an affiliate of the Steinmetz Diamond Group, to borrow $2 million under a convertible bridge loan as part of a refinancing plan. The funding would enable Rockwell to continue with two key projects and enhance its production profile.

The loan is an integral step in the planned recapitalization of Rockwell, which seeks to raise up to $35 million in new financing in coming months. Rockwells board has approved a 15:1 share consolidation, or reverse-split, which is likely to be effected before the shareholders meeting.

Mozambique Preps for Diamond Mining

As many as 27 companies are looking for diamonds in Mozambique, according to the Minister of Mineral Resources, Esperanca Bias. So far, diamonds have not been extracted. Bias said that any diamonds offered for sale in central Mozambique have almost certainly been smuggled across the border from Zimbabwe. Mozambique is speeding up preparations to join the Kimberley Process (KP).

Firestone Lists on Botswana Exchange

Firestone Diamonds listed on the Botswana Stock Exchanges Venture Capital Board (VCB) this week. The junior diamond miner already trades on the London Stock Exchange.

Renard Valuation Jumps

In its ongoing feasibility study for the Renard diamond project, Stornoway Diamond Corporation determined that the "base case modeled" diamond price for Renard 2 and 3 rose 56% from the valuation taken in September 2009 to $182 per carat as of May 2011. The base model for Renard 4 rose 49% to $112 per carat, according to the May diamond valuation report conducted for Stornoway by WWW International Diamond Consultants. Stornoway listed “high” diamond price models of $236, $205 and $185 per carat for Renard 2, 3 and 4 kimberlite pipes respectively.

Next Steps for Gahcho Kue

De Beers Canada and Mountain Province Diamonds approved the Gahcho Kue feasibility study with some revisions and clarifications. The joint venture partners approved the necessary development work for the Gahcho Kue project and called for the projects operator to prepare a plan and budget for the development of the mine. Once the project plan and budget are approved it will serve as the basis for a final investment decision, which is expected to be made once the partners have clarity on the progress of the environmental review currently underway.

ECONWATCH

For the week ending June 16

There were only 14 industry stocks showing gains this week with the best performance coming from DGSE Companies (up 16%), JCPenney (up 11%), and Gemfields (up 13%). There were too many losers to name, however, Birks & Mayors (down 11%), LJ International (down 15%), Zale (down 20%), Theo Fennell (down 17%), and Rockwell Diamonds (down 30%) all registered double digit declines. Read the extended stock report for major retailer and miner stocks from India, the U.S., and Europe. June 16 June 9 Chng.
$1 = Euro 0.707 0.690 0.017
$1 = Rupee 44.89 44.72 0.2
$1 = Israel Shekel 3.46 3.39 0.07
$1 = Rand 6.87 6.77 0.10
$1 = Canadian Dollar 0.98 0.98 0.00

Precious Metals
Gold $1,528.90 $1,540.20 -$11.30
Platinum $1,755.00 $1,833.00 -$78.00

Stock Indexes Chng.
BSE 17,985.88 18,268.54 -282.66 -1.5%
Dow Jones 11,961.37 12,124.36 -162.99 -1.3%
FTSE 5,698.81 5,844.69 -145.88 -2.5%
Hang Seng 21,953.11 22,420.37 -467.26 -2.1%
S&P 500 1,267.64 1,289.00 -21.36 -1.7%
Yahoo! Jewelry 1,034.00 1,061.40 -27.40 -2.6%

RAPAPORT NEWS SERVICE | June 24, 2011 www.rapaport.com | news@rapaport.com

Industry Retail EconWatch India Mining Stats General

Rapaport Weekly Market Comment June 24, 2011  

Steady traffic as Hong Kong show opens with high expectations for Far East polished demand. Rough trading strong with high teen premiums for Indian DTC goods as BHP Billiton prices rise about 10%-15%. India’s May polished exports +24% to $2.2b, rough imports +44% to $1.4b. Israel’s May polished exports +82% to $1.1b. Botswana’s April diamond exports -19% to $208m. Tiffany & Co. opens regional base in Dubai. Civil society walks out of ineffectual KP intercessional meeting while Zimbabwe vows to export Marange diamonds with African and Asian support. TRADE ALERT: MARANGE GOODS EXPECTED TO BE RELEASED SHORTLY. RESPONSIBLE BUYERS SHOULD REQUIRE SUPPLIER GUARANTEE THAT THEY ARE NOT SELLING THESE DIAMONDS TO THEM.

