Nemáš začo, to sú 100% firmy.

RAPAPORT NEWS SERVICE | Dec. 14, 2012 www.rapaport.com | news@rapaport.com

Retail & Wholesale
Stats
India
EconWatch
Mining

Rapaport Weekly Market Comment Dec. 14, 2012

Polished markets stable with very good U.S. demand for SI qualities. Jewelers discounting heavily to drive final Christmas sales. Expensive De Beers sight estimated at $490M. Weak rough trading and low premiums as Indian cutters hold enough inventory for post-Diwali manufacturing. Christie’s NY sale at $32.5M (84% by lot) with rectangular-cut, 50.01ct, D, potential FL diamond selling for $8.4M ($167,400/ct.). U.S. Oct. polished imports -21% to $1.4B. Belgium’s Nov. polished exports -8% to $1.2B. Philippe Mellier, Varda Shine to address DMIA NY meeting. Caution: Prices for green, grey and brown tinted diamonds 10-15% below non-tinted. Green tint often indicates Marange origin.

RapNet Data: Dec. 13

Diamonds 1,014,663
Value $6,268,682,969
Carats 1,089,765
Average Discount -27.46%

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RAPAPORT ANNOUNCEMENTS

December
16-19
Sun-Wed

Rapaport Single Stone Auction

Israel

View details.

December
18-20
Tue-Thu

Rapaport Melee Auction

New York

View details.

January
8
Tue

An Evening with Philippe Mellier and Varda Shine

New York City
Hosted by DMIA at 5:30 p.m.
Venue to be announced shortly.
Reservations are required.
Email Alla Sachakova for seating.
alla-at-williamfriedmandiamonds.com

QUOTE OF THE WEEK
Last-minute shoppers are looking forward to the four-day Christmas weekend this year to finalize their shopping plans before the big day, making sure to research everything from shipping deadlines to the best deals on apparel, jewelry and electronics. Budget-conscious consumers have taken advantage of retailers’ deals all season long, even after a strong showing Thanksgiving weekend, and could even look to the days after Christmas to find treasures in the clearance bins or new spring items that arrive that week.

Pam Goodfellow | BIGinsight

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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. View jobs now.

INDUSTRY 	  

De Beers Broadens Term Supply Eligibility

De Beers Group invited eligible customer of its rough diamond auctions to apply for term supply for the remainder of the 2012 to 2015 supplier of choice contract period. De Beers opened the offer to create a more dynamic intention to offer (ITO) re-planning process. Sightholders and non-sightholders that have demonstrated sufficient demand through De Beers’ auction sales in 2012 will, subject to De Beers’ forecast rough diamond availability, have the opportunity to qualify for an ITO by submitting a contract proposal questionnaire (CPQ) as part of the 2013 ITO re-planning process. Eligibility includes having met mandatory financial and compliance requirements and demonstrating the requisite level of demand at De Beers’ auction sales in 2012 in categories of rough diamonds for which De Beers has sufficient forecast availability.

Mellier & Shine to Keynote at DMIA Meeting

The Diamond & Importers Association of ‎America (DMIA) will host and feature guest speakers Philippe Mellier, the chief executive of the De Beers Group and Varda Shine, the chief executive of the De ‎Beers Diamond Trading Company (DTC) as part of its general membership meeting on January 8 in New York. DMIA expects Mellier and Shine to make a comprehensive presentation about the De Beers Group of ‎Companies, diamond mining, polished markets, and the state of the international, as well ‎as the U.S. diamond and jewelry industry. ‎A large turnout is expected, so reservations are required and sought immediately by emailing Alla ‎Sachakova at alla-at-williamfriedmandiamonds.com. Venue details will follow shortly.‎

RETAIL & WHOLESALE 	  

NY Auctions Net Strong Diamond Prices

VIEW THE TOP LOTS: The New York offices of Sothebys and Christies held their Magnificent Jewels auctions this past week and high-quality diamonds and gemstones achieved very strong prices. Sotheby’s sale totaled $64,765,013, the highest-ever for a day of jewelry sales in New York, with the top lot a 6.54 carat, internally flawless, fancy intense pink diamond ring by Oscar Heyman, that sold for $8,594,500, or $1,313,144 per carat. Christie’s sale realized $32,541,625 with strong sell-through rates of 84% by lot. The top lot was a 50.01-carat, D, potentially flawless, rectangular-cut diamond ring by Graff that sold to Laurence Graff for $8,370,500 or $167,400 per carat.

Most Shoppers Complete Gift Buying Early

The National Retail Federation (NRF) and BIGinsight concluded that so far this Christmas season, 20.8% of U.S. shoppers have made a jewelry purchase, which is slightly lower than the groups prediction of 24%. Survey results also found that 56.5% of shoppers have completed gift buying, which is up from 46.5% compared with one year ago. More than half of the shoppers surveyed purchased apparel, 41.9% bought toys, 42.9% purchased books, CDs, DVDs and video games, 28.3% bought electronics and 14.6% purchased sporting goods or leisure items.

With only 10 days remaining before Christmas Day, of those who havent completed shopping, 29.8% expect to finish by December 18 and 10.2% said theyd wrap-up gift buying on December 24.

