Rapaport Weekly Market Comment January 6, 2012

Polished diamond prices weak in second half but up for the year: 2011 RapNet Diamond Index (RAPI) for 1ct. +19% to 96.96, 0.30ct. -1% to 16.11, 0.50ct. +20% to 34.39, 2ct. +15% to 18.78, and 3ct. +18% to 35.19. Markets quiet in January, but traders hoping holiday momentum will spur positive 1Q. Far East demand improving with steady last minute orders before Chinese New Year. Indian markets cautious ahead of Mumbai show. Israel’s 4Q polished exports -13% to $1.4B, rough imports -22% to $899M, full year 2011 polished exports +23% to $7.2B, rough imports +17% to $4.4B.

RapNet Data: Jan. 5

Diamonds 849,982
Value $5,634,480,097
Carats 877,485
Average Discount -26.52%

www.rapnet.com
Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS

January
16-26
Mon-Thu

Rapaport Melee Auction
New York & Belgium

email: auctions@rapaport.com

January
18-24
Wed-Tue

Rapaport Single Stone Auction
New York & Israel

email: auctions@rapaport.com
QUOTE OF THE WEEK
I understand the companys challenges, but I am more persuaded by the companys opportunities and strengths. As a company with over $40 billion in sales, millions of customers, irreplaceable brands, thousands of stores and committed associates, we have a lot to work with to improve our business and delight our customers. It is also important to have a board of directors and shareholders who are truly long-term oriented and who have made such a significant financial commitment in working to transform this iconic company.

Ron Boire | Newly Appointed Exec. V.P., Sears
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.
RETAIL & WHOLESALE

Dec. Retail Sales

U.S. December retail sales --as reported by those who sell jewelry-- were mixed and most missed expectations. The following list is arranged beginning with highest sales total first. Only Bon-Ton and Saks observed that fine jewelry performed well during the Christmas 2011 season. Walmart, which is the largest retailer, suspended monthly reports during the Great Recession and thus offered no insight to sales performance. This past week, Sears stated that Christmas-season same-store sales fell by 5.2% and didnt provide totals. Tiffany, Signet and Zale traditionally announce their December sales by mid- or late January.

Target comps +1.6% | total +2.6% to $10.1B
Costco comps +7% | total +9% to $10B
Macys comps +6.2% | total +6.6% to $4.93B
Kohls comps -0.1% | total +1.7% to $3.25B
JCPenney comps +0.3% | total -2.3% to $2.89B
Nordstrom comps +8.7% | total +12.7% to $1.57B
Dillards comps +4% | total +3% to $1.1B
Bon-Ton comps -0.7% | total -1.1% to $505M
Saks comps +5.8% | total +4.7% to $453M
Cato Corp. comps -1% | total +2% to $108M

Online Christmas Sales +15%

U.S. online retail sales for Christmas season 2011 finished as expected and rose 15% year on year at $37.2 billion, according to comScore. There were 10 shopping days between November 1 and December 31 that surpassed $1 billion in spending, led by Cyber Monday with $1.25 billion in online sales. Gian Fulgoni, comScores chairman, said that until retailers report their financial year-end results, it remains to be seen whether aggressive pricing and free shipping offers came at the cost of lower margins.

The top 10 online spending days:

Cyber Monday -- $1.25B
December 5 -- $1.18B
December 12 -- $1.13B
November 29 -- $1.12B
December 6 -- $1.11B
December 16 -- $1.10B
December 13 -- $1.10B
November 30 -- $1B
December 8 -- $1B
December 15 -- $1B
Macys Preps Stores for Closure

Macys will prune underperforming stores from its list of locations in addition to opening new Macys and Bloomingdales. Macys estimated $25 million to $30 million in costs will be booked in the fourth quarter of 2011 related to store closures. Clearance sales will begin on January 8 at five Macys locations and four Bloomingdales stores. Macys will open in Salt Lake City, Utah and Greendale, Wisconsin within the next four months and plans three more stores nationwide in 2013, while Bloomingdales expects to open in the Glendale Galleria in Glendale, California next year and build a new location in Stanford Shopping Center in Palo Alto, California in 2014.
Stuller Partners with Bfly

Stuller partnered with Bfly, the creators of the patented Butterfly Gem® cut in Canada, to become the exclusive distributor of the Bfly line to independent retailers in the U.S. The Butterfly Gem cut’s most unique feature is its ability to resemble a butterfly in flight when tilted back and forth. Other features of the cut include, an enhanced cutting technique to improve light return and solid angles and grooves for easy setting. The collection is offered in sterling silver or 10-karat, 14-karat and 18-karat yellow or white gold with any birthstone, and is available as earrings, rings, bracelets, pendants, watches and charms.
NRFs BIG Show Begins Jan. 15

The "BIG Show," organized annually by the National Retail Federation (NRF) in New York, expects tens of thousands of attendees, hundreds of speakers, and a keynote address from President Bill Clinton. The exposition runs January 15 through 18, at the Jacob Javits Center in Manhattan. Dell is sponsoring an "Independents’ Day," on January 16, which is a full-day of special programs specifically for independent retailers.
Indias EBITDA Margins to Fall in 3Q

CRISIL Research warned that the average Indian corporate EBITDA margins are expected to drop to around 17.7% for the October to December quarter from a 19.7% rate one year ago. Companies with substantial debt will be further impacted by rising interest rates and mark-to-market losses on foreign debt and derivatives. CRISIL also forecasts that corporate revenue growth will drop to a 14% to 15% rate during Indias third fiscal quarter, down from a rate of 22.5% in 2010, due to lower rates of growth following a slowdown in consumption and investments.
India Seeks Mandatory Hallmarking

India’s cabinet approved an amendment to making gold hallmarking mandatory in order to protect consumers from unscrupulous jewelers. The amendment still has to be ratified by Parliament before it becomes a law. Currently, the Bureau of Indian Standards (BIS), under the Consumer Affairs Ministry, is the sole the administrative authority of hallmarking.
Thieves Wipe Out Jewelers Inventory

Beverly Hills Jewelers Ltd., in Virginia, was robbed of its entire inventory, valued at close to $2 million. Store owner Gary Baker told local news that the thieves circumvented security devices and left behind weapons he had in the store as well as less valuable merchandise. Baker said he was not insured. The store was the scene of an armed robbery in 1994, in which Baker and his brother killed the invaders.
GENERAL

Citras Founders Pass Away

Citra Trading Corporation announced the passing of its founder, Hirsh Chitrik, on December 28 in New York. Chitrik, 84, (pictured) established Citra in 1961 first as a pearl importer, but later the company added gold chains and then diamonds to its offerings. Hershel, as he was known, had a reputation of being a jeweler from the old school. He was survived by his wife, Rivka, his children, grandchildren and great-grandchildren. Chitriks brother, Aaron, passed away on October 27 at 73. Aaron was involved with Citras founding as well and started the gold department, before launching his own firm, Aaron & Son.
Bedos Joins Birks & Mayors

Jean-Christophe Bédos was appointed president and chief executive of Birks & Mayors and will succeed Thomas A. Andruskevich, who plans to step down from the role in the second quarter of 2012. Bédos will be based at the company’s headquarters in Montreal, Canada. Previously, Bédos served at Cartier, Boucheron International and Richemont.
Gaydamak Files Complaint

Arcadi Gaydamak filed a complaint with Israeli police against Lev Leviev regarding their former diamond business partnership, Globes reported. Gaydamak contended that Leviev has not paid him commissions and dividends on diamonds traded in Angola and the Democratic Republic of the Congo since 2004, with a value of $2 billion. Gaydamak previously filed a lawsuit against Leviev in London for failing to uphold their partnership.
Boire Joins Sears

Sears Holdings appointed Ron Boire as its executive vice president, chief merchandising officer and company president for the Sears and Kmart store formats. Boire will lead merchandising for both the Sears and Kmart brands. Boire was previously the president of Brookstone Inc.
Ndlovu to Head ZMDC

Jerry Ndlovu, the current director of Zimbabwe’s Airports and Business Development at the Civil Aviation Authority, has been appointed general manager of Zimbabwe Minerals and Development Corporation (ZMDC), The Standard reported. Ndlovu will begin his new role later in January filling a post left vacant when ZMDC dismissed its former general manager, Dominic Mubayiwa, following allegations of fraud. Ndlovu is a board member of the Minerals Marketing Corporation of Zimbabwe (MMCZ) as well as a member of the Royal Aeronautical Society and the Zimbabwe Institute of Engineers. Both MMCZ and ZMDC are under U.S. sanctions.
MSJA Adds New Directors

The Manufacturing Jewelers & Suppliers of America (MJSA) re-elected its sitting officers on the board of directors to a second term, while installing two new directors, Lee Krombholz, owner of Cincinnati-based, Krombholz Jewelers and Just Like You Designs and Bimal Das, director of ScotiaMocatta. In addition, David Pillow, president of Innovative Design Group in Richland Hills, Texas returned to the board as a director.
DAC Visits India, Israel

A delegation consisting of high level officials from Diamond Administration of China (DAC) visited Israel and India to better understand each nation’s diamond industry and seek cooperation in diamond trading. In India, the DAC met with representatives of the Gem & Jewellery Export Promotion Council (GJEPC) and visited Bharat Diamond Bourse in Mumbai. GJEPC and DAC also agreed to promote diamond consumption in India and China by way of educating consumers, creating innovative programs with end-to-end marketing. In Israel, DAC officials met with representatives of Israel Diamond Manufacturers Association (IsDMA), Israel Diamond Exchange (IDE), and the Israel Diamond Institute (IDI). The DAC expressed its desire to worth with Israels organization to develop China’s Shanghai Diamond Exchange Center.
GIA 4Cs App in Simplified Chinese
The Gemological Institute of America (GIA) offers its 4Cs iPad app for consumers and retailers in Simplified Chinese. The free app is designed to educate and engage consumers on the 4Cs with video and interactive tools. App users can explore how diamond color changes across the GIA D-to-Z color scale, typical inclusions and blemishes at various points in the GIA clarity scale, a diamond’s anatomy, how various parameters influence a diamond’s cut grade, how a diamond’s size changes by carat weight, and a GIA Grading Report anatomy.
Sarin Technologies plans a diamond assay service as an online subscription product that enables users to verify a polished diamonds authenticity, geometric parameters and cut grade. Subscribers will first need to purchase the Sarin DiaScanTM S+, and pay a monthly subscription fee for the assay service based upon scope of use, with additional one-time charges for specific premium services such as printed reports and re-cut plans for optimal valuations.
Diamond Exhibit Celebrates Queen Elizabeths Jubilee

Buckingham Palace will host a diamond exhibition in August and September, in honor of Queen Elizabeths Diamond Jubilee this year, titled Diamonds: A Jubilee Celebration. The event will show various ways in which diamonds have been used and worn by British monarchs over the past two centuries. The exhibition also includes an unprecedented number of the Queens personal jewels that have been inherited or acquired during her 60-year reign, such as the diamond tiara she frequently wears.
STATS
Israel

4Q $Mil. %Chng. YTD $Mil. %Chng.
Polished exports $1,370 -13% $7,200 23%
Polished imports $1,510 7% $5,680 35%
Net exports ($140) $1,520 -6%

Rough imports $899 -44% $4,410 17%
Rough exports $564 -33% $3,520 15%
Net imports $362 3% $898 29%

Net diamond account ($502) $622 -32%
ECONWATCH
Winners & Losers in 2011
Watch how industry shares performed year on year. Diamond industry and related stocks had a tough year with only 13 of 55 publically traded companies on the Rapaport Stock Tracker showing gains. The best stock performance in 2011 came from DGSE (up 75%) for U.S. retail, Gitanjali Gems (up 43%) for Indian retail, and Gemfields (up 52%) was the only mining company to end the year higher. Mining stocks took a particularly hard beating.