RapNet Data: June 23

Diamonds 706,147
Value $5,281,413,298
Carats 796,207
Average Discount -24.18%

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RAPAPORT ANNOUNCEMENTS

June
21-26
Tue-Sun
Rapaport Buy Now Sale
Hong Kong

email: auctions@rapaport.com

Jun-Jul
27-5
Mon-Tue

Rapaport Single Stone Auction
New York & Israel

email: auctions@rapaport.com

July
4-12
Mon-Tue

Rapaport Melee Auction
Mumbai

email: auctions@rapaport.com

QUOTE OF THE WEEK:
The MDC believes diamonds and other mineral resources belong to the people of Zimbabwe and must be exploited for national benefit in a transparent manner. The current system under which the military is heavily involved in the mining and marketing of diamond with revenues undeclared to the national fiscus is clearly unacceptable.

Movement for Democratic Change (MDC) | Zimbabwes Coalition Government Party

Careers@Rapaport

The Rapaport Group is growing rapidly. If you wish to work with the best and brightest, join us. We have great opportunities for trading managers, gemologists, sales assistants, and entry level positions for our offices in New York, Antwerp, Mumbai, Dubai, and Shanghai. To get on the fast track, email your resume to careers@rapaport.com.

INDUSTRY

KP Meeting Ends in Stalemate Again

Civil society members of the Kimberley Process (KP), including Global Witness and Partnership Africa Canada (PAC), walked out of the intercessional meeting this week saying that negotiations with Zimbabwe were harming the scheme’s credibility. Ultimately, the meeting ended without a resolution on Zimbabwes Marange exports. KP chair Matthiew Yamba is expected now to present a draft proposal and seek written consensus from members from their home states.

Zimbabwes second ruling political party, the Movement for Democratic Change (MDC), expressed its view to the KP, saying that exports from the Marange would help boost the countrys struggling economy. But, the MDC also chided Zimbabwe’s military for its "current" involvement in the diamond fields and demanded financial transparency on rough exports.

Meanwhile, the Zimbabwe Blood Diamonds Campaign, which contended that smuggling and violence continues in the diamond fields, advocated for a ban on rough or else Marange diamonds would contaminate the industry.

The Rapaport Group urges responsible buyers to require supplier guarantees that they are not buying Marange goods.

WGC Drafts Conflict-Free Standards

The World Gold Council believes that gold must be a source of economic and social development wherever it is found, and that any possibility for gold to fund conflict must be eradicated. Therefore, the group established a consultation process on conflict-free and "chain of custody" gold standards and is currently seeking feedback on the resulting draft measures. The World Gold Council is accepting comments through September 1.

RETAIL & WHOLESALE

Rapaport Broadcast

Watch Now: U.S. jewelry inflation rises in May as higher gold, platinum, silver and diamond prices add pressure to retail markup. Online video viewing habits continue to evolve and present an opportunity for brands to advertise; while a Rice University study urges a cautious approach to retailers using “daily deal” websites to increase brand awareness and sales.

Jewelry as Investments of Passion

Jewelry, gems and watches accounted for 22% of all "investments of passion" for high-net-worth-individuals (HNWIs) in 2010, according to the Capgemini and Merrill Lynch 2011 World Wealth Report. The jewelry category tied with art, for second place, behind "luxury collectibles," which was the largest segment under "investments of passion." In the Middle East, HNWIs exhibited the highest share of jewelry purchases with 29% buying investment pieces. Overall, the worlds population of HNWIs expanded 8.3% year on year in 2010 and HNWIs wealth grew 9.7% to $42.7 trillion, surpassing the 2007 record of $40.7 trillion.

Tiger Global Invest in CaratLane

The Tiger Global hedge fund invested $6 million in Caratlane Trading Pvt. Ltd., which operates jewelry website CaratLane.com in India. CaratLane announced the funding on its Twitter page. Tiger Global has been investing in many key online properties including LinkedIn, Flipkart.com, Babyoye.com, and others.