U.S. online retail sales for the first 40 days of the Christmas shopping season through December 10, rose 13% year on year to $29.3 billion, according to comScore Inc. Green Monday, which fell on December 10, experienced a 13% increase as well and comScore predicted that it opened what would become the heaviest online spending week since tracking began. So far, the top categories for this season have been digital content and subscriptions, predominantly comprised of digital book, music and video downloads; toys; video game consoles and accessories; electronics and computer hardware.

Apollo Global Buys AURUM

Private equity firm Apollo Global Management, through its affiliates, will acquire AURUM Holdings Limited in the U.K. for an undisclosed sum. The portfolio of companies under the AURUM brand name includes Watches of Switzerland, Mappin & Webb and Goldsmiths. The acquisition is expected to close in the first quarter of 2013 and is subject to customary closing conditions. Apollo Global currently manages approximately $110 billion in private equity, credit and real estate funds to invest across a core group of nine industries.

PPR Acquires Qeelin

PPR acquired a majority stake in the Chinese fine jewelry brand Qeelin for an undisclosed sum. The transaction should be finalized in January. Qeelin was launched in 2004 and turns mythical and superstitious Chinese symbols into contemporary jewels. Qeelin operates 14 boutiques, seven of which are on Mainland China, four in Hong Kong and three across Europe, in addition to being carried by multi-brand stores, such as Colette in Paris and Restir in Tokyo. PPR expects to accelerate Qeelins expansion, notably through store openings in China and Hong Kong.

Gitanjali Acquires Nirvana & Viola

The Gitanjali Group acquired the Nirvana and Viola Indian jewelry brands as the company ‎aims to enhance its share of the organized retail space. The acquisition was made ‎through Gitanjali’s subsidiary Spectrum Jewellery Ltd. for an undisclosed amount.‎ Nirvana is a 15-year-old brand with a focus on daily wear jewelry, ‎targeting professional women between the ages of 20 and 45 in tier I and tier II cities. Its ‎product range consists primarily of rings, earrings and pendants and at price points ranging ‎from $460 to $553 (INR 25,000 to INR 30,000). The brand has an active design portfolio ‎of 2,000 designs.‎ Viola is a relatively newer brand and offers colored stones by Italian designers and targets the occasional-wear and party wear markets, with price points ‎ranging from $553 to $921 (INR 30,000 to INR 50,000).

Shree Ganesh Partners With Rocks Creations

Shree Ganesh Jewellery House (I) Ltd. plans to set up a jewelry manufacturing ‎unit in Bangladesh as it expands its global market base. The company recently ‎entered into a joint venture with Rocks Creation Ltd. of Bangladesh to set up the unit with ‎a total investment of $9.2 million. Shree Ganesh will own 75% of the joint venture. The production capacity of the unit will be 200 kilograms of gold jewelry per year and the companies expect to employ and train 200 jewelry craftsmen.

Rocks Creation has retail, jewelry and textiles operations so it will provide the local support and infrastructure in Bangladesh to set up the factory and pipeline. Bangladesh is ‎designated as a beneficiary country under the U.S. Generalized System of Preferences ‎‎(GSP) program for jewelry, which will also enhance Shree Ganeshs market base.

Tiffanys Legacy of Diamonds Opens in Dubai

Tiffany & Co. opens its special exhibit, A Legacy of Diamonds, at its flagship store in Dubai on December 13 as part of the retailers 175th anniversary celebration. A Legacy of Diamonds showcases jewelry from the Tiffany archives and includes its icon -- the 128.54-carat Tiffany Diamond. The exhibition in Dubai will conclude on January 9. The Tiffany Diamond is considered to be one of the finest and most beautiful fancy yellow diamonds ever discovered. Its beauty symbolizes Tiffanys heritage and was reset in a diamond and platinum necklace for this anniversary exhibition. Additionally, the design features more than 100 carats of diamonds and includes 20 Lucida® diamonds and 58 brilliant-cut diamonds, with a mounting of 481 sparkling stones, each hand cut and set by skilled artisans.

Helzberg Launches Proposal App

Helzberg Diamonds create a new smartphone application, the Proposal Pro™: A Complete Guide to Popping the Question, to provide its customers with help in navigating their way through the engagement experience. The mobile app advises users on points such as asking her parents to putting the perfect ring on her finger and supports an automated ring sizer. Proposal Pro offers information on how to select a ring, define the 4C’s and to plan a proposal. The app is available at iTunes and Google Play stores.

Jewelry Robbers Wreak Havoc Across LA

Five masked gunmen robbed Empire Jewelry & Pawn Shop in Moreno Valley, California Wednesday and shot a jewelry clerk before fleeing the scene with an undisclosed amount goods. The jeweler was rushed to hospital and remains in critical condition. The robbers engaged police in a high-speed chase across southern California, which resulted in the suspects separating to avoid capture. One gunman ended up in Watts where he was captured as a result of carrying out a carjacking. Four other suspects fled to the sprawling campus of California State University Fullerton where police surrounded the college, closed it down and successfully captured two suspects, but two others evaded authorities and remain at large.