Taká maličkosť ako vie potešiť váha suroviny necelý gram.

Firma Petra Diamonds predala 4,8 karátový modrý diamant za 1.450.000 amerických dolárov cena $ 300,000 na karát pri svojom poslednom konaní, ktoré sa uskutočnilo v decembri vykázala. Diamant bol vyťažený spoločnostov bani Cullinan v Južnej Afrike a dosiahol najvyššiu cenu za karát surového kameňa predávaného Petra Diamonds ku dnešnému dňu.
Cullinan je preslávený ako spoľahlivé nálezisko pre modré diamanty, a predaj ukázal ako sú vzácne a žiaduce na medzinárodnom trhu.
Petra začala obchodovanie na hlavnom trhu londýnskej burzy (AIM).
Adonis Pouroulis, predseda Petra Diamonds vysvetlil, že spoločnost má hlavný cieľ pokračovať v raste na najbližšie roky, pretože neustále zvyšuje svoju produkciu až na viac ako 5 miliónov karátov fiškálne do roku 2019.

RAPAPORT NEWS SERVICE | January 13, 2012 www.rapaport.com | news@rapaport.com

Industry Retail General EconWatch India Mining
Rapaport Weekly Market Comment January 13, 2012
Diamond markets stable but trading remains cautious. Rough selling at slightly below DTC box prices in dealer market as cutters expect ALROSA & DTC to reduce high prices at Jan. sights. Stable Far East demand ahead of Chinese New Year. Jewelry retailers report steady Christmas sales with tight profits and increased revenue due to higher prices. Nov.-Dec. Tiffany & Co sales +7% to $952M, Zale Corp +6% to $564M, Birks & Mayors +5% to $80M, Signet +8%, Theo Fennell -11%. Botswana Nov. diamond exports -55% to $185M. Israeli police arrest 16 people in diamond exchange on money laundering charges.
RapNet Data: Jan. 12

Diamonds 864,505
Value $5,704,404,837
Carats 900,671
RAPAPORT ANNOUNCEMENTS

January
16-26
Mon-Thu

Rapaport Melee Auction
New York & Belgium

email: auctions@rapaport.com

January
18-24
Wed-Tue

Rapaport Single Stone Auction
New York & Israel

email: auctions@rapaport.com
QUOTE OF THE WEEK
I believe the drop in U.S. holiday sales for Tiffany signals a change in shoppers jewelry preferences. Additionally, the little blue box may be losing some of its luster, as affluent consumers shy away from the more conspicuous symbols of affluence. Luxury consumers dont want to be seen as part of the much maligned 1%, and this manifests as a preference for luxury goods that are individual, but not overtly status oriented.

Pam Danziger | Unity Marketing
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
Certified Polished Diamond Prices +19%

Rapaport Diamond Price Statistics Annual Report 2011 shows certified polished diamond price increase were spurred by strong buying in the first half of the year. However, global economic uncertainties and tight liquidity in the cutting centers caused prices to soften in the latter half. Price increases between January and June 2011 were influenced by an aggressive overheated rough market driven by over-easy credit in the Indian market, speculative demand and significant restocking by retailers in the Far East and subsequently in the U.S. The second half of the year was influenced by increasing uncertainty caused by the U.S. and European economic crises, volatile financial, currency and commodity markets, as well as continued political instability in the Mideast. Tight liquidity, particularly in India, impacted trading from July as manufacturers were unable to obtain replacement costs on the high rough prices they had paid earlier in the year.

The RapNet Diamond Index (RAPI) for 1.00 ct. polished diamonds rose 19% to 96.96. The 0.30 ct. category fell 1% to 16.11, and 0.50 ct. increased 20% to 34.39. The RAPI for 2.00 ct. diamonds grew 15% to 18.78 and 3.00 ct. rose 18% to 35.1
Jewelers Weigh In On Christmas Sales Trends

How were Christmas retail sales in the U.S. -- really? Watch Now! Three independent jewelers explain how the busiest season of the year compared with their expectations and what surprises they found in diamond gift demand. Robin McCormick Jewelry Design Studio in Katonah, NY, Daniele Trissi of Scarsdale, NY, and Manfredi Jewels in Greenwich, CT, weigh in. Indias economy is having some growing pains especially as the dollar strengthens against the rupee. Sanjay Kothari, the vice chairman of the Gem & Jewellery Export promotion Council (GJEPC), discusses the outlook on the sidelines of the Signature IIJS show in Mumbai.
RETAIL & WHOLESALE

Dept. Store Sales -1%, Jewelry Sales +1%

U.S. department store sales fell 1.3% year on year to $26.42 billion in December, according to advanced estimates released by the government. The government also released its estimate for jewelry store sales during the month of November 2011. Data reported a 1% year on year increase in sales to $2.495 billion, which represented a remarkable slowdown from previous months.

Jewelry Chain-Store Christmas Sales
Birks & Mayors comps +3%, total +5% to $80M
Zale comps +4%, total +6% to $564M
Tiffany & Co. comps +4%, total +7% to $952M
Signet comps +7.8%
Theo Fennell comps -11%

Tara Jewels Files for $42M IPO 

Tara Jewels Ltd. plans an initial public offering (IPO) of equity shares with Indias capital market regulator to raise up to $42.4 million (INR 2.2 billion). Tara said it would raise $29 million through a new round of equity shares, while major shareholder Fabrikant H.K. Trading Ltd. is selling a portion of its stake in the company valued at INR 700 million. In addition, Tara said it is considering raising INR 500 million through a private placement of up to 1.8 million equity shares before the IPO. The Mumbai-based jewelry maker’s first attempt to raise money in 2010 failed due to weak market conditions.
Fossil to Acquire Skagen Designs

Fossil Inc., designer and manufacturer of clothing, jewelry, watches, handbags, and other accessories, agreed to purchase Reno, Nevada-based Skagen Designs Ltd., which is maker of watches, jewelry, sunglasses, and clocks. Fossil estimated the value of the deal at about $236.9 million in cash and stock and will also acquire Skagen’s international affiliates, which operate regional offices in Denmark, Hong Kong, Germany, the U.K. and Canada.
DGSE Opens Two Southern Bullion Stores

DGSE Companies held two grand openings for new stores this month and plans to open a third new location in February. DGSE celebrated its 23rd Southern Bullion Coin & Jewelry store, which opened in Daphne, Alabama on January 3, marking the second location in the greater Mobile metropolitan area. On January 6, Southern Bullion opened in Anderson, South Carolina. In early February, Southern Bullion plans to open a 25th location, this one in Destin, Florida.
Faberge Plans Easter Egg Hunt for London

Faberge is planning a massive Easter egg hunt across Central London, which will feature 200 giant and uniquely crafted, strategically placed eggs, scattered throughout the capital, and take place over the 40 days and night of Lent beginning February 12. The two-and-a-half foot fiberglass eggs will be adorned and decorated by leading artists, architects, jewelers and designers. Following the hunt, the eggs will be available for purchase at three special auctions, with proceeds from the sales going to Action for Children and Elephant Family. The jewel in the crown of the auction will be an exclusively designed, one of a kind jeweled egg pendant by headline sponsor Fabergé, in collaboration with Nicky Haslam
Stuller Announces Dates for Bridge Conference
Stuller announced it was renewing its "Bridge" conference series for 2012. The conference allows a select group of retailer’s to learn about the industry’s technologies, customization tools and media development. The conference, which takes place in Stutter’s headquarters in Lafayette, Louisiana, is scheduled nine times this year: April 1 to 3 and 16 to 18, May 21 to 23, June 18 to 20, July 9 to 11 and 22 to 24, August 20 to 22, September 24 to 26 and October 15 to 17.
Yurmans Name Glen Senk as Chief Exec.

David and Sybil Yurman appointed Glen T. Senk as David Yurman Inc.s chief executive effective February 27. Senk, who most recently served as chief executive for Urban Outfitters, has a record of success in developing and expanding powerful multi-channel, multi-national retail and wholesale brands.

GENERAL

Steady Sales at Signature IIJS

Visitor traffic remained light for most of the Signature IIJS show in Mumbai, but exhibitors appeared satisfied that the right type of buyers were in attendance. Most exhibitors reported that they were receiving a steady stream of inquiries but that buyers were asking for lower prices. They also noted that activity in the jewelry section was better than for loose diamonds. Overall, Indian polished manufacturers and dealers expect sales to improve in the first quarter following the local wedding season and as trading with international centers returns to normal following the New Year vacation period.

Surat Diamond Assoc. Honors Virani

The Surat Diamond Association, alongside the Gujarat Gaurav Samman Samiti, celebrated the appointment of KARP Impexs chairman, Kishrobhai Virani, as the Honorable Consul of the Kingdom of Lesotho. Virani entered the diamond business in 1980 and he received the National Export Award for Outstanding Performance among small-scale industries for three consecutive years from 1993 to 1996.

Israel Police Make Arrests in Diamond Exchange

Police arrested 16 in the Israel Diamond Exchange Sunday morning in connection with illegal financial activities. Authorities confiscated numerous computers and documents. Suspects were accused of laundering money in large sums without reporting the transactions to the relevant authorities in Israel or abroad. They were also reportedly making unlawful loans. The suspects allegedly gained tens of millions of shekels in profits from these activities.

Swatch 2011 Sales +22%

Swatch Group reported that 2011 sales rose 22% year on year to $7.6 billion. The company experienced significant growth, not only in Greater China but also in all other regions and all price segments. The watches and jewelry segment recorded a sales increase of 26% to $6.7 billion. The complete financial report, including profits, will be available in February.

Veichannal Launches Gemfling.com

Verichannel, a trade-restricted search engine for the jewelry industry, launched a search engine Gemfling.com to help consumers connect with retailers and brands online. The site was launched January 11 and allows users locate stores and compare products and prices.

Runci to Retire From JA

Matthew A. Runci, the long-time president of Jewelers of America (JA), will retire from the post on December 31, 2012. An executive search committee has been appointed that will commence shortly. JA initiated formal succession planning in 2009, engaging independent advisors to assist the board in defining responsibilities and competencies for the chief executive and devising interim plans to help the organization prepare for a smooth transition upon Runci’s retirement.

MINING

Mountain Province Spin-Off Kennady

Mountain Province Diamonds Inc. will spin-off its Kennady North diamond project into a newly incorporated company, Kennady Diamonds Inc. Upon completion of the deal, Kennady Diamonds will be listed on the TSX Venture Exchange with the distribution of shares to Mountain Province shareholders on a pro rata basis. Mountain Province will also provide Kennady Diamonds with sufficient working capital to fund the planned exploration activities for 2012.

Namakwa 1Q12 Update

Namakwa Diamonds Limited issued an interim, first-quarter management statement for the three months that ended on November 30. Rough and polished diamond trading inventory sold at cost for $6.36 million. The mining company has drawn $25 million from a $40 million loan with Jarvirne and it has reduced corporate costs from $15.9 million in fiscal-year 2011 to $9 million for the current period. Namakwa expects to tender initial production from its Lesotho operations this month and plans nine more tenders this year.

Crackdown Curbs Smuggling to Mozambique

Diamonds smugglers, from Mozambique towns that border Zimbabwe’s Marange fields, who have made their living in the illicit trade of Marange diamonds are finding their business drying up as Zimbabwes President Robert Mugabe takes control of his country’s diamond mines. Since Kimberley Process approval was given to Marange diamonds in November, Zimbabwe security forces and companies loyal to Mugabe have tightened their grip on the Marange fields, devastating the local economies of border towns that have been dependent upon illegal trading.