“The e-commerce industry is set to boom in India, and we were among the few to have foreseen the market and started CaratLane in 2008. This inflow of funds will be used to strengthen our backend operations and augment our customer base through enhanced reach, owing to a refreshed approach to our marketing and brand-building effort,” said Mithun Sacheti, chief executive of CaratLane.

Aspire Buys Interest in Eternite

Aspire International Inc. acquired an equity interest in diamond jewelry wholesaler Eternite International Company Limited. The investment is an initial phase of a larger collaboration project designed to use Aspires ecommerce platform to introduce Eternites jewelry product lines in China.

New Trademarks for De Beers, Kama Schachter

The U.S. Patent & Trademark Office (USPTO) awarded the trademark "Everlon Diamond Knot Collection" to De Beers and approved the trademark "Kama Schachter" for Kama Schachter Jewelry (Pvt.) Ltd. of Mumbai on June 14.

De Beers filed for the trademark June 17, 2009, which consists of the word "EVERLON" enclosed within stylized interlocking elements above the words "DIAMOND KNOT COLLECTION." Kama Schachter filed for the trademark that carries its name on April 21, 2009, which features the words "KAMA SCHACHTER" below a horizontal line surmounted by a stylized crown.

Tiffany Opens Corp. Office in Dubai

Tiffany & Co. opened its regional headquarters in Dubai to oversee business development in the Middle East, Eastern and Central Europe, Africa, Turkey and India. Tiffany expansion plans will cater to the increased demand for luxury goods in emerging markets. Dubai is the fourth international representative office for the retailer outside of the U.S. Over the next five years Tiffany & Co. plans to more than double its network of boutiques in emerging markets.

In the U.S., Tiffany & Co. appointed Patrick F. McGuiness, 45, to the level of senior vice president and chief financial officer. In a second management change, James N. Fernandez, 55, has been appointed to the newly-created role of chief operating officer for Tiffany & Co.

Damas Opens New Store Concept in Fujairah

Damas International Limited inaugurated a newly renovated Damas store in Fujairah. The reopening comes only weeks after Damas opened a new concept store in Mercato Mall, Dubai. Raj Sahai, retail director for UAE Damas, stated, this location will attract locals and tourists alike, "so we are delighted to open this new and improved store to offer the best retail experience possible."

Zale to Rejoin Russell 3000

Zale expects to rejoin the U.S. broad-market Russell 3000® Index when Russell Investments reconstitutes its comprehensive set of U.S. and global equity indexes on June 24. Annual reconstitution of Russell’s U.S. indexes captures and ranks the 4,000 largest U.S. stocks as of the end of May, based upon total market capitalization. Shares in Zale have risen more than 200% year on year and market capitalization is roughly $174 million.

GENERAL

Avidar Joins Pres. Council of CIBJO

Eli Avidar, managing director of the Israel Diamond Institute Group of Companies (IDI), has joined the presidents council of CIBJO, the World Jewellery Confederation. CIBJO is responsible for making strategic decisions and consists of officers and five other member representatives, each of whom is appointed by the president, Dr. Gaetano Cavalieri. Avidar has been IDIs managing director since 2007 and has pioneered the Israeli diamond industrys marketing thrust into China and India.

De Beers Publishes Sustainability Report

De Beers highlighted its sustainability efforts in 2010, which included supplying $1.12 billion in rough diamonds to sightholders in southern Africa for manufacturing there – a 93% increase from 2009. De Beers also maintained a 50% reused/recycled water footprint for operations in the region even though production rose 34%. The company also provided anti–retroviral treatment to 1,652 employees and their partners in Botswana, Namibia and South Africa, and disbursed $29.8 million in community social investment, including contractually mandated initiatives and in-kind contributions.