U.S. Customs Seize $83M in Counterfeit Watches

The U.S. Customs & Border Patrol seized thousands of counterfeit designer watches, which had they been real would have been valued at $83 million. Nearly 7,800 watches where confiscated upon arriving in a truck at the World Trade Bridge that links Laredo, Texas and Nuevo Laredo, Mexico. The U.S. government determined that the watches infringed upon the trademark Audemars Piguet. In June, Customs seized a shipment of 4,200 fake Louis Arden and Audemars Piguet watches at the same border crossing and listed the retail value of those timepieces at $29 million had they been authentic. The Laredo port determined this latest seizure was the largest to date in terms of retail value.

MINING 	  

Renard Sample Reveals High-Value Stone

Stornoway Diamond Corporation recovered a 9.78-carat rough diamond from ongoing processing at its Renard 65 bulk sample program and a preliminary valuation was given at $7,000 per carat. Stornoway defined this diamond as one of the most valuable stones ever discovered at the Renard diamond project. Further, the rough diamond was described as an unbroken white octahedral gem. The next largest diamond in the sample was 6.41-carats and it, too, was a white octahedral gem of high-quality with a preliminary valuation of $4,700 per carat. Approximately one third of the Renard 65 bulk samples heavy mineral concentrate has now been processed and a total of 11 diamonds larger than 1.8 carats were extracted.

Tirisano Placed on Care & Maintenance

Rockwell Diamonds placed its Tirisano mine operations on care and maintenance as a result of persistent labor difficulties and ongoing losses incurred at the mine. Tirisano has been subject to persistent industrial relations issues regarding wage increases, despite the fact that the mine continued operating at a loss. The labor issues are being dealt with in compliance with the Labour Relations Act (LRA) of South Africa, according to Rockwell. Challenges at Tirisano have been exacerbated by operational complexities and slower than anticipated price recovery for the smaller diamonds that make up a large part of the mines production. With operations at Tirisano suspended, the company will focus on its high potential Saxendrift and Klipdam projects in the Middle Orange River region.

Gemfields Acquires Ruby Deposit

Gemfields plans to acquire a controlling interest in an additional ruby deposit located adjacent to the company’s Montepuez ruby mine in Mozambique. The initial acquisition includes 75% of one exploration license with a one-year option to acquire 75% of a second license for $1.75 million each. The mining titles would provide a platform, alongside the Montepuez deposit, for the expansion and development of Gemfields’ Mozambique operations. Small-scale and informal mining within the targeted licenses has already taken place and the current vendor is seeking to expand its operations. The deal is subject to government approval.

STATS 	  

Belgium

Nov. $Mil. %Chng. YTD $Mil. %Chng.
Polished exports $1,153 -8% $12,213 -9%
Polished imports $1,035 -11% $12,129 -6%
Net exports $118 34% $84

Rough imports $1,100 10% $11,323 -11%
Rough exports $1,044 -11% $12,124 -8%
Net imports $56 ($801)

Net diamond account $62 -76% $884 20%

U.S.

Oct. $Mil. %Chng. YTD $Mil. %Chng.
Polished imports $1,441 -21% $16,416 -12%
Polished exports $1,120 -5% $14,044 -7%
Net imports $321 -48 $2,372 -34%

Rough imports $27 -27% $404 -21%
Rough exports $20 -13% $258 -25%
Net imports $7 -50% $148 -10%

Net diamond account $328 -49% $2,520 -33%

ECONWATCH 	  

Diamond Industry Stock Report

U.S. retail was mixed as JCP (+15%) led gainers, but Blue Nile (-3%), Movado (-7%) and Zale (-7%) zapped the jewelry index. European retailers were all lower, Indian shares were lower except for Classic Diamond (+13%) and C. Mahendra (+3%). Mining shares were mixed but Stornoway (+26%) and True North (+29%) posted the best performance. Read the extended industry stock report for this past week.
Dec. 13 Dec. 6 Chng.
$1 = Euro 0.760 0.771 -0.011
$1 = Rupee 54.49 54.14 0.4
$1 = Israel Shekel 3.79 3.83 -0.04
$1 = Rand 8.67 8.68 -0.01
$1 = Canadian Dollar 0.98 0.99 -0.01

Precious Metals
Gold $1,696.90 $1,698.90 -$2.00
Platinum $1,612.00 $1,596.00 $16.00

Stock Indexes Chng.
BSE 19,229.26 19,486.80 -257.54 -1.3%
Dow Jones 13,170.80 13,074.04 96.76 0.7%
FTSE 5,929.61 5,901.42 28.19 0.5%
Hang Seng 22,445.58 22,249.81 195.77 0.9%
S&P 500 1,419.45 1,413.94 5.51 0.4%
Yahoo! Jewelry 1,119.48 1,132.41 -12.93 -1.1%

RAPAPORT... ALROSA has started a stripping operation at its Botuobinskaya diamond pipe, the first phase in developing the deposit to prepare it for mining minerals.

The stripping operations will last for three years with commercial diamond mining at Botuobinskaya expected to begin in the fourth quarter of 2015, the Russia-based miner stated.

ALROSA said that the diamond pipe will be worked out as an open pit, while its ore will be processed at the existing facilities of Nyurba GOK, a mining and concentrating mill. The open-pit mine will produce about 1.5 million carats annually after Botuobinskaya reaches its design capacity of 300,000 tonnes of ore per year, the company noted.