ECONWATCH

Diamond Industry Stock Report

Investors didnt take kindly to jewelry retail sales reports this week and expected stronger Christmas sales and at least a positive outlook for consumer spending moving forward. Blue Nile -13%, DGSE -13%, Signet -4%, Tiffany -10%, Zale -16%, Damiani -8%, Theo Fennell -21%. Indian shares were fine though. Read the extended industry stock report for this past week.

Jan. 12 Jan. 5 Chng.
$1 = Euro 0.779 0.780 -0.001
$1 = Rupee 51.58 52.99 -1.4
$1 = Israel Shekel 3.83 3.85 -0.02
$1 = Rand 8.05 8.17 -0.12
$1 = Canadian Dollar 1.02 1.02 0.00

Precious Metals
Gold $1,650.00 $1,622.10 $27.90
Platinum $1,497.00 $1,411.00 $86.00

Stock Indexes Chng.
BSE 16,037.51 15,857.08 180.43 1.1%
Dow Jones 12,471.02 12,415.70 55.32 0.4%
FTSE 5,662.42 5,624.26 38.16 0.7%
Hang Seng 19,095.38 18,183.41 911.97 5.0%
S&P 500 1,295.50 1,281.06 14.44 1.1%
Yahoo! Jewelry 1,053.59 1,037.14 16.45 1.6%

RAPAPORT NEWS SERVICE | January 27, 2012 www.rapaport.com | news@rapaport.com

Industry Retail Stats EconWatch India Mining

Rapaport Weekly Market Comment January 27, 2012

TRADE ALERT: INDIAN CUSTOMS AUTHORITIES RESTRICTING POLISHED DIAMOND IMPORTS. DO NOT SHIP POLISHED DIAMONDS TO INDIA WITHOUT CLARIFICATION. De Beers reduces prices and changes assortments at estimated $650M sight as 4Q production -24% to 6.5M Cts. and total 2011 production -5% to 31.3M Cts. Indian markets confused and concerned with expectations of lower polished prices. Rough trading weak and polished markets cautious. Chinese New Year begins with high expectations for retail jewelry sales, while wholesale trade closes. Letšeng 4Q sales +2% to $83M but average prices -23% to $2,543/ct. Surat’s SRDSIL auctions 46,000 Cts. of Zimbabwe and Russian rough for $17M.

RapNet Data: Jan. 26

Diamonds 870,492
Value $5,704,170,481
Carats 899,681
Average Discount -26.61%

www.rapnet.com
QUOTE OF THE WEEK
The department store is the No.1 opportunity in retail today. We are going to rethink every aspect of our business, boldly pursue change, and create long-term shareholder value, as we become Americas favorite store. Every initiative we pursue will be guided by our core value to treat customers as we would like to be treated - fair and square.

Ron Johnson | JCPenneys CEO
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 Jan. Sight Estimate $650M

The Diamond Trading Company (DTC) opened its first sight of 2012 with an estimated value of $650 million, as the De Beers distribution unit adjusted prices and changed the assortments presented. Sightholders who spoke with Rapaport News said that while prices appeared lower on paper, the reductions were not so clear once the boxes had been assessed. Manufacturing margins remain very tight, thus some boxes, such as the 4 to 8 grainers, were giving a lower value than before, said one sightholder.

While average prices came down by an estimated 2% to 3%, some boxes fell by double-digit margins, particularly on the better quality stones. Goods that were more heavily impacted were 8-grainer to 2.5-carat boxes, and goods above 5 carats, with estimated reductions ranging from 10% to 25 in certain stones. London sightholders now expect DTC goods to sell at around list prices on the dealer market. They were selling at slight discounts in the run-up to the sight.

DTC sight week also provided company executives the opportunity to celebrate a new year. Read speeches to sightholders delivered by Varda Shine, Cynthia Carroll and Philippe Mellier.
U.S. Appoints Milovanovic to Chair KP

Gillian Milovanovic will serve as U.S. chair for the Kimberley Process (KP) in 2012. She will be the first woman to hold the post following her appointment this week by U.S. State Department Assistant Secretary for Economic and Business Affairs, Jose W. Fernandez. The KPs certification-of-origin system is followed by 76 diamond-producing and processing countries to eliminate the trade in conflict diamonds. Milovanovic previously served as ambassador to Mali and to Macedonia and has held senior positions at U.S. Embassies in South Africa, Botswana, and Belgium. She speaks fluent French and has extensive economic and business experience.
RETAIL & WHOLESALE

Jewelry Designers Share Passion, Inspiration

JA New York showcased independent jewelry designers who have extraordinary passion for their craft. One-of-a-kind collections that are priced right proved popular at the show with retail buyers. Video coverage includes new diamond jewelry designs from Erica Molinari; Ray Griffiths Fine Jewelry; Sarah Richey of Ethereal, and a special interview with jewelry designer Grace Freeman and her debut piece the "Liberation Necklace." WATCH NOW.
Things are Changing at JCPenney

J.C. Penneys chief executive, Ron Johnson, announced a new pricing and promotion scheme for the retailer that begins February 1 and includes permanent price mark-downs on all merchandise of at least 40%. The new strategy also includes simpler pricing, new tags on merchandise, and a new JCPenney logo and advertising campaign, which has already begun online with "Things are Changing 2.1.12."
BIS Licenses for Hallmarking

The Bureau of Indian Standards (BIS) has issued 9,005 licenses through December 31, for the hallmarking of gold jewelry. BIS is encouraging a hallmarking scheme for gold jewelry to ensure quality products for the consumers. BIS recognizes more than 170 hallmarking centers in the country. Earlier this month, India approved mandatory gold jewelry hallmarking.
Blue Diamonds Creates Subsidiary

Sri Lanka-based Blue Diamonds Jewellery informed shareholders that it will create a subsidiary in Singapore in order to establish a retail presence there and to create an e-commerce channel. The subsidiary would be a joint venture with ECL Soft Ltd., which is owned by E-Channelling Plc.
Luk Fook Raises $176M

Luk Fook Holdings raised approximately $176 million in Hong Kong from the sale of 46.6 million shares, for HKD 29.25 each, on January 19. As a result of the transaction, the majority shareholder, Luk Fook, reduced its stake in the larger company to 39.75% and public shareholders stake was reduced to 46.95% from slightly more than 50% prior to the placement. Proceeds were expected to fund inventory, retail expansion and other general corporate purposes.
Tiffany Eyes India Partnership

Tiffany & Co. is reportedly working on a joint venture with former actress Reena Wadhwa to expand in India. Tiffany has been pursuing potential partners in emerging markets and will announce the details of a business structure in India once they have been finalized. Tiffany recently formed a joint venture company with Dubai-based jeweler Damas International to develop its business in the United Arab Emirates.
Thangamayil Profits Jump

Thangamayil Jewellery Ltd. reported that its fiscal third-quarter net profit more than doubled to $3.4 million. Growth was driven by higher sales, which rose 80% year on year to $61.8 million, and total expenditures grew 76% to $55 million.
GENERAL
Spivak Joins Martin Flyer

David Spivak joined Martin Flyer as a regional sales manager following a long career with Charles Wolf and Co. He will bring three new lines as well as the core Martin Flyer brand products to the Centurion Show in Scottsdale next week.
Van der Kwast Takes New Role at ABN Amro

Victor van der Kwast, the chief executive of ABN Amro’s International Diamond and Jewelry Group (ID&JG), is stepping down from his position but will continue at the bank as chief executive of ABN Amro Private Bank International for Belgium and Luxembourg. He will be replaced as the head of ID&JG by Erik Jens, who currently serves as chief executive of ABN Amro’s private banking division for Switzerland and the Swiss region.
Brewer to Head Sams Club

Walmart promoted Rosalind G. Brewer to president of Sams Club effective February 1. Brewer, 49, was most recently president of the Walmart U.S. eastern business unit, where she was responsible for more than $100 billion in annual revenue, representing almost 1,600 stores and more than 500,000 associates. Brewer was also the first chairperson of the Walmart presidents council of Global Women Leaders. Brewer will replace Brian Cornell who is departing the company for family reasons.

Levene Commits Suicide

Andrew Robert Levene, 41, also known as Robert Thomas, was arrested in Spain in connection with the murder of Yekutiel Zeevi, owner of Y.Z. Jewelry in Westport, Connecticut. However, The Hartford Courant reported Thursday that Levene committed suicide in his cell while awaiting extradition to the U.S. Levene faced one count of interference with commerce through robbery, one count of federal murder, one count of attempted murder, and one count of causing death through the use of a firearm. Following the murder, Levene reportedly traveled to Philadelphia and three days later flew to Amsterdam, before ending up in Spain where he was arrested by Spanish National Police.

MINING

De Beers Production Falls

De Beers diamond production slumped in the fourth quarter of 2011 as the company carried out maintenance at key mines while market demand for diamonds remained soft. Output fell 24% year on year to 6.489 million carats during the three months that ended on December 31. For the full year, production decreased by 5% to 31.328 million carats.

Gem Diamonds Sales +2%

Prices of diamonds recovered at the high-value Letšeng mine in Lesotho fell 23% year on year in the fourth quarter of 2011 as economic uncertainty took its toll on the market. Gem Diamonds, which owns 70% of the mine reported that the average price achieved at Letšeng fell to $2,543 per carat, from $3,291 per carat a year earlier. The company noted that prices achieved for Letšeng type higher quality polished diamonds declined by about 5% to 10% from July through the fourth quarter.

Gem Diamonds listed sales from Letšeng at $82.3 million, up 2%, as the volume of carats sold rose 32% to 32,353 carats. Production grew 35% to 29,783 carats. Full-year sales rose 57% to $299 million as the volume of sales grew 22% to 107,700 carats. Production rose 24% to 112,367 carats. Sales from Ellendale production rose 14% to $88.7 million for the full year.

Jarvirne Increases Stake in Namakwa

Jarvirne Limited nearly tripled its stake in Namakwa Diamonds to 32.39%. Jarvirne Limited is indirectly owned by Eduard Prutnik and holds 98,65,158 shares, up from 31,873,491. Namakwa signed an agreement with Jarvirne for a two-year loan of $40 million in the third quarter of 2011 and has since drawn $25 million.

Steinmetz to Raise Funds for Koidu

The Beny Steinmetz Group is planning to float its Sierra Leone diamond mine on the Hong Kong Stock Exchange, the Financial Times reported. The group’s Octea subsidiary, which owns the Koidu mine, is looking to raise between $400 million and $600 million through the initial public offering, which will give the mine a value of $2 billion to $3 billion.
ECONWATCH
Diamond Industry Stock Report

Stocks were largely mixed this week. Some noteworthy movement included: Birks & Mayors (+13%), JCPenney (+15%), LJ Intl. (+12%), Goenka Diamond (+20%), Moutain Province (-10%), Peregrine (-11%), Stornoway (-25%), Stellar Diamonds (+34%). Read the extended industry stock report for this past week.