STATS

Israel

May 2011 - figures rounded $Mil. %Chng.
Polished exports $1,100 82%
Polished imports N/A
Net exports N/A

Rough imports N/A
Rough exports $427 72%
Net imports N/A

Net diamond account $376 82%

India

May 2011 - figures rounded $Mil %Chng.
Polished exports $2,220 24%
Polished imports $1,550 54%
Net exports $668 -15%

Rough imports $1,410 44%
Rough exports $155 99%
Net imports $1,260 39%

Net diamond account ($590)

Botswana

April 2011 - figures rounded $Mil %Chng. YTD $Mil. %Chng.
Diamond exports $208 -19% $1,280 26%

MINING

ALROSA 1Q Profits +42%

ALROSA finalized its first quarter results, under International Financial Reporting Standards, and reported that revenue fell 5% year on year to $1 billion (RUB 29.6 billion). Net debt was reduced 13% to $3.1 billion (RUB 86.89 billion) and short term debt fell 86% to $449 million (RUB 12.3 billion). Net profit rose 42% to $431 million (RUB 12.04 billion). ALROSA produced 10 million carats of rough during the first quarter, an increase of 16% year on year, but sold only 9.1 million carats, representing a 28% drop. The price per carat sold rose 34% to $102.

Gem to Drill for Water in CKGR

Gem Diamonds will drill four water boreholes in the Central Kalahari Game Reserve (CKGR) of Botswana for local residents. Gem Diamonds will provide the technical and financial assistance on the program, which will benefit the local ecosystem as it will provide multiple sources of water at the various CKGR settlements to prevent the concentration of people around a single water source. This borehole-drilling program follows discussions and consultations with CKGR communities and will be conducted in two phases. The first phase will begin with the drilling of a borehole at Mothemelo in early July and this will be followed by boreholes in Metsimanong, Molapo and Gope.

Diadem to Hold a Private Placement

Diadem Resources Ltd. expects to consummate a private placement of up to four million units at 30-cents per unit to raise $1.2 million in equity financing. Diadem expects this financing will close prior to the end of July, 2011, and anticipates that approximately 80% of the gross proceeds will be used to fund exploration on Parry Peninsula and 20 percent will be used as general working capital.

ECONWATCH

For the week ending June 23

Biggest movers this week were Birks & Mayors (+11%), Man Sang (-14%), Saks (+10%), Classic Diamond (-12%), Suashish (-15%), Titan had a 10:1 stock split, Gem Diamonds (-10%). Read the extended stock report for major retailer and miner stocks from India, the U.S., and Europe. June 23 June 16 Chng.
$1 = Euro 0.701 0.707 -0.006
$1 = Rupee 45.03 44.89 0.1
$1 = Israel Shekel 3.44 3.46 -0.02
$1 = Rand 6.83 6.87 -0.04
$1 = Canadian Dollar 0.98 0.98 0.00

Precious Metals
Gold $1,521.80 $1,528.90 -$7.10
Platinum $1,698.00 $1,755.00 -$57.00

Stock Indexes Chng.
BSE 17,727.49 17,985.88 -258.39 -1.4%
Dow Jones 12,050.00 11,961.37 88.63 0.7%
FTSE 5,674.38 5,698.81 -24.43 -0.4%
Hang Seng 21,759.14 21,953.11 -193.97 -0.9%
S&P 500 1,283.50 1,267.64 15.86 1.3%
Yahoo! Jewelry 1,066.67 1,034.00 32.67 3.2%

RAPAPORT NEWS SERVICE | July 8, 2011 www.rapaport.com | news@rapaport.com

Industry Retail EconWatch India Mining General

Rapaport Weekly Market Comment July 8, 2011  

Polished diamond prices surge in 1H 2011 with RapNet Diamond Index for 1ct up 34.3% and RapNet Composite Index up 32.5%. Rapaport estimates rough prices rose about 32% in 1H. Trading slows slightly as Far East buyers avoid large inventory purchases in summer months. Chinese bank ICBC signs MOU with AWDC to finance Antwerp diamond trade. Israel’s 2Q polished exports +22% to $1.9b, rough imports +49% to $1.3b. Japan’s May polished imports +11% to $52.5m. Yair Sahar elected Israel Diamond Exchange president. TRADE ALERT: Dubai releases $157m worth of KP certified Marange rough and South Africa also dealing in Marange goods. Responsible buyers should require written supplier guarantee that they are not selling them Marange diamonds.