Botuobinskaya, which is located 3 kilometers from the currently mined Nyurbinskaya diamond pipe, has an estimated diamond reserve of more than 70 million carats given its diamond grade is 5.13 carats per tonne, ALROSA noted. Botuobinskaya diamonds are characterized by a high proportion of gem-quality and near-gem-quality stones having a high degree of transparency.

ALROSA has included the mining operations to be launched at Botuobinskaya in its long-term development plan until 2021. The company expects Botuobinskaya will setmake up for dwindling ore production at Nyurbinskaya where mining began in 2000. 😲 😲 🙄

RAPAPORT NEWS SERVICE | Dec. 28, 2012 www.rapaport.com | news@rapaport.com

Retail & Wholesale
General
India
EconWatch
Mining

Rapaport Weekly Market Comment Dec. 28, 2012

Caution: Automatic Jan. 1 U.S. tax hikes may significantly reduce diamond ‎demand. News: U.S. holiday sales disappoint as consumer confidence slides on ‎stalled budget talks. Final effort to beat fiscal cliff deadline expected but inevitable tax hike will ‎reduce 2013 jewelry demand. MasterCard Advisors SpendingPulse reports Nov./Dec. ‎retail sales +0.7% vs. +2% in 2011. comScore says online sales +16%. Diamond trading ‎quiet as U.S. and Belgian markets close for Christmas break and Indian manufacturing ‎cautiously resumes after Diwali. Israel and other markets focusing on Far East Chinese ‎New Year demand.

RapNet Data: Dec. 27

Diamonds 974,972
Value $6,178,135,631
Carats 1,054,527
Average Discount -27.43%

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RAPAPORT ANNOUNCEMENTS

The Rapaport Group
wishes you and yours
a happy, peaceful,
healthy and prosperous
New Year.

January
21-29
Mon-Tue

Launching Rapaport Jewelry Auctions 

Closeout and Estate Jewelry

January 21-25, New York
January 28-29, Miami
Excellent Buying Opportunities

For more information, please call +1-702-893-9400

January
8
Tue

An Evening with Philippe Mellier and Varda Shine

New York City
Hosted by DMIA at 5:30 p.m.
Venue to be announced shortly.
Reservations are required.
Email Alla Sachakova for seating.
alla-at-williamfriedmandiamonds.com

QUOTE OF THE WEEK
Christmas shopping season experienced only marginal growth when compared to the 2011 season. The Northeast, Mid-Atlantic and North Central regions of the country all lagged the national average growth, while the southern and western regions of the country experienced more positive holiday shopping seasons. You really did have two kinds of results, depending on the region -- one had a relatively negative season, while the other was more in line with the lower-end of expectations. And between the two, even with all the negative headwinds, the country managed to gain slightly over last year.

Michael McNamara | MasterCard Advisors SpendingPulse

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RETAIL & WHOLESALE 	  

Retail Sales Growth Slows to a Crawl

A SpendingPulse report by MasterCard Advisors found that, from October 30 to December 24, U.S. consumers increased their spending by 0.7% year on year for categories such as jewelry, apparel, electronics, online, luxury and furnishings. The measure excluded autos, food and fuel. SpendingPulse noted that online sales for those same categories grew only 8.4% year on year with the strongest products being specialty apparel and electronics.

The Christmas-season, as measured from about November 1 through January 1, initially experienced steep sales declines in the northeastern U.S. due to storm damage, but then sales recovered when promotional activity stimulated growth, the group concluded. However, across the nation, growth subsided in the first half of December with several areas returning to negative growth year on year. Finally, sales improved again for the final two weeks before Christmas.

Meanwhile, comScore observed that Christmas-season retail sales from November 1 through December 22 jumped 16 percent year on year to $38.7 billion and that rate of growth was in line with expectations.

WATCH WEEKLY SALES RECAP

Theo Fennell Narrows Loss

Theo Fennell reported that revenue fell 8% year on year to $7.9 million for the six months that ended on September 30. The cost of sales was nearly 7% lower at $3.7 million and the luxury jeweler lowered its loss to $987,000 from $2.3 million one year earlier. Theo Fennell is in ongoing discussions with EME Capital about a potential takeover and it will inform the market when there are further developments to report.

NRF Warns of Fiscal Cliff Impact

The National Retail Federation (NRF) estimated that U.S. retail sales in 2013 would fall flat for the year, following a contraction in the first half, if middle-class tax increases go into effect as a result of inaction on the so-called fiscal cliff. However, if Congress and the White House reach a deal to avoid automatic tax increases on December 31, the NRFs chief economist, Jack Kleinhenz, estimated that retail sales would increase between 2% and 2.5% year on year for 2013.

Sterling, Zale Trade Barbs in Court

Sterling Jewelers charged that Zale violates the Lanham Act with its Celebration Fire tagline, the most brilliant diamond in the world, but Zale argued that Sterling makes similar claims with its own branded diamonds. Expert witnesses for plaintiff Sterling argued that Zale could only make a brilliant claim if each Celebration Fire diamond was indeed the most brilliant. Defendant Zale argued that Sterlings witnesses collaborated in the case simply for competitive reasons. Zale has requested a trial by jury.