Jan. 26 Jan. 19 Chng.
$1 = Euro 0.760 0.770 -0.010
$1 = Rupee 50.11 50.21 -0.1
$1 = Israel Shekel 3.76 3.79 -0.03
$1 = Rand 7.79 7.92 -0.13
$1 = Canadian Dollar 1.00 1.00 0.00

Precious Metals
Gold $1,721.60 $1,657.50 $64.10
Platinum $1,609.00 $1,519.00 $90.00

Stock Indexes Chng.
BSE 17,077.18 16,643.74 433.44 2.6%
Dow Jones 12,735.63 12,625.19 110.44 0.9%
FTSE 5,793.10 5,741.15 51.95 0.9%
Hang Seng 20,439.14 19,942.95 496.19 2.5%
S&P 500 1,318.45 1,314.50 3.95 0.3%
Yahoo! Jewelry 1,099.45 1,070.11 29.34 2.7%

RAPAPORT NEWS SERVICE | February 3, 2012

Industry Retail Stats EconWatch India Mining

Rapaport Weekly Market Comment February 3, 2012  

Far East diamond demand restrained but strong gold demand spurs jewelry sales during Chinese New Year. Belgian polished suppliers hold prices firm despite weak trade at Antwerp Diamond Fair. Rough premiums improve but confusion remains over DTC box values. Prices stable at Petra Diamonds tender as company reports 1H revenue +13% to $101M, production +64% to 953,553 Cts. LVMH 2011 sales +16% to $31B, profit +22% to $7B. Titan Industries 3Q sales +25% to $493M, profit +19% to $33M. Japan’s Dec. polished diamond imports +28% to $67M, 2011 imports +17% to $814M.

RapNet Data: Feb. 2

Diamonds 876,821
Value $5,765,455,921
Carats 908,635
Average Discount -26.49%

www.rapnet.com

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RAPAPORT ANNOUNCEMENTS

February
8-19
Wed-Sun

Rapaport Melee Auction
New York & Hong Kong

email: auctions@rapaport.com

February
22-28
Wed-Tue

Rapaport Single Stone Auction
New York & Israel

email: auctions@rapaport.com

QUOTE OF THE WEEK
Whether people are planning to get engaged, or just celebrate the holiday with flowers and a night out, consumers are telling us they can open their wallets a little wider for Valentines day. Weve seen a consistent trend of consumers saying they will spend more, from holiday shopping to travel plans and spending plans for February 14 are no exception.

Sonali Chakravorti | American Express

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

Chinese New Year Jewelry Sales +16%

Chinese consumers celebrated the Year of the Dragon and drove retail sales higher by 16.2% year on year to $74.6 billion during the traditional New Year Golden Week. The country’s Ministry of Commerce reported jewelry sales grew 16.4% during the week, which began January 23, with gold bars, gold ingots and other dragon-themed jewelry ranking among the favorite items.

Jewelry Spending Surveys Point Higher

Watch Full Coverage. Surveys from American Express, Sears, and the National Retail Federation (NRF) point to strong jewelry sales leading up to Valentines Day, February 14. Of those who celebrate the holiday, consumers plan to spend $126.03, up 8.5% from 2011, according to the NRF, and 19% of consumers plan to buy jewelry. American Express determined that 15% of consumers intend to buy jewelry for Valentines Day and also shared what consumers felt to be resonable price ranges for engagement rings. Sears, which boosted its jewelry offerings for February 14, found that 40% of those in a relationship intend to get engaged on Valentines Day.

RETAIL & WHOLESALE

LVMH Revenue +16%, Profit +22%

Luxury group LVMH’s revenue rose 16% year on year to $31.2 billion during 2011 and profit jumped 22% to $7 billion. Specifically for the watches and jewelry segment, revenue nearly doubled to $2.6 billion in large part due to the integration of Bulgari. LVMH reported that organic revenue, which reflects comparable-store sales and exchange rates for the watches and jewelry segment rose 23%. LVMH watch and jewelry brands continued sustained growth across all geographies.

Titans 3Q Sales +25%, Profit +19%

Titan Industries Ltd. reported that net sales rose 25% year on year to $493.3 million during its third fiscal-quarter that ended on December 31, 2011. Net profits grew 19% to $33.1 million Titans jewelry sales increased by 25% to $401.6 million while sales at its watch division rose 17% to $77.5 million.

Shantivijay Jewels 3Q Sales -20%

Shantivijay Jewels Ltd. reported that group net sales fell 20% year on year to $3.2 million during its third fiscal-quarter that ended on December 31, 2011. Net profit slumped 48% to $63,438 as interest expense rose 201% to $48,103 and other income declined 22% to $29,49. Total expenditures fell 20% to $3.1 million during the quarter.

Renaissance Jewellery Sales -2% in 3Q

Renaissance Jewellery Ltd. reported that net sales fell 2% year on year to $69.8 million during the third fiscal-quarter that ended on December 31, 2011 as jewelry and diamond revenues declined. However, net profits increased by 40% to $4.4 million during the quarter largely due to lower expenses. The company’s jewelry segment sales declined 12% to $62.7 million and sales at its diamond business fell 43% to $5.8 million.

Brooke Burke Partners with Chad Allison

Television personality Brooke Burke will launch a jewelry line with the label Brooke Burke Collection by Chad Allison. Her partnership with the brand created 30 jewelry styles consisting of bracelets, pendants, earrings, and rings in black and white diamonds and colored gems in gold and sterling silver. The pieces will retail from $149 to $3,000 and Chad Allison targets a distribution channel of 700 doors across the U.S. The official launch for Burke is planned for Luxury by JCK in May.

GENERAL

Antwerp Hosts Third Annual Diamond Trade Fair

The Antwerp Diamond Bourse and the Diamond Club of Antwerp hosted the third edition of the Antwerp Diamond Trade Fair (ADTF), as diamond buyers from Europe, the Middle East and Turkey visited the booths of some 70 Antwerp diamond firms. Many exhibitors noted a sizable delegation of Middle Eastern buyers at the fair, from countries such as Saudi Arabia and Lebanon, who were seeking high-end goods in the form of large, loose diamonds and jewelry. Raphael Rubin, a member of the ADTFs organizing committee, also revealed that buyers from North America, China and Southeast Asia would be invited to take part in the 2013 fair.

Zale Promotes Brumfield to SVP

Ken Brumfield has been appointed senior vice president of financial products for Zale Corporation. He will be responsible for all customer financing, warranty, insurance and repair product offerings, and will to report to Matt Appel, Zale’s chief administrative officer. Prior to joining Zale in September 2010, Brumfield was a director of sales at Alliance Data Systems and a senior vice president of credit services at Stage Stores Inc.

Cavalieri Receives Award of Order of Carl Faberge

CIBJOs president, Gaetano Cavalieri, received the Award of the Order of Carl Faberge at a ceremony held February 1 in St. Petersburg, Russia, during the opening of the International Jewellery Forum, JUNWEX Petersburg 2012. The awards committee of the Carl Faberge Memorial Foundation said it was honoring Cavalieri for his contribution to the preservation and maintenance of the art of jewelry, as well as for the substantial part he has played in the development of the jewelry industry. The Order of Carl Faberge is an initiative of Tatyana Fedorovna Faberge, the great granddaughter of the famous jeweler, and was envisioned by its founders to become a Russian equivalent of the Nobel Prize.

STATS

Japan

Dec. %Chng. 2011 %Chng.
Polished imports $67M 28% $814M 17%
Price per carat $479 76% $401 41%

MINING

Petra Diamonds Revenues +13%

Petra Diamonds revenue rose 13% year on year to $101.4 million in the first fiscal-half of 2012 as production grew and rough markets stabilized. The company reported that group production grew 64% to 953,553 carats during the six months that ended on December 31, 2011 due to the addition of the Finsch mine, which Petra bought from De Beers for $192 million. The company noted that while jewelry sales during the Christmas season in the U.S. and Europe registered only modest growth, strong increases continued in emerging markets.

Stellar Diamonds Releases Interim Results

Stellar Diamonds reported, in an interim financial statement for six months that ended in December, that it held $1 million in cash reserves and approximately $600,000 in rough diamonds in inventory that were ready for sale. The company spent approximately $4.2 million developing the Droujba, Guinea and Tongo, Sierra Leone diamond resources.

Paragon Diamonds Raises Nearly $3M

Paragon Diamonds Limited completed a placement of 5,948,275 new ordinary shares at 29 pence each on Londons Alternative Investment Market (AIM) and raised gross proceeds of approximately $2.71 million. The new shares will rank pari passu with existing ordinary shares, and dealings on AIM are expected to commence in the new ordinary shares next Wednesday, February 1.The companys issued share capital now consists of 194,125,329 ordinary shares of 1 pence each.

ECONWATCH

Diamond Industry Stock Report

Stocks traded more calmly this week and were mostly on the upside. Biggest movers were Birks & Mayors (-10%), Charles & Colvard (+14%), Scio Diamond (-8%), Chow Tai Fook (-9%), Ren. Jewellery (+11%), Lucara (+21%), Stornoway (+11%). Read the extended industry stock report for this past week.

Feb. 3 Jan. 26 Chng.
$1 = Euro 0.760 0.760 0.000
$1 = Rupee 49.03 50.11 -1.1
$1 = Israel Shekel 3.72 3.76 -0.04
$1 = Rand 7.67 7.79 -0.12
$1 = Canadian Dollar 0.99 1.00 -0.01

Precious Metals
Gold $1,759.50 $1,721.60 $37.90
Platinum $1,626.00 $1,609.00 $17.00

Stock Indexes Chng.
BSE 17,431.85 17,077.18 354.67 2.1%
Dow Jones 12,707.08 12,735.63 -28.55 -0.2%
FTSE 5,796.07 5,793.10 2.97 0.1%
Hang Seng 20,739.45 20,439.14 300.31 1.5%
S&P 500 1,325.54 1,318.45 7.09 0.5%
Yahoo! Jewelry 1,098.16 1,099.45 -1.29 -0.1%

Rapaport Weekly Market Comment February 24, 2012

Hong Kong show OK with steady sales and stable prices improving market sentiment. Buyers remain cautious due to uncertain global economy. Rough trading weak and cutters’ profit margins tight. Israeli tax authorities temporarily suspend investigations and raids as bourse negotiates new tax agreements for diamond trade. India’s new 2% protectionist polished import tax is destroying its role as primary trading center. Indians will sell what they cut, but that’s it. Their global trading will move to Dubai, Hong Kong and other centers. India’s Jan. polished imports plummet 59% to $945M, polished exports -19% to $1.8B, rough imports +7% to $1.1B. Zale 2Q revenue +6% to $664M, profit +6%.

RapNet Data: Feb. 23

Diamonds 868,296
Value $5,688,960,800
Carats 906,795
Average Discount -26.57%

www.rapnet.com

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RAPAPORT ANNOUNCEMENTS

February
22-29
Wed-Wed

Rapaport Single Stone Auction
New York & Israel

email: auctions@rapaport.com

Feb-Mar
28-1
Tue-Thu

Rapaport Melee Auction
New York

email: auctions@rapaport.com

QUOTE OF THE WEEK
[The Hong Kong show had] more jewelry retailers and manufacturers as visitors this year with fewer middle-men and agents....Since there had been a quiet season just prior to the show due to the U.S. holiday and Chinese New Year, we expected a good buyers turn out. There was good demand and business in certified carat-plus sizes in VS-SI, triple EX goods categories.

Dinesh Lakhani | Kiran Gems

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

Israel Suspends Probe For Now

Authorities in Israel suspended their investigations into alleged tax evasion and money laundering activity taking place in the Israel Diamond Exchange (IDE) for one month. A professional team will be established in the coming days to negotiate a suitable solution to the affair and to represent the industry in negotiating a long term solution to future dealings with the tax authorities. Authorities launched the investigation in early January focusing on 16 suspects who were systematically laundering money in large sums without reporting the transactions to the relevant authorities in Israel or abroad. They were also reportedly converting foreign exchange and providing unlawful loans, allegedly gaining tens of millions of shekels in profits from these illegal activities. Dealers noted that trade within the bourse fell sharply due to the investigations.