RapNet Data: July 7

Diamonds 723,984
Value $5,116,150,195
Carats 797,460
Average Discount -24.53%

Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS

July
4-12
Mon-Tue

Rapaport Melee Auction
Mumbai

email: auctions@rapaport.com

August
15-25
Mon-Thu

Rapaport Melee Auction
New York & Belgium

email: auctions@rapaport.com

QUOTE OF THE WEEK:
Diamonds are a special investment product and have a distinct function other investment products cannot match. The demand for diamonds to celebrate marriages in itself is substantial, not to mention the high demand from the wealthy investor class.

Jiang Jianqing | Chairman of ICBC

Careers@Rapaport

The Rapaport Group is growing rapidly. If you wish to work with the best and brightest, join us. We have great opportunities for trading managers, gemologists, sales assistants, and entry level positions for our offices in New York, Antwerp, Mumbai, Dubai, and Shanghai. To get on the fast track, email your resume to careers@rapaport.com.

INDUSTRY

Polished Prices Rise in June

Certified polished diamond prices rose in June as U.S. buyers fought to keep pace with Far East competitors. While some price resistance is apparent, the outlook for the second half of the year remains strong. The RapNet® Diamond Index (RNDI)™ for 1.00ct. diamonds rose by 7.4% to 109.17, while 0.50ct. increased by 13% and 3.00ct. grew by 8.2%. The RapNet Composite Index increased by 8.4% to 179.96 during the month. Rough prices too continue to rise and Rapaport estimates that average rough prices have increased by about 30% to 35% in the first half of the year. Read the full report, which covers industry trends for the first half of the year.

Dubai Releases Marange Rough

The Kimberley Processs United Arab Emirates (UAE) office released 14 packets of Marange diamonds for export as expected. The diamonds have been held in Dubai since November 2010 shortly after arriving from Zimbabwe. The Rapaport group warns responsible buyers to require written supplier guarantee that they are not selling them Marange diamonds.

ICBC Enters Antwerp

ICBC, a major bank in China, committed to support the diamond markets of Antwerp and will finance trading. An agreement signed with the Antwerp World Diamond Centre (AWDC), enables pre-financing of diamond transactions via ICBC and will enable local players to expand into China. Members of the Antwerp diamond industry will embark on a 10-day road show through China in late October under the auspices of the AWDC, during which they will meet with Chinese jewelers from five different cities.

Rapaport Weekly Broadcast

Watch Now: The Harry Oppenheimer Diamond Museum in Israel is hosting the collection from the Diamond Trading Companys Shining Light Awards 2010-2012. This new exhibition is open through September and titled All about Diamonds. Featured designers hail from South Africa, Namibia and Botswana, and incorporated 25,000 diamonds weighing more than 630 carats into their winning designs.

RETAIL & WHOLESALE

Discounts Drive June Retail Growth

The following same-store sales increases were recorded for June and analysts concluded that heavy discounting drove sales, especially for apparel: Macys 6.7%, Saks 11.9%, JCPenney 2%, Kohls 7.5%, Neiman Marcus 12.5%, Nordstrom 7.9%, Costco 8%, BJs 3.5%, Dillards 6%, Nordstrom 7.9%.

MasterCard Advisors SpendingPulse, a macroeconomic report tracking U.S. retail and services sales, found that retail sales from the luxury and restaurant categories performed well in June, while overall retail sales growth was supported by higher prices at the gasoline pump and at grocery stores. Specialty apparel experienced sales gains, but the electronics and appliances, furniture and furnishings and department stores sectors remained in negative territory. SpendingPulse noted that ecommerce sales rose 15.2% year on year. The SpendingPulse Luxury Index, excluding jewelry, rose 8.2%.

The International Council of Shopping Centers (ICSC) reported that U.S. chain-store sales overall rose 6.9% year on year in June, and that the figure was given a 1.4% boost just from rising fuel costs. Michael P. Niemira, chief economist and director of research for ICSC, said, Helping to drive sales was stronger employment growth, better weather and summer clearance. ICSC anticipates a gain of 4.5% to 5.5% for the month of July.