Read the latest court summary briefs:
Sterling Says Zale Misinterprets an Advertisers Legal Burden

Zale Says Sterling Misleads With Its Own Diamond Claims

Sterling Says Consumer Expectations Exceed Zales Claim

U.S. Consumer Confidence Flat

The Conference Boards Consumer Confidence Index was basically flat year on year at 65.1 points (1985=100) for December 2012, but the group noted a sharp drop from Novembers reading of 71.5 points. Nonetheless, the Present Situation Index rose 34% year on year to 62.8 points. The Expectations Index, however, fell 13% to 66.5 points. The group observed that the pending fiscal cliff negotiations worried consumers most.

JJS Attracts Strong Attendance

The tenth edition of the Jaipur Jewellery Show (JJS) in India, also known as the December Show, experienced higher traffic than one year ago and exhibitors reported good inquiries from buyers. Jewelry demand was relatively better than diamonds, however. Organizers estimated more than 30,000 visitors participated in the show and some 290 exhibitors were present to serve.

LAzurde Opens Flagship Store

Saudi Arabia-based jeweler L’Azurde expects to invest $26.7 million in expanding it diamond store network, tripling the number of locations to 30 in the next three years. L’Azurde reported an annual growth rate of more than 30% this past year. The brand opened a new flagship store in Riyadh on Olaya Street this past week.

GENERAL 	  

Groupon Acquires Channel Solution

Groupon acquired CommerceInterface, a provider of web-based channel management technology that serves manufacturers, distributors and retailers to manage online sales. Terms of the deal were not disclosed. Groupon said it has been using CommerceInterface technology since April 2012 to streamline its own operations and automate interactions with vendors. As part of this deal, CommerceInterface will no longer serve other retail channels and current customers will have the option to transition to other vendors over the next six months with migration support from the company.

YES Bank Adopts Commodity XL Solution

YES Bank licensed Triple Point Technologys Commodity XL for Precious Metals software to manage its gold and silver bullion wholesale and retail distribution operations in India. YES Bank serves corporate and retail customers at more than 380 branches in 275 cities. The software provides an enterprise solution to seamlessly manage all aspects of the precious metals supply chain at YES Bank, while supporting regulatory compliance, according to the companies. Commodity XL provides a real-time, enterprise-wide view of exposure and automatically generating compliance documentation for national or international trade.

Runci Retires From JA

Matthew A. Runci, the president of Jewelers of America (JA) for more than 17 years, will retire on December 31. David J. Bonaparte, formerly the vice president of JCK Brands for Reed Exhibitions, will take the helm of the national jewelry trade association effective January 1. The two men have worked together since October to ensure a smooth transition of leadership. Bonaparte will focus on continuing JAs public policy work, in addition to enhancing its membership, both in terms of size and benefits.

MINING 	  

ALROSA Acquisition Expands Production

ALROSA acquired a 51% stake in alluvial diamond miner Nizhne-Lenskoye for $119 million and it will provide additional production of two million carats a year. Nizhne-Lenskoye mines alluvial diamonds near operations overseen by ALROSAs subsidiary Almazy Anabara. The company has estimated diamond reserves of 26.4 million carats and its existing and expected mineral resources are sufficient to maintain diamond mining for 17 years.

ALROSA also began strip mining operations at its Botuobinskaya diamond pipe, the first phase in developing the deposit to prepare it for mining minerals. Stripping will continue for three years, with commercial diamond mining at Botuobinskaya expected to begin in the fourth quarter of 2015. The diamond pipe will be worked as an open pit, while its ore will be processed at the existing facilities of Nyurba GOK, a mining and concentrating mill. The open-pit mine will produce about 1.5 million carats annually after Botuobinskaya reaches its design capacity of 300,000 tonnes of ore per year. Botuobinskaya has an estimated diamond reserve of more than 70 million carats given its diamond grade is 5.13 carats per tonne.

ECONWATCH 	  

Diamond Industry Stock Report

U.S. retail shares took a bath as investors noted weaker-than-expected preliminary Christmas sales. Birks -9%, Blue Nile -5%, Signet -4%, Zale -8%. European shares were lower, but not much worse than flat. Indian shares were mixed, Classic -10% but C.Mahendra +10%, Goenka -4% but Goldiam +3%. Mining shares were slightly higher except for Rockwell -8%, Harry Winston -5%, Stellar -7% and Stornoway -1%. Read the extended industry stock report for this past week.
Dec. 27 Dec. 20 Chng.
$1 = Euro 0.755 0.755 0.000
$1 = Rupee 54.95 54.86 0.1
$1 = Israel Shekel 3.73 3.74 -0.01
$1 = Rand 8.49 8.48 0.01
$1 = Canadian Dollar 0.99 0.99 0.00

Precious Metals
Gold $1,664.00 $1,648.50 $15.50
Platinum $1,532.00 $1,546.00 -$14.00