ALROSA Previews Rough in Israel

ALROSA will hold a preview in Israel of the rough diamonds it plans to auction. The company is preparing to tender rough diamonds that are larger than 10.8 carats. ALROSA, through its subsidiary in Israel, Arcos Diamonds Israel Ltd., will allow pre-qualified companies to participate in the upcoming tender by placing bids in Israel without having to travel to Moscow. The diamonds will be shown from the offices of Arcos Diamonds Israel between February 26 and March 3.

Jewelry Price Inflation +8% in Jan.

U.S. consumer price inflation (CPI) in January for the jewelry sector surged 8.2% year on year to 185 points, according to government figures. The reading established a new CPI record for jewelry and it was the thirteenth consecutive monthly calculation with a reading above 170 points. Monthly jewelry price inflation averaged a 9.5% increase during 2011 as prices were driven higher by record gold prices, near record prices for silver and double-digit price increase for diamonds. Meanwhile, the CPI for all product categories in January rose 2.9% year on year to 227.5 points. That figure too was a record high, which was in part fueled by a jump in prices for food, fuel oil and apparel.

RETAIL & WHOLESALE

Zale Narrows 1H Loss; Pandoras Sales, Profit Slide

WATCH NOW: The retail environment in the U.S. continues to send mixed messages after Blue Niles sales and profit contraction this past week. Zales results were certainly stronger than they have been, but revenue growth fell short of the rate of jewelry price inflation. Michael Hills performance was strong with only the U.S. operations reporting a loss. Pandora reported a weaker quarter as sales plunged and profit fell, however, Pandora closed its year with higher profit.

Sears Loss Tops $2B

Sears reported that fourth-quarter sales fell 4% to $12.5 billion and it reported a loss of $2.4 billion compared with profit of $374 million one year ago. The retailer announced drastic measures, including selling stores, to raise revenue and return to profitability. Sears plans to reduce peak inventory in 2012 in excess of previously announced $500 million to $580 million range and peak borrowing needs in excess of $350 million estimate. The company will separate Sears Hometown and Outlet businesses and certain hardware stores.

Charles & Colvards Profit Soars

Charles & Colvard more than doubled revenue during the fourth-quarter to $7.2 million, and the companys net income rose to $1.8 million from $410,232 one year ago. Sales of moissanite and jewelry for the companys fiscal-year, which closed December 31, rose 26% year on year to $16 million and profit was flat at $1.6 million.

SRS Profit +42%

SRS Ltd. reported net sales rose 7% year on year to $127.7 million during its third fiscal-quarter and net profit jumped 42% to $4.8 million. Jewelry segment sales increased 23% to $110.8 million, while cinema business sales grew 33% to $2.8 million. However, cash-and-carry sales declined 49% to $13.2 million and food and beverages sales fell 10% to $1.1 million. Total expenditure rose 7% to $120.2 million.

Goenka Profit -82%

Goenka Diamond & Jewels Ltd. reported that group net sales fell 23% year on year to $24.8 million during its third fiscal-quarter due to weak diamond and jewelry revenue. Net profit dropped 82% to $670,948. Diamond business sales fell 21% to $18.2 million and jewelry segment sales decreased 30% to $6.7 million. Total expenditures declined 13% to $24.2 million.

Forevermark Expands in South Africa

Forevermark announced a wider partnership for South Africa by adding retailers Ntinga and Shemer in Johannesburg, Peter Gilder in Cape Town and Lorraine Efune in both cities to offer jewelry featuring Forevermark diamonds. To celebrate the ongoing expansion across South Africa, the brand held an event to showcase one-of-kind Forevermark jewelry in the presence of numerous national celebrities.

Graff Opens in Burj Al Arab

Graff opened in the Burj Al Arab hotel in Dubai through a partnership with Damas. The new 121-square-meter Graff boutique is located on the first floor of the luxury hotel and carries the jewelers Butterfly collection, Diamonds on Diamonds collection and Lotus for Jewellery collection, among others. Watches include GraffStar Grand Date, GraffStar Ladies, ChronoGraff and ScubaGraf. Damas is the sole agent for Graff in Dubai.

Canoe Wins Rio Tinto Competition

Canada-based jewelry designer Reena Ahluwalia was recently honored as an international winner in the Rio Tinto Diamonds Global Design Competition. There were nine winners chosen for four categories, which included Champagne Diamonds, Silvermist Diamonds, Canadian Diamonds and Sustainable Jewelry. Ahluwalia received the prestigious Master Craftsman award for the Canadian Diamonds category for her "Canoe" diamond necklace. Canoe, which depicts a snow-covered canoe in a frozen crystalline lake, is set in 18-karat white gold and features 28.96 carats of diamonds from Canada. Ahluwalia said it was inspired by a poetic image of the magical Canadian landscape and its pristine white winters. Crossworks Manufacturing Ltd. collaborated with Ahluwalia and sponsored the manufacturing.

Fab Acquires Casacanda

U.S.-based online flash sales website Fab.com acquired Casacanda to expand its reach into Germany, Austria and Switzerland. Casacanda.de, which now switched to Fab.de, had grown membership to more than 250,000 since launching in September. Fab.com reinvented itself about eight months ago from a social website into an ecommerce venue that sells fashion items, including jewelry and watches, and it now boasts more than two million members and claims to have sold one million products so far.

GENERAL

JVC Hosts Hire, Fire Seminar

The Jewelers Vigilance Committee (JVC) will present a seminar on “How to Hire, Fire and be a Legally Compliant Employer in One Easy Lesson,” in Manhattan on March 14. JVC developed this program to teach jewelers about legal safeguards in order to avoid expensive and distracting employment lawsuits. Suzan R. Flamm, JVC’s senior counsel, will offer practical “how to” actions many jewelers can implement to avoid employment lawsuits and provide the right environment to foster employee retention. While this JVC seminar is free, registration is required. Call Natalia at 212.302.5739.

Pritchard Joins Zales Board

Beth M. Pritchard will join the board of Zale Corporation on March 9. Pritchard is the North American Advisor for M. H. Alshaya Company, a global franchise company representing over 65 premium brands throughout the Middle East, Eastern Europe, Russia and Africa. Pritchard’s past experience includes founding Sunrise Beauty Studio, serving as vice chairman of Dean & Deluca and as president of Limited Brands’ Bath & Body Works. She currently serves on the boards of Vitamin Shoppe and Cabela’s.

HRW Says Keep Mugabe Sanctions

Human Rights Watch (HRW) urged the European Union (E.U.) to maintain travel restrictions and asset freezes on President Robert Mugabe and his inner circle until Zimbabwe carries out human rights reform measures. The E.U. is conducting its annual review of sanctions on Zimbabwe and is scheduled to announce a decision on March 17. HRW criticized Mugabes political party, ZANU-PF, for failing to abide by an earlier agreement to promote freedom of speech, end politically motivated violence, and apply national laws fully and impartially to hold those responsible for abuses accountable. HRW contended that the ZANU-PF has been the main obstacle to making progress in carrying out those reforms and have so far stayed silent on investing the Marange diamond violence of two years ago.

MINING

Botswana Diamonds Raises $2M

Botswana Diamonds raised $2.38 million through a placement of 37,750,000 shares in London at 4 pence each. The majority of the net proceeds will be used for the company’s exploration projects in Botswana, Cameroon and Zimbabwe. The company expects first results from its Botswana operations in third-quarter, while in Cameroon, first results are due mid-year. The company has sampling projects in Zimbabwe.

Mining Firm Seeks New Concessions

The Diamond Mining Corporation, a joint venture between Zimbabwe and Pure Diam of Dubai, reportedly asked the government for additional diamond concessions in the Marange since the lifespan of its current operations was only expected to be four years at the present rate of production. To improve on Diamond Mining Corp.s investment, the government should consider allocating a concession with diamondiferous conglomerates, which have been known to carry a grade averaging plus or minus 6 carat per tonne, the companys general manager was quoted saying by the Zimbabwe Standard.

Pure Diam has reportedly contributed $35 million towards developing its Marange concession in partnership with the Zimbabwe Mining & Development Corporation (ZMDC), which is under sanctions by the U.S. and E.U. Production from the concession is being sold to the global diamond market. This production may not be purchased by entities based in the U.S. or E.U.

Lucara Secures $25M Facility

Lucara Diamond secured a $25 million credit facility from The Bank of Nova Scotia. The facility will allow the company to focus fully on commissioning activities at its Karowe mine in Botswana. Under the terms, the two year facility will be secured by Lucaras assets and that of its subsidiaries. Up to $15 million will be advanced prior to the delivery of security over the companys Karowe assets.

Chamber Urges Fee Review, PM Seeks Openness

The Zimbabwe Chamber of Mines called for the government to rescind new mining fees, which increased as much as 5,000 percent for some miners and were therefore out of line with neighboring countrys fees. The chamber argued that these fees would create an unfavorable investment climate for the mining sector.

Meanwhile, Zimbabwes Prime Minister, Morgan Tsvangirai, called for greater openness in the countrys diamond trade, adding that the profits the nation’s diamond industry should benefit all citizens. Zimbabwe expects $600 million from diamond sales this year. The country’s Treasury, however, still claims millions of dollars in diamond revenue cannot be accounted for from the past two years.

WWW to Market AGD Rough Output

Diamond producer Arkhangelskgeoldobycha (AGD), which is currently bringing the Grib diamond pipe near Arkhangelsk in northwestern Russia into production, signed a marketing contract with London based WWW International Diamond Consultants to advise the miner on how best to maximize its rough diamond output once goods come to market at the end of 2013. AGD, which is wholly owned by oil giant Lukoil, has estimated that it will be mining annually at least four million carats of high-quality diamonds once it reaches full production.

Rio Tinto Recovers 12.76ct. Pink

Rio Tinto said it recovered Australias largest rough pink diamond, a 12.76-carat stone, at its Argyle open pit mine in the east Kimberley region of Western Australia. The diamond, to be named the "Argyle Pink Jubilee," is a light pink diamond and similar in color to the Williamson Pink that Queen Elizabeth received as a wedding gift and which was set in a brooch for her coronation. The diamond will be cut and polished in Perth by Richard How Kim Kam, who estimated that it will take 10 days to cut and polish the diamond.

STATS

India

Jan. $Mil. %Chng.
Polished exports $1,773 -19%
Polished imports $945 -59%
Net exports $828

Rough imports $1,094 7%
Rough exports $153 45%
Net imports $941 3%

Net diamond account ($113)

ECONWATCH

Diamond Industry Stock Report

It was a mixed week for U.S. jewelry retail stocks. Charles & Colvard shares rose 22%, but Birks & Mayors fell 10%; European shares were mostly higher and Indian shares were lower except for Gitanjali (+7%). Mining shares performed well, Peregrine, Lucara, Shore Gold, and Mwana Africa all rose 10%. Read the extended industry stock report for this past week.