PPR Buys Majority Stake in Sowind

Luxury group PPR became majority shareholder in Swiss watchmaking firm The Sowind Group with a 50.1% stake. PPRs president Francois-Henri Pinault becomes Sowinds chairman alongside Monica Mailander Macaluso, who becomes vice-chairman. The deal strengthens PPRs position in the high-end watchmaking segment. Sowind is the holding company that includes the brands Girard-Perregaux and JeanRichard and also Sowind Manufacture.

Wealthiest U.S. Shoppers Prefer Amazon

Amazon.com was the favorite online retailer for U.S. households with incomes of $250,000 or more according to Unity Marketing. The clear online retail leader continues to evolve with the times to maintain loyalty and attracted about 45% of all ultra-affluent shoppers, while 14% of wealthy consumers shopped through auction site eBay.com, just more than 10% frequented Groupon.com, and about 8% visited their local Craigslist.com portal. Wealthy fashionistas were also attracted to flash sale websites, such as Shopittome.com, Gilt.com, Hautelook.com, BeyondtheRack.com and Amazons new entry into the category, MyHabit.com, while Buy.com was a favorite website for the wealthy, tech-oriented bargain shoppers.

Gitanjali Introduces New Logo

Bollywood actress Katrina Kaif unveiled the Gitanjali Groups new corporate identity and logo, which was created by JWT. Gitanjali restyled its color palette and created branding identities for Gitanjali Jewels and Gitanjali Lifestyle.

De Beers Jewellers Opens in Kazakhstan

De Beers Diamond Jewellers opened a new store in Kazakhstan, on Bogenbai Batyr, 125 in Almaty. The Almaty store will be operated by Premier Metro Group, whose core business is the retail and distribution of luxury goods including jewelry, watches, cars, high-end mobile phones as well as fine wines.

In other news from the retailer, Jennie Farmer was appointed its communications director. Farmer held a variety of brand marketing and communications roles at Procter & Gamble before joining Forevermark as global head of brand marketing in September 2008.

Lazare Kaplan Settles with Underwriters

Lazare Kaplan entered into settlement agreement with its U.S. and U.K. underwriters in order to resolve long-standing material uncertainties, which have prevented the company from filing its periodic financial reports. The agreements enable Lazare Kaplan to receive $32 million, in addition to $28 million previously paid, by the U.S. underwriters, to settle its claims, dismiss all pending litigation and execute mutual releases. From as far back as August 2009, Lazare Kaplan has been unable to finalize its financial statements or file its Form 10-K for the past two fiscal years due to claim litigation.

Birks & Mayors FY Sales +6%, Narrows Loss

Birks & Mayors reported a revenue increase of 6.2 percent year on year to $270.9 million, while cost of sales increase by only 2.8 percent to $154.9 million during its fiscal year 2011. The retailer was able to narrow its loss to $7.7 million for the period that ended March 26, from $19.5 million one year earlier. A stronger currency in Canada boosted the sales figure by $9.6 million.

GENERAL

NWT Gifts Diamonds to Royal Couple

The government of Northwest Territories (NWT) commemorated the visit of Their Royal Highnesses The Duke and Duchess of Cambridge with diamonds. Prince William was given a set of diamond pave cufflinks modeled on the governments official polar bear logo. His wife Catherine was given a diamond pave brooch in the shape of a polar bear. The diamonds came from Diavik and the jewelry was designed by Harry Winston Inc.

IDI Hong Kong Appoints Gordon-Keret

The Israel Diamond Institute (IDI) appointed Michal Gordon-Keret as managing director for its office in Hong Kong, replacing Orly Yaffe. Gordon-Keret has had a long career in management and administration.

IDE Elects Sahar

Yair Sahar, the chief executive of Sahar Atid, was elected president of the Israel Diamond Exchange (IDE) and will replace Avi Paz who served six years in the position. Sahar said that the diamond exchange is one of the important pillars of Israels economy and that he would ensure the country remains a global center for the diamond trade by strengthening local diamond manufacturing.