Stock Indexes Chng.
BSE 19,323.80 19,453.92 -130.12 -0.7%
Dow Jones 13,096.31 13,311.72 -215.41 -1.6%
FTSE 5,945.30 5,958.34 -13.04 -0.2%
Hang Seng 22,619.78 22,659.78 -40.00 -0.2%
S&P 500 1,418.09 1,443.69 -25.60 -1.8%
Yahoo! Jewelry 1,101.57 1,116.13 -14.56 -1.3%

Rapaport Weekly Market Comment Jan. 4, 2013

Diamond prices stabilize in December easing sharp declines for the year: 2012 RapNet Diamond Index (RAPI™) for 1ct. -12.5%, 0.3ct. -7.4%, 0.50ct. -11.1%, 3ct. -11.6%, Rapaport Melee Index (RMI™) +2.3%. Diamond buyers conservative as higher U.S. taxes expected to reduce luxury spending in 2013. Expectations rise for Chinese New Year as China’s economic outlook improves. Israel’s 2012 polished exports -23% to $5.6B, rough imports -13% to $3.8B. Japan’s Nov. polished imports +9% to $68M. Tiffany extends partnership with designer Elsa Peretti for 20 years. De Beers executives to address U.S. DMIA on Jan. 8.

RapNet Data: Jan. 3

Diamonds 949,225
Value $6,040,237,425
Carats 1,025,052
Average Discount -27.44%

www.rapnet.com

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RAPAPORT ANNOUNCEMENTS

January
8
Tue

An Evening with Philippe Mellier, Varda Shine

and Stephen Lussier

New York City
Hosted by DMIA at 5:30 p.m.
1271 Avenue of Americas 8th Floor
Reservations are required.
Email Alla Sachakova for seating.
alla-at-williamfriedmandiamonds.com

January
15-23
Sun-Mon

Rapaport Melee Auction

New York & Dubai

View details.

January
21-29
Mon-Tue

Launching Rapaport Jewelry Auctions 

Closeout and Estate Jewelry

January 21-25, New York
January 28-29, Miami
Excellent Buying Opportunities

For more information, please call +1-702-893-9400

QUOTE OF THE WEEK
December sales were slightly below our expectations, as strong results late in the month did not completely offset softness in the first three weeks. Similar to November, profitability for December benefited from our continued focus on achieving an appropriate balance between price investments and driving sales, combined with thoughtful inventory management.

Gregg Steinhafel | Target Corp.

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. View jobs now.

INDUSTRY 	  

Polished Prices Fall in 2012

Certified polished diamond prices fell ‎in 2012 as global economic weakness slowed growth in China and poor government ‎policy fueled further declines in India. Steady U.S. demand sustained the jewelry industry ‎but consumer sentiment softened in December as pending tax hikes reduced holiday ‎retail spending.‎ In December, the RapNet Diamond Index (RAPI™) for 1-carat polished diamonds was ‎flat, while other categories rose slightly.‎

For 2012, RAPI for 1-carat fell 12.5%, while 0.3-carat ‎stones declined 7.4% and 0.5-carat diamonds decreased by 11.1%. RAPI for ‎‎3-carat stones fell 11.6% but the Rapaport Melee Index (RMI) ‎increased by 2.3%.

Forecasts for pending diamond price increases are premature and the trade should be ‎careful not to inflate prices by buying diamonds with easy credit. Bank credit that enables ‎firms to buy diamonds at unsustainably, artificially high prices must be stopped. ‎

Purchase the Rapaport Research Report, “Questionable Stability” for full details.

KP Issues a Notice on CAR

The Kimberley Process (KP) urged vigilance across the supply chain for any illicit rough diamonds that may have been introduced by rebel group Seleka in the Central African Republic (CAR), particularly from Bria, Sam Ouandja and Bamingui. The KP requested its Working Group on Monitoring and the Working Group of Diamond Experts to continue monitoring the situation on the ground where rebel groups have attacked diamond-producers. The KP noted, however, that most of CARs rough diamond production is legitimate and accompanied by certificates.

ALROSA Sells $230M in Rough to Gokhran

ALROSA sold approximately $230 million worth of diamonds to Russia’s state depository ‎Gokhran in 2012.‎ The company sold about $90 million worth of goods to Gokhran in the second quarter of ‎‎2012 and an additional $140 million through the rest of the year. ALROSA explained in August that it reduced supply to the market and sold to Gokhran ‎after ‎witnessing its customers acute financing problems during the second half of ‎‎2011, ‎which led to the decline in demand for rough diamonds in the first half of 2012.‎

RETAIL & WHOLESALE 	  

U.S. Christmas Season Retail +3%

U.S. chain-store sales rose 4.5% year on year in December, excluding drugstores, according to the International Council of Shopping Centers (ICSC). The comparable-store increase for the entire Christmas season rose 3.1%, due to a weaker-than-expected November reading. ICSC concluded that retailers performed largely as expected, and benefited from two extra days of shopping due to an early Thanksgiving weekend. ICSC anticipates that Januarys chain-store sales will increase about 3% year on year, but lower when drugstores are included. As for online spending, comScore stated that retail sales rose 14% year on year to $42.3 billion from November 1 through December 31, which was just slightly lower than expectations.