Feb. 23 Feb. 16 Chng.
$1 = Euro 0.750 0.760 -0.010
$1 = Rupee 49.09 49.28 -0.2
$1 = Israel Shekel 3.75 3.75 0.00
$1 = Rand 7.66 7.76 -0.10
$1 = Canadian Dollar 1.00 0.99 0.01

Precious Metals
Gold $1,780.10 $1,729.40 $50.70
Platinum $1,720.00 $1,622.00 $98.00

Stock Indexes Chng.
BSE 18,078.50 18,153.99 -75.49 -0.4%
Dow Jones 12,984.69 12,904.08 80.61 0.6%
FTSE 5,937.89 5,885.38 52.51 0.9%
Hang Seng 21,380.99 21,277.28 103.71 0.5%
S&P 500 1,363.46 1,358.04 5.42 0.4%
Yahoo! Jewelry 1,163.62 1,138.84 24.78 2.2%

Rapaport Weekly Market Comment March 2, 2012

De Beers DTC sight estimated at $600M with prices stable. Rough dealer markets improve slightly with most boxes trading close to DTC list. Polished markets relatively steady with some softening of 1ct. RapNet Diamond Index. Namakwa Diamonds launches production at Lesotho’s Kao mine. Firestone Diamonds suspends operations at Botswana’s BK11 mine due to weak rough market. Petra Diamonds 1H revenue +13% to $101M, posts loss of $27M vs. profit of $25M previous year.

RapNet Data: Mar. 1

Diamonds 876,143
Value $5,741,117,358
Carats 914,941
Average Discount -26.35%

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RAPAPORT ANNOUNCEMENTS

March
12-15
Mon-Thu

Rapaport Melee Auction
New York

email: auctions@rapaport.com

March
19-29
Mon-Thu

Rapaport Melee Auction
New York & Belgium

email: auctions@rapaport.com

QUOTE OF THE WEEK
We noted diminishing clearance inventory throughout the month and believe that the majority of retailers began [March] with clean inventory positions. Still, deeper year-over-year promotions continue as new full-price flows are commanding center stage throughout the mall envioronment.

Adrienne Tennant | Janney Capital Markets

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 Feb. Sight Estimate $600M

The Diamond Trading Company (DTC) February sight ended Wednesday with an estimated value of $600 million. The De Beers distribution unit kept prices stable with minor adjustments on specific items. The sight one year ago this month was estimated at $690 million. The mood of traders improved slightly since January largely due to better Indian demand and a more stable rupee. One sightholder noted that Indian goods are starting to trade at high single-digit premiums again, but suspected that dealers are pushing prices to raise the value of their inventories before the financial year ends on March 31. Some complained that DTC prices are high and that manufacturers are struggling to profit from their cutting and polishing activity. Rapaport estimates indicate that through the first two sights of the year, DTC sales are down 14 percent to $1.25 billion.

India Eases Duty for Lab Work

India waived its 2% import duty on cut and polished diamonds sent abroad for certification or grading purposes. The exemption follows the introduction of a 2% import tax on polished stones on January 17, which that led to confusion regarding stones returned from laboratories abroad. A notification said such duty will not be applicable on re-importing cut and polished diamonds (each of 0.25 carat or more) sent for certification or grading abroad to certain authorized laboratories. The government noted that an exporter with annual export turnover of $1 million (INR 50 million) for each of the last three years may export cut and polished diamonds abroad to authorized laboratories without being charged the duty.

Consumer Confidence Steady

Watch Now: The Conference Boards Consumer Confidence Index® in February 2012 was steady from one year ago at 70.8 points (1985=100). Consumer spending however is still down 36% on a daily basis from February 2008, shows Gallup. But PriceGrabber surveyed shoppers and asked how many intend to spend more on jewelry this year. While the majority of U.S. consumers will hold their wallets tight, of the 21% who plan to spend more, some 24% will buy more jewelry the resarch found.

RETAIL & WHOLESALE

February Retail Sales

Same-store %Chng. Total %Chng. $Mil
BonTon 0.7% 0.9% $199
Costco 8% 10% $7,040
Kolhs -0.8% 1.1% $1,170
Macys 4.6% 5.5% $1,860
Nordstrom 10% 16.2% $704
Saks 6.6% 6% $196
Target 7% 8% $5,130

Jewelry Sales +58% in Macao

Macaos Statistics and Census Service placed the value of retail sales during the fourth quarter of 2011 at $1.57 billion, reflecting a year-on-year increase of 44%. Retail sales of watches, clocks and jewelry accounted for 30% of the total at about $477 million. Unit sales rose 30 percent year on year. The value of retail sales for 2011 rose 42% year on year to $5.4 billion, driven by a 58% jump in sales of jewelry, watches and clocks as well as a 54% surge in the sale of leather goods.

PMMC Opens New Facility

The Precious Minerals Marketing Company (PMMC) in Ghana inaugurated its new diamond cutting and processing plant in Accra. The facility will initially employ 40, but the company expects to increase the number to 400 in the future. PMMC purchases and then exports gold and diamonds from small-scale miners, and it produces jewelry. The company was founded in 1989.

Dousset Opens Diamond Showroom

Jean Dousset opened a diamond showroom at 8471 Melrose Avenue in Los Angeles. The space presents his diamond engagement rings and jewelry collections and features original portraits of Doussets great-great grandfather, Louis Cartier. Dousset launched his independent jewelry career in 2005, after working for some of the most illustrious jewelry brands such as Chaumet, Boucheron and Van Cleef & Arpels. In the past few years, the designer has secured diamond suppliers whom he defines as uncompromising and focused on the very best cut diamonds.

Graff Sues to Recover Diamonds

Graff filed lawsuits in Manhattan seeking the return of two gems it believed were stolen from an elaborate unsolved $20 million heist in its London store in 2007. Graff charges that one of the gems, weighing in at 16 carats, turned up in a pawn shop in Hong Kong, while the other, a 4.20-carat diamond came into possession of an Israeli diamond consolidator. Both diamonds are being held in New York by the Gemological Institute of America pending a court hearing.

GENERAL

Myanmar Gems Sale in March

Myanmar will hold its annual gems show in the at Mani Yadana Jade hall in country’s new capital of Nay Pyi Taw from March 9 to 18 with preview dates set for March 6 to 8. Organized by the country’s Ministry of Mines, the 49th Myanmar Gems Emporium will display around 15,000 gems.

Mordaunt Joins I. Henning

Jamie Mordaunt will join I. Henning & Co.s Botswana management team where he will play an integral part in its development. Mordaunt will relocate to Gaborone to join Tshebetso Kgatlwane (Teekay), in leading Hennigs expansion plans in preparation for DTC sights scheduled to begin in Botswana at the end of 2013.

High Joins Stuller

Stuller Inc. added Jeff High to its executive team as part of its effort to coordinate activities between Gemvision and the diamond manufacturer. High will continue as president of Gemvision and leverage his knowledge and experience at Stuller in order to bring the full benefits of digital technology to the jewelry industry. Stuller and Gemvision formed a strategic partnership in 2009 with the goal of enhancing customization tools for retail jewelers. The partnership produced CounterSketch Studio, a 3D jewelry design platform that allows retailers to work alongside their customers in creating one-of-a-kind custom jewelry pieces.

Police Find Traders Body in Mathura

Diamond trader Krishen Arya, who ran a diamond showroom, was kidnapped in Faridabad in Haryana, India on February 22. Police investigations led to a former employee, who under interrogation confessed to kidnapping Arya with three other men. It was also revealed that the men abandoned a plan to hold the trader for ransom, and instead murdered him and burned the body to hide evidence. Police found the body in a Mathura forest.

MINING

Firestone Puts BK11 on Ice

Firestone Diamonds suspended operations at its BK11 mine in Botswana due to operational challenges and current weaknesses in the diamond market, but the mining company said BK11 is designed for a rapid re-start. The mine, which launched production in late 2010, has been placed on care and maintenance with a monthly holding cost of approximately $65,000.

Petra Records a Loss

Petra Diamonds posted a net loss of $26.7 million during the fiscal half year that ended on December 31, compared with a profit of $24.5 million one year earlier. Higher sales this year are expected due to larger than normal inventory levels worth $38.1 million on December 31. Petra previously reported that revenues rose 13% year on year to $101.4 million during the first fiscal half.

Namakwas Koa Production Update

Namakwa Diamonds is scheduled to launch production at its Kao mine in Lesotho this week as part of the first phase of commercial mining. Namakwa has recovered 11 diamonds in excess of 10.8 carats with a combined weight of 245 carats from Kao so far. In the period from January 1 to February 25, the company recovered 25,546 carats from the mine at an average size of 0.24 carats per stone.
Namakwa has sold 11,245 carats of rough from Kao on tender in Johannesburg at an average price of $237.60 per carat so far this year. A further 7,200 carats are currently on tender and another 8,400 carats will be tendered in early March.

ECONWATCH

Diamond Industry Stock Report

U.S. and Eurpean diamond-industry shares were moderately higher with Charles & Colvard and Theo Fennell both up 13%. Indian shares traded lower, except for Goenka (+13%). Mining shares were mostly negative except for Mountain Diamonds (+11%) and Gemfields (+10%). Read the extended industry stock report for this past week.

Mar. 1 Feb. 23 Chng.
$1 = Euro 0.750 0.750 0.000
$1 = Rupee 49.20 49.09 0.1
$1 = Israel Shekel 3.78 3.75 0.03
$1 = Rand 7.45 7.66 -0.21
$1 = Canadian Dollar 0.99 1.00 -0.01

Precious Metals
Gold $1,716.90 $1,780.10 -$63.20
Platinum $1,699.00 $1,720.00 -$21.00

Stock Indexes Chng.
BSE 17,583.97 18,078.50 -494.53 -2.7%
Dow Jones 12,980.30 12,984.69 -4.39 0.0%
FTSE 5,931.25 5,937.89 -6.64 -0.1%
Hang Seng 21,387.96 21,380.99 6.97 0.0%
S&P 500 1,374.09 1,363.46 10.63 0.8%
Yahoo! Jewelry 1,165.04 1,163.62 1.42 0.1%

Rapaport Weekly Market Comment March 9, 2012

Global financial and commodity prices soften as European crisis persists and China, Brazil and India lower growth forecasts. Diamond markets stable with good U.S. demand but buyers remain cautious. Mixed expectations for large stone demand at Basel show. The RapNet Diamond Index (RAPI) for 1 ct. polished diamonds fell 1.8% to 94.18 in Feb. ALROSAs diamond sales +21% to $694M in Jan-Feb. Rio Tinto cuts number of Select Diamantaire clients to 13. Belgiums Feb. polished exports +4% to $1.4B, rough imports +2% to $1.1B. Botswana’s Jan. diamond exports -69% to $109M. Marange Resources appoints former Zimbabwe defense chief Tshinga Dube as chairperson.

RapNet Data: Mar. 8

Diamonds 867,456
Value $5,703,438,476
Carats 911,079
Average Discount -26.80%

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RAPAPORT ANNOUNCEMENTS

March
8-15
Thu-Thu

Rapaport at Basel
Hall 3.1
Stand F01

Rapaport Contact: Alissa Goren
email: alissa.goren@diamonds.net

March
12-15
Mon-Thu

Rapaport Melee Auction
New York

email: auctions@rapaport.com

March
19-29
Mon-Thu

Rapaport Melee Auction
New York & Belgium

email: auctions@rapaport.com

QUOTE OF THE WEEK
I have just returned from a month in the Democratic Republic of the Congo and I can say that Cartierís [grant for Development Diamond Standards for artisnal digger is not just a vote of support for our work, it is a solid example of how the concept of corporate social responsibility has expanded beyond the immediate corporate environment to a wider world of development possibilities.

Dorothe Gizenga | Diamond Development Initiative Intl.

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

Prices Fall in Feb.

Certified polished diamond prices softened in February. Far East demand was steady, however, global buyers remain cautious. The RapNet Diamond Index (RAPI) for 1.00-carat polished diamonds fell 1.8% to 94.18, RAPI for 0.30-carat diamonds rose 3.6% to 16.04 and RAPI for 0.50-carat diamonds rose 0.9% to 34.81. The RAPI for 3.00-carat stones fell 2.1% to 343.32.