Police Seek Suspects in Surat

Police arrested five people in Surat in connection with the alleged theft of an estimated $1.1 million from Nidhi Diamond. The prime suspect, a 27-year-old computer operator, worked for Nidhi Diamond and under police interrogation confessed to planning the heist with seven others. Police recovered 27 packets of diamonds worth $606,109, but they are still searching for 23 packets as well as three suspects tied into the crime.

STATS

Israel

Figures rounded 2Q11 $Mil. %Chng. YTD $Mil. %Chng.
Polished exports $1,890 22% $4,030 34%
Polished imports $1,580 51% $2,810 50%
Net exports $312 -38% $1,210 8%

Rough imports $1,330 49% $2,470 37%
Rough exports $1,100 39% $2,270 40%
Net imports $228 100% $208 10%

Net diamond account $84 -79% $1,000 8%

Japan

Figures rounded May 2011 $Mil. %Chng. YTD $Mil. %Chng.
Polished imports $53 11% $297 8%
Gold jewelry $61 27% $272 16%
Platinum jewelry $40 24% $190 19%

MINING

ALROSA Increases Sales Outlook, Funding

ALROSA increased the sales outlook for rough and polished diamonds to $4.7 billion for 2011. Based upon these projections, the mining company increased its prospecting budget by $128 million, will invest $251 million in construction of underground mines, and added $215 million to all planned investments. The consolidated debt of the group will also be reduced to $2.73 billion, from a 2010 debt load of $3.13 billion. This week, ALROSA held its first online auction for rough diamonds and sold approximately $11 million in goods. The company plans to hold regular online auctions beginning later this year.

Firestone Tender Nets $2M

Firestone Diamonds raised $2 million from a tender of 12,212 carats from its Liqhobong mine in Lesotho for an average price of $123 per carat, and 2,036 carats of stones from the BK11 mine in Botswana for an average $235 per carat. Prices for small diamonds and cape yellows and browns continue to be very strong. An April tender yielded $1.4 million from 7,111 carats.

Diamonds North Raises $750K

Diamonds North Resources closed a non-brokered private placement with gross proceeds of $750,000 for 4,687,500 flow-through common shares. Diamonds North will use the funds to explore the Esker Gold Property and evaluate a new generation of kimberlite targets on its Amaruk diamond property.

Shear Acquires New Claims

Shear Diamonds Ltd. acquired 34 newly staked claims totaling 77,250 acres contiguous with the "Carat Property" surrounding its Jericho diamond mine. This new land package provides Shear Diamonds with blanket mineral rights covering existing and newly interpreted priority indicator dispersion trains. In the companys most recent update from Jericho, a total of five holes were completed into the propertys kimberlite complex in order to help resolve the kimberlite contacts as well as aid in the understanding of geological domains as Shear revises its geological model for the mine.

TanzaniteOne Preps for Name Change

TanzaniteOne Limited proposed changing its name to Richland Resources Ltd. Shareholders will vote on the change August 1 during the companys general meeting in Bermuda. Revenue in 2010 rose 27% year on year to $15.9 million and net profit rose to $700,000 from a loss of $3.1 million. First quarter 2011 production was up 8% to 609,737 carats and sales were ahead 48% to nearly $4 million.

ECONWATCH

For the week ending July 7

Read the extended stock report for major retailer and miner stocks from India, the U.S., and Europe.

July 7 June 30 Chng.
$1 = Euro 0.697 0.690 0.007
$1 = Rupee 44.27 44.60 -0.3
$1 = Israel Shekel 3.39 3.40 -0.01
$1 = Rand 6.67 6.76 -0.09
$1 = Canadian Dollar 0.96 0.97 -0.01

Precious Metals
Gold $1,531.80 $1,499.20 $32.60
Platinum $1,741.00 $1,722.00 $19.00

Stock Indexes Chng.
BSE 19,078.30 18,845.87 232.43 1.2%
Dow Jones 12,719.49 12,414.34 305.15 2.5%
FTSE 6,054.55 5,945.71 108.84 1.8%
Hang Seng 22,530.18 22,398.10 132.08 0.6%
S&P 500 1,353.22 1,320.64 32.58 2.5%
Yahoo! Jewelry 1,177.41 1,146.58 30.83 2.7%