The following table reflects December sales at some of the major retailers.
Dec. $Mil. %Chng. Comps %Chng.
Bon-Ton $513 1.5% 2.4%
Costco $11,200 11.5% 8%
Kohls $3,370 4% 3.4%
Macys $5,100 3.6% 4.1%
Nordstrom $1,700 9.4% 8.6%
Target $10,200 0.8% 0%

Hong Kong Jewelry Sales +14%

The Census and Statistics Department (CSD) of Hong Kong reported that November retail sales rose 9.5% year on year to $4.7 billion. The volume of retail goods sold rose 8.1%. Sales of jewelry, watches and clocks rose 13.6% year on year in November to $1 billion, bringing the year to date total to $11.1 billion and representing an increase of 7.3%. The CSD observed that retail sales benefited from a vibrant influx of tourists and stable job and income conditions locally.

Tiffany, Peretti Sign a 20-Year Deal

Tiffany & Co. and jewelry designer Elsa Peretti entered into an amended and restated agreement to extend their partnership 20 years. Tiffany made a $47 million one-time payment to Peretti, which is subject to the withholding of U.S. income taxes on a portion of the payment. Peretti will also receive royalties for use of the Peretti intellectual property and fees in respect of certain quality-control services Peretti has committed to providing pursuant to the agreement.

Since 1974, Tiffany & Co. has been the sole licensee for the intellectual property rights to make and sell jewelry and other products under Peretti’s trademarks. The renewed agreement, which reflects the long-standing rights and marketing and royalty obligations of both parties, grants Tiffany an exclusive license in all of the countries in which Peretti-designed jewelry and products are currently sold.

Richline Buys Rio Grande

The Richline Group Inc. acquired Rio Grande, including Rio Grande’s Neutec branded equipment, from The Bell Group Inc. In the new corporate structure, Rio Grandes president, Alan Bell, and executive vice president, Molly Bell, will continue in their executive roles and oversee the company, while Eddie Bell will continue to lead the Santa Fe Symposium and Neutec. With Richlines financial support and collaboration, Rio Grande will be able to meet the future challenges of the jewelry industry, according to the companies. Rio Grande will be a stand-alone business, as are two other recent acquisitions -- LeachGarner and Inverness.

LJ Intl. Changes FY Closing Date

LJ International Inc. approved a change to its fiscal year, moving the closing date from December 31 to March 31 from this point forward. The primary purpose of altering the financial closing date was to align its reporting structure with that of other domestic peers in order to improve comparability on both a quarterly and an annual basis, according to a statement from the board of directors.

Foresee Ranks Website Satisfaction

Foresee Results annual Holiday E-Retail Satisfaction Index, which measured the user experience of 100 retail websites from 24,000 consumers, found that Amazon.com measured up to high standards with an 88% satisfaction rate. Other retailers that sell jewelry included QVC.com with a satisfaction rate of 83%, Avon.com and HSN.com at 81%, Kohls.com at 80%, Nordstrom, Saks and Target at 79%, Costco, JCPenney, ShopNBC and Walmart at 78%, Macys at 77%, Overstock and Sears at 75%, RueLaLa at 73% and Gilt at 72%.

Foresee observed some big-name retailers suffered declines including Apple and Dell, but the largest drop in satisfaction hit JCPenney.com. Satisfaction with the customer experience, when measured correctly, is the most important predictor of future success, according to the firm. Merchandise selection remains a top priority for increasing customer satisfaction. Foresee determined that, on average, a one-point change in website user satisfaction was found to predict a 14% gain or loss in revenue.

GENERAL 	  

Disparity Widens With Industry Stocks

WATCH NOW: There were two distinct stories from publicly-traded diamond industry shares in 2012 across retail, wholesale and mining sectors. Either the companys stock was hot, investors snapped-up shares and the prices soared by 20% or more, or the opposite was true and poor business conditions sank shares by as much as half. Stand-out performers though included Movado Group, Charles & Colvard, Richemont, Gitanjali Group, Titan, Vaibhav Gems, Michael Hill and Gemfields. Overall the greatest losses for share prices hit the diamond-mining companies.

Luxury Women to Watch

‎The Luxury Daily named 25 executives in its inaugural Luxury Women to Watch 2013 list, defined by those who are expected to make a difference in luxury marketing and retail during the year. Of those closely tied to the jewelry industry, Luxury Daily chose Erika Bearman, the senior vice president of communications at Oscar de la Renta; Pam Danziger, (pictured) the president of Unity Marketing; Cannon Hodge, the social media manager at Bergdorf Goodman; Denise Incandela, the chief marketing officer for Saks Fifth Avenue and Maureen Mullen, the research lead for L2 Think Tank.