Indias polished trade declined following the sudden government-imposed 2% import tax on polished diamonds. The recent stability of the rupee has partially restored consumer and trade confidence. Similarly, Israels trading saw some renewed confidence after the taxation and police authorities agreed to suspend, for one month, their investigations into company transactions in the Israel Diamond Exchange. The inquiries stymied polished trading in the bourse through January and February.

Rough trading is weak due to high prices that are impacting cutters profit margins. Read the latest Rapaport Research Report, "Showing Restraint" for further details.

RapNet Diamond Index (RAPI)
Feb. 12 Jan.-Feb. YOY %Chng. Mar. 1
1ct. -1.8% -2.9% 8.4%
0.3ct. 3.6% -0.4% -3.8%
0.5ct. 0.9% 1.2% 18%
3ct. -2.1% -2.4% 6.6%

Rio Tinto Narrows Select Membership

Upcoming Rio Tinto Select Diamantaires sales dates include, March 26 to 30, April 30 to May 4, June 11 to 15, July 16 to 20, August 27 to 31, October 1 to 5, November 5 to 9 and December 10 to 14. Two tender sales are scheduled for April 11 to 24 and October 10 to 23.

The following companies are part of the Select Diamantaire program for 2012 and represent seven fewer firms than one year ago.

Crossworks Manufacturing
Diambel
Dianco
Diarough
Dimexon Diamonds
E. Schreiber
Gemmata
IDH Diamonds
Interjewel
L&N Diamonds
Laurelton Diamonds
Sheetal Group
Venus Jewel

RETAIL & WHOLESALE

Prices Remain Higher Year-on-Year

WATCH NOW: An overview of diamond prices for February along with year-on-year comparisons. Gemfields sales jumped 57% to $46 million as strong demand for ethical emeralds continued. Profits surged 42%. Cartiers new movie creates social media buzz as more than one million view it on YouTube.

Gitanjali Acquires LJJ

Gitanjali acquired Leading Jewels of Japan (LJJ) for an undisclosed amount with an aim to expand its business there. The deal was made through Gitanjalis Aston Luxury Group Ltd. subsidiary. Leading Jewels of Japan is involved in the production, sales, purchase, import and export of diamonds, precious stones, jewels and jewelry. Gitanjali also reported that its Milan-based subsidiary, Giantti ltalia S.R.L., has merged with its Valenza, Italy-based subsidiary, Leading ltalian Jewels S.R.L., as a part of the companys ongoing restructuring of its international business.

Cartier Funds Standards Program

Cartier International provided a grant to the Diamond Development Initiative International (DDI) to focus on implementing "Development Diamond Standards" for artisanally produced diamonds. In Sierra Leone, DDI is working with local leaders and civil society to identify sites where diamonds are produced in ways that are environmentally sound, and where diggers receive a fair price, working under safe conditions.

Those diggers diamonds will be tracked through the trading, polishing and retail system to provide customers with gems that go beyond standard definitions of "ethical" and "fair trade" products. If successful, this pilot program stands to revolutionize the development prospects for miners -- where an estimated 15% of the worlds gem diamonds are produced.

The Cartier grant will also provide general support, assisting DDI in several projects now under way, including human rights training in Africa, and a major registration project in the Democratic Republic of the Congo, which is bringing more than 70,000 miners into the formal sector.

CBRE to Rep Tiffanys Paris Flagship

CBRE France is representing the sale of 6 rue de la Paix, Paris, which houses Tiffany & Co.s flagship and Kronmesser jewelers and is approximately 8,230-square-feet of retail space. Both jewellers committed to new long term leases. The building was put on the market for about $40 million. Rue de la Paix is a very prestigious address in Île-de-France.

GENERAL

Forbes Publishes Billionaries List

Forbes published its annual list of the worlds richest players for 2012, which recorded 1,226 billionaires with an average net worth of $3.7 billion and a combined net worth of $4.6 trillion.

Here were the top billionaires involved, one way or another, in the diamond and jewelry industry:

Rank Name Company Net Worth
No.3 Warren Buffett Berkshire Hathaway $44B
No. 4 Bernard Arnault LVMH $41B
No. 26 Jeff Bezos Amazon $18B
No. 59 Francois Pinault PPR $13B
No. 122 Ralph Lauren Ralph Lauren $8B
No. 136 Nicky Oppenheimer De Beers $7B
No. 169 Beny Steinmetz Steinmetz Diamond Group $6B
No. 199 Johann Rupert Richemont $5B
No. 422 Jack Ma Alibaba $3B
No. 464 Laurence Graff Graff Diamonds $3B
No. 764 Lev Leviev Leviev Diamonds $2B

S.A. Dealers Club Re-elects Blom

The Diamond Dealers Club of South Africa election results:

Ernest Blom, chairman
Lionel Noach, vice chairman
M. Ellis, treasurer

Board members:
Manny de Amorim
Mark Reichman

Sarel Snyman
Trevor Temkin
David Woolf
J. Nortje
M.V. Moosa
N. Parag

IndexIQ Proposes Diamond Trust

IndexIQ filed a preliminary prospectus with the U.S. Securities and Exchange Commission proposing its IQ Physical Diamond Trust, an exchange-traded fund (ETF) backed by diamonds. The trust would only carry diamonds of "industry standard," one-caraters and create parcels, based upon characteristic variations. Investors in the trust will not receive the regulatory protections afforded to investors in regulated commodity pools. Diamonds will be held in Antwerp and a custodian will physically segregate the trustís diamonds†from any other diamonds which it owns, and will verify the diamond identities through GIA certificates.

MINING

ALROSA Sales +21%

ALROSAs sales of rough and polished diamonds in the first two months of 2012 rose 21% to $694 million. The company observed growing global demand for rough diamonds and it expects its first quarter sales of rough and polished diamonds to reach $1.123 billion.

Petra Joins FTSE 250

Petra Diamonds announced that the FTSE Group approved the inclusion of the company in the FTSE 250 Index. All constituent changes will be applied after the close of business on March 16 and will be effective on March 19.

Dube to Chair Maranage

Marange Resources has appointed Tshinga Dube, a former chief executive of the Zimbabwe Defense Industries (ZDI), as its chairperson. Dube is a senior ZANU-PF politician and is a member of the partys supreme decision-making body between congresses. He is also the director of several non-listed companies, according to the Financial Gazette.

Marange Resources is owned by the Zimbabwe Mining Development Corporation (ZMDC), both of which are under U.S. sanctions, and operates one of four concessions mining at Zimbabweís Marange fields. U.S. entities may not trade diamonds with either firm, and E.U. entities may not trade with ZMDC

Rani to Sell Stake in River Ranch

Dubai-based Rani Investment is reportedly negotiating the sale of its stake in the River Ranch Diamond Mine to Zimbabwe. The mine is located along the border with South Africa, near Beitbridge in southern Zimbabwe. Rani is owned by Saudi businessman Adel Aujan.

Dianor Negotiates New Terms

Dianor Resources entered into a mortgage forbearance agreement with its lenders on the surface rights for the Leadbetter diamond property. Dianor secured the original agreement in October 2008 and has since paid $2.55 million against a mortgage of $5 million. The balance of the mortgage to be paid under this agreement is $2.45 million plus accruing interest and other fees.

A forbearance agreement was also signed with Third Eye Capital Inc. for the payment of almost $1.3 million plus accruing interest and other fees arising from the $10 million credit facility entered into in August 2010.

Diamcor Results from Krone-Endora

Diamcor Mining recovered approximately 144 carats of rough diamonds from its Krone-Endora project near the Venetia mine in South Africa. Of the diamonds recovered, six of the stones were 1-carat or larger, with the two largest being recorded at approximately 3.93 carats and 2.09 carats.

The rough diamonds were recovered in conjunction with initial testing and commissioning work completed on the x-ray flow-sort final recovery modules being installed at the project.

STATS

Botswana

Jan. $Mil. %Chng.
Diamond exports $109 -69%

Belgium

Feb. $Mil. %Chng. YTD $Mil. %Chng.
Polished exports $1,370 4% $2,200 3%
Polished imports $1,250 41% $2,400 29%
Net exports $125 -75% ($216)

Rough imports $1,100 2% $2,100 0%
Rough exports $1,160 2% $2,200 -1%
Net imports ($92) ($30)

Net diamond account $217 $186

ECONWATCH

Diamond Industry Stock Report

Diamond-industry shares were moderately lower this week. Some exceptions were Sothebys (+6%), Tiffany (+4%), Damiani (+7%), Peregrine (+6%) and Gemfields (+11%). Read the extended industry stock report for this past week.

Mar. 8 Mar. 1 Chng.   

$1 = Euro 0.754 0.750 0.004
$1 = Rupee 50.18 49.20 1.0
$1 = Israel Shekel 3.77 3.78 -0.01
$1 = Rand 7.50 7.45 0.05
$1 = Canadian Dollar 0.99 0.99 0.00

Precious Metals
Gold $1,699.40 $1,716.90 -$17.50
Platinum $1,655.00 $1,699.00 -$44.00

Stock Indexes Chng.
BSE 17,145.52 17,583.97 -438.45 -2.5%
Dow Jones 12,907.94 12,980.30 -72.36 -0.6%
FTSE 5,858.73 5,931.25 -72.52 -1.2%
Hang Seng 20,900.73 21,387.96 -487.23 -2.3%
S&P 500 1,365.91 1,374.09 -8.18 -0.6%
Yahoo! Jewelry 1,171.60 1,165.04 6.56 0.6%

Rapaport Weekly Market Comment March 30, 2012

Polished markets quiet but prices strong. Small DTC March sight estimated at $520M with prices +2% as sightholder contracts end. Indian rough demand improves but manufacturing still restrained. Rio Tinto explores sale of diamond business as 2011 production -15% to 11.73M cts. Russia’s 2011 diamond production +0.8% to 35.14M cts. but exports +37% to $3.8B. De Beers estimates global diamond jewelry sales +10% in 2011 with China +22%. Chow Sang Sang 2011 revenues +47% to $2.2B, profits +45% to $143M. Indian jewelers continue strike as govt. set to impose excise duty and raise import tax on gold.

RapNet Data: Mar. 29

Diamonds 871,460
Value $5,837,228,170
Carats 921,302
Average Discount -26.31%

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RAPAPORT ANNOUNCEMENTS

Apr-May
23-3
Mon-Thu

Rapaport Melee Auction

New York & Belgium

email: auctions@rapaport.com

Apr-May
25-1
Wed-Tue

Rapaport Single Stone Auction 

New York & Israel

email: auctions@rapaport.com

June
3
Sun

Rapaport Conference at JCK 

Registration has opened for the Rapaport Conference at the JCK Las Vegas Show 2012.

RSVP now.

QUOTE OF THE WEEK
We regularly review our businesses to ensure they remain aligned with Rio Tintos strategy of operating large, long-life, expandable assets. We have a valuable, high-quality diamond business, but given its scale we are reviewing whether we can create more value through a different ownership structure.

Harry Kenyon-Slaney | Rio Tinto Diamonds

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 March Sight

De Beers raised prices an average of 2% to 3% at the Diamond Trading Company (DTC) sight this week as the mining company has curbed its rough supply in the first quarter of 2012. The March sight had an estimated value of $520 million and sight participants noted that rough demand has improved, particularly from Indian cutters, but they added that DTC boxes are considered expensive at the moment.

Rough premiums on the dealer market increased in the past two weeks as market sentiment improved following the Basel and Hong Kong shows. DTC boxes and ALROSA goods have been selling at an average 5% premium. Sightholders observed that the price increases mainly affected the Indian goods. DTC sales during the first quarter likely fell 13% year on year to $1.77 billion, according to Rapaport estimates.

KP Warns the Trade on Cameroon

The Kimberley Process is aware of a number of fake certificates coming out of Cameroon. Any document purporting to be a Kimberley Process certificate from the country should not be used and no rough diamonds may be imported from Cameroon into the territory of any Kimberley Process participant. Cameroon is not a member state, however, it is making progress toward compliance. The Kimberley Process will provide further notice when Cameroon has achieved participant status and is eligible to issue certificates and trade rough diamonds. Information regarding fake certificates should be sent to kpcs.chair@state.gov.

Protests Open Door for Tax Rethink

Indias Finance Minister, Pranab Mukherjee, is re-considering his budget proposal to tax unbranded jewelry following major protests by local jewelers across the country. He is also examining the issue of making PAN card declaration mandatory for buying jewelry of more than $3,938 (INR 200,000) in cash.

There is no plan to bring the jewelers with a turnover of up to $984,640 (INR 50 million) within the tax limit and he held firm on the proposed customs duty for gold as the government seeks to reduce imports due to current account deficit. Indian bullion traders and jewelry retailers, unhappy with the finance minister’s plans have been on strike since March 17 to oppose the proposed measures. Trading groups across the diamond industry in Mumbai will remain closed on Friday in support of the protest.

RETAIL & WHOLESALE 	  

Diamond Jewelry Sales +10%

Global diamond jewelry sales increased by 10% in 2011 spurred by continued growth in China, according to De Beers research. The rate of growth was on par with the increase in 2010. De Beers concluded that sales were boosted by increased diamond prices, which apparently led consumers to seek lower-quality or smaller diamonds. China posted the strongest sales growth, rising by 22% during the year, and overtook India and Japan to become the second largest diamond market behind the U.S.

De Beers estimated that China has 11% of the global market share now, whereas the U.S. accounts for about 38%. U.S. consumers focused on buying 0.50-carat to 0.99-carat, H+, SI last year, whereas in China and Japan, the popular items were 0.18-carat to 0.49-carat, H+ with VS clarity in China and SI clarity in Japan. The strongest items in India were 0.02-carat to 0.07-carat, H+, VS-SI goods. Bridal dominated the market, particularly in the U.S. where bridal and engagement rings had a “clear lead” over diamond jewelry. Earrings were important in India and necklaces were big sellers in Japan, while both bridal and non-bridal solitaire products dominated sales in China.

Chow Sang Sang Profit +45%

Chow Sang Sangs revenue rose 47% year on year to $2.21 billion and profit increased 45% to $143.2 million for 2011. The companys jewelry retail sales rose 53% as sales in Hong Kong and Macau surged, while wholesale revenue jumped 31%. Inflation-curbing measures in China did not deter mainlanders from spending, whether they were at home or in Hong Kong. Chow Sang Sang maintained a positive outlook for 2012 despite economic uncertainties and high gold prices. The value of the companys inventory rose 27% to $800.3 million.

Kingold Profit +44%

Kingold Jewelrys fiscal year sales rose 51% year on year to $789 million, while cost of sales increased 52% to $747 million, for the period that ended on December 31. Net income attributable to shareholders jumped 44% to $26.2 million. Despite the strong performance, Kingold Jewelry noted a weaker fourth-quarter.

Movado Turns a Profit in 2011

Movado Group reported fiscal-year sales rose 22.5% year on year to $468.1 million for the period that ended on January 31. Cost of sales rose 6% to $211.8 million, which helped the retailer out of the red and to report net income of $32 million compared with a loss of $47.2 million one year ago. Movados inventory as of January 31 fell 10% to $163.7 million.

U.S. Ring Budgets Drop Slightly

The average budget for an engagement ring in 2011 dropped 5% year on year to $5,130, according to the latest Real Weddings Survey produced by XO Group for TheKnot.com and the WeddingChannel.com. While the average in real dollars was less, the amount bought even less, for the U.S. consumer price index for jewelry in 2011 rose 9.5%. Nonetheless, the survey, which captured detailed budget plans of 18,000 couples who were active with the sponsoring websites, revealed that the average wedding budget (excluding the honeymoon) was flat year to year at $27,021.

SRS Mulls Selling Stake

SRS Ltd. revised the utilization of its initial public offering (IPO) proceeds and is considering selling a stake in SRS Jewells Ltd. The board will meet on March 31 to consider the plan. SRS shareholders approved a special resolution to revise the utilization of IPO proceeds in February. SRS has business interest in jewelry manufacturing, retail and entertainment.

Cartier Appoints New Chief

Stanislas de Quercize has been appointed the chief executive of Cartier and will replace Bernard Fornas at the end of this calendar year. De Quercize has been the chief executive of Van Cleef & Arpels since 2005 and will continue in that capacity until he assumes the new position. He has also had an extensive career within the group since 1989, working at Montblanc, Alfred Dunhill and Cartier where he held the post of president in the United States.

De Beers Retail Launches New App

De Beers Diamond Jewellers will launch a new bridal app for the iPad and iPhone in April, which will be available in five different languages, aim to help consumers discover engagement and wedding jewelry. The app will feature videos that give consumers expert advice on how to choose the best ring, information on the design and craftsmanship of De Beers jewelry, and the ability to locate the nearest De Beers Diamond Jewellers store to arrange an appointment.

Aaron Farber to Host Jewelry Artists of Quebec

The Aaron Faber Gallery in Manhattan will host the “Innovation and Craftsmanship in Metal: Jewelry Artists of Québec” exhibition from May 3 to May 26, featuring 14 of Québec’s jewelry artists along with their work. The exhibition was created in partnership with the Québec government office in New York and SODEC, the Québec government body that promotes synergy between business and culture.

U.S. Consumer Confidence Rises

U.S. consumer confidence rose 11% year on year to 70.2 points in March, according to The Conference Board. While the reading was still far below the important benchmark of 100 points, it was slightly lower than The Conference Board Consumer Confidence Index® of 71.6 points in February. The Present Situation Index increased to 51 points from 36.9 points one year ago and the Expectations Index rose by two points to 83 in March.

MINING 	  

Mining Progresses in Canada, Africa

WATCH NOW: Diamond miners and explorers from Canada and Africa updated shareholders on their progress. Lucara Diamond and Botswana Diamonds reported financial results and updated shareholders on key pipeline projects. Stellar Diamonds reported strong maiden resource estimates from its Tongo project. View the campaign materials from "Our Diamonds, Our Pride" a marketing effort developed by Debswana and the Botswana Export Development & Investment Authority.

Rio Tinto Considers Exit From Diamonds

Rio Tinto is considering exiting the diamond business, but it is very much business as usual in the states and countries where the company operates. The diamond market outlook is positive and discoveries are limited, but the company decided it was time to review its assets and explore ways to improve the value for shareholders.

Shore Golds Loss Grows

Shore Gold recorded a net loss of $219.9 million or 98 cents per share for the fiscal year that ended on December 31. The company reported a loss of $26 million the previous year. Shore Gold registered impairment charges of certain previously capitalized exploration and evaluation assets of $208.4 million in 2011. The company sold some investments for $1.3 million during the year. Shore Gold held working capital of $15.9 million as of December 31, but it is actively pursuing financial options to go forward with its Star-Orion South diamond project.

Gemfields Sale Nets $26M

Gemfields conducted an auction of predominantly medium to high-quality rough emeralds in Singapore this past week and revenues came to $26.2 million, representing a price per carat of $38.25. The auction was 87% sold by lot and 94% sold by value. The next auction will be held in Jaipur in June.

Namdeb Funds New Mine

Namdeb expects to develop a new diamond mine at Sendelingsdrift, on the Orange River, and approved construction funding of approximately $36 million, according to fin24 news. Production is expected to yield 45,000 carats per year beginning in late 2013 with the life span of mine projected to be seven years.

India Seeks More ALROSA Rough

India is seeking more rough supply from Russia and pushed for and early close to ALROSAs supply contracts so that more Indian firms can apply for the next round of long-term contracts. The move would enable Indias state-run trading company MMTC Ltd. and the Hindustan Diamond Company Private Limited (HDCPL) to apply for rough from ALROSA. The request was also made of Russia to formalize a way for Indians to buy from Gokhran.

De Beers Transitions Towns

De Beers and the Nama Khoi Local Municipality in South Africa announced the integration plan of Kleinzee, following a similar proclamation made for the town of Koingnaas in August. Both towns were established and managed by De Beers to cater to the company’s employees working at Namaqualand mines. Koingnaas is in the process of being integrated as part of the Kamiesberg municipality and Kleinzee will join the Nama Khoi Local Municipality. In anticipation of the transitions, De Beers has invested about $12 million (ZAR 90 million) in the refurbishment of municipal infrastructure to ensure that the towns are in a good shape when handed over to the respective municipalities.

ECONWATCH 	  

Diamond Industry Stock Report

Diamond-industry related shares were largely mixed this week. Movado Group pulled ahead 11% after reporting strong results, Sothebys was up 6%, European shares were lower and Indian stocks experienced volatile readings with Classic Diamonds (-11%) and Gitanjali (-12%) in negative territory while Goenka (+13%), Rajesh (+10%) and Vaibhav Gems (+17%) pulled ahead.
Read the extended industry stock report for this past week.
Mar. 29 Mar. 22 Chng.
$1 = Euro 0.750 0.758 -0.008
$1 = Rupee 52.40 51.22 1.2
$1 = Israel Shekel 3.73 3.75 -0.02
$1 = Rand 7.72 7.71 0.01
$1 = Canadian Dollar 1.00 1.00 0.00

Precious Metals
Gold $1,661.50 $1,643.60 $17.90
Platinum $1,627.00 $1,617.00 $10.00

Stock Indexes Chng.
BSE 17,058.61 17,196.47 -137.86 -0.8%
Dow Jones 13,145.82 13,046.14 99.68 0.8%
FTSE 5,742.03 5,845.65 -103.62 -1.8%
Hang Seng 20,609.39 20,901.56 -292.17 -1.4%
S&P 500 1,403.28 1,392.78 10.50 0.8%
Yahoo! Jewelry 962.39 975.89 -13.50 -1.4%

HRD si dobre nakakalo do hniezda ,najviac propagovaný labák niektorými honorom sa hrdiacich naších spoločností aj v spoluučasti.😃
niet na GIA a IGI labáčiky😉

RAPAPORT... Sources from the HRD confirmed that four gemologists were asked to resign this week and that an internal investigation is currently being carried out. An official statement released today stated that the graders left due to elements that have triggered an immediate internal, ongoing investigation concerning possible inappropriate conduct.

According to statement issued, HRD Antwerp is fully committed to take appropriate actions in line with the results of the internal investigation which is still ongoing.

Rumors have been swirling in Antwerp that the four in question were actively involved in bribery concerning the valuation of an undisclosed number of diamonds. Reportedly, five diamond firms could have been directly involved in the issue.

Georges Brys, the director of HRD Antwerp Lab, explained to Rapaport News, Contrarily to what may have been said in the press, the police aren’t at all part of our internal investigation, they aren’t involved yet at this stage. Obviously we questioned our legal department, but we must assess the situation, and then inform our board and the ISO committee. It’s only after those actions, that we’ll be able to take all necessary measures. We can‘t just fire people without informing the unions and giving them a sound motive.

Brys concluded, I must insist that so far, all we have against our former graders is that they made a professional mistake. We have nothing to hide, and we’re not trying to hide anything. All we’re doing is making sure we know the circumstances and the facts.