Avidar Rejoins IDI

The Israel Diamond Institute Group of Companies (IDI) reappointed Eli Avidar as its ‎managing director, six months after he left the position to join the private sector. Avidar previously served as IDI managing director from October 2006 until June 2012 ‎when he was appointed chief executive of Azura Consulting, which is owned by ‎Dan Gertler and provides consulting services for the ‎management of mining assets in ‎Africa.‎

STATS 	  

Israel

2012 $Mil. %Chng.
Polished exports $5,560 -23%
Polished imports $4,270 -25%
Net exports $1,290 -15%

Rough imports $3,830 -13%
Rough exports $2,800 -20%
Net imports $1,030 -15%

Net diamond account $262 -58%

Japan

Nov. $Mil. %Chng. YTD %Chng.
Polished imports $68 9% $834 12%

Rapaport Weekly Market Comment Jan. 11, 2013

Diamond markets quiet. Rough prices may come under pressure ‎as banks scrutinize manufacturers and reduce credit facilities that have encouraged speculation and price manipulation. Far East polished demand improving ahead of Chinese New Year but ‎consumers remain price sensitive. Indian retail diamond demand strong. Government may raise ‎gold import duty to 6% encouraging shift in consumer demand to diamonds. Christmas season sales at Signet +7% to $1.2B, ‎same-store sales +3%; Zale sales flat at $567M, same-store sales +2%; Tiffany sales +4% to $992M, same-store flat. Swatch Group 2012 revenue +14% to $8.8B, watch & jewelry ‎sales +16%. Anglo American appoints AngloGold Ashanti’s Mark Cutifani as new CEO.

RapNet Data: Jan. 10

Diamonds 963,427
Value $6,145,883,384
Carats 1,052,331
Average Discount -27.55%

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RAPAPORT ANNOUNCEMENTS

January
15-23
Sun-Mon

Rapaport Melee Auction

New York & Dubai

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January
21-29
Mon-Tue

Launching Rapaport Jewelry Auctions 

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January 21-25, New York
January 28-29, Miami
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January
23-30
Wed-Wed

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QUOTE OF THE WEEK
Tiffany & Co.s shortfall in the fourth quarter and reasoning for the conservative 2013 outlook was primarily weakness in U.S. sales. This is particularly disappointing after multiple negative revisions to guidance throughout 2012 and the gross margin weakness acknowledged last quarter.

Liz Dunn | Macquarie Group

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RETAIL & WHOLESALE 	  

Swatchs FY Sales +16%

The Swatch Group reported that sales from its watches and jewelry segment grew 15.6% year on year to $7.9 billion in 2012. The company noted double digit growth rates for almost all of its brands, outside of Greater China. Total group sales rose 14% year on year to $8.8 billion. The company will report net income on February 21, signaling ahead of time to expect solid results despite the significant marketing expenses for the London Olympic Games and unsatisfactory currency developments this past year.

Tiffanys Comps Flat

Tiffany & Co. reported that worldwide sales increased 4% year on year to $992 million for the Christmas season, which included the months of November and December 2012. However, comparable-store sales were flat.

Sales in the Americas region rose 3% year on year to $516 million, however, Tiffany recorded a comparable-store sales decline of 2% for its New York flagship store and in U.S. branch stores. Internet and catalog sales rose 4%. In the Asia-Pacific region, revenue increased 13% to $187 million, comparable-store sales jumped 7%; in Japan, total sales plunged 5% to $153 million, but same-store sales rose 1%; in Europe, sales rose 2% to $119 million, however, results were mixed by country and same-store sales were flat.

Signets Comps +3%

Signet Jewelers reported Christmas-season sales on a same-store basis rose 3.3% year on year for the nine weeks that ended on December 29. Group sales, which included $37 million from the newly acquired Ultra stores, rose 7.1% to $1.24 billion. Online sales increased by 39%. By region, U.S. sales on a comparable-store basis rose 4.7% and total sales rose 9.9% to $1 billion. In the U.K., same-store sales fell 2.6% and total sales fell 8.1% at constant-exchange-rates to $203 million.

Zales Comps +2%

The Zale Corporation reported that its Christmas-season same-store sales rose 2.3% year on year, while total revenue was flat at $567 million. Zales branded stores posted a same-store sales increase of 3.1% year on year, while Gordons Jewelers posted a comparable-store sales increase of 2.2%. Canadas fine jewelry brands posted a comparable-store sales increase of 2.7%. Same-store sales at Piercing Pagoda rose 1.7%.

Rajesh Reports Record Festive Sales

Rajesh Exports reported record sales during the Diwali and Christmas festive seasons with revenue exceeding $41 million. Stores registered footfall of 97,322 customers, 64,312 conversions and they sold 79,347 pieces of jewelry. More than 743 kilograms of jewelry were sold during the period. Rajesh Exports expects to introduce 1,000 new designs in its stores beginning on January 15 for the upcoming wedding season.

DMIA Hosts De Beers Execs for NY Trade

WATCH NOW: Marking an official public appearance of De Beers executives on U.S. soil, the Diamond & Importers Association of America (DMIA) hosted its members and the diamond trade for an Evening with De Beers on January 8 in Manhattan. Philippe Mellier, the chief executive of the De Beers Group; Varda Shine, the executive vice president of global sightholder sales and Stephen Lussier, the executive vice president of marketing, presented "Diamond Equity and the De Beers Group" to some 300 in attendance.

Deepak Intl. to Market Polar Bear Diamonds

The Northwest Territories (NWT) of Canada granted Deepak International Ltd. its special diamond manufacturer status, which enables the company to purchase a portion of the 10% of NWT rough diamond production offered for local cutting and polishing. Deepak International will also be able to market the Polar Bear trademark under and exclusive licensing agreement. Deepak International is authorized to market NWT-manufactured diamonds as a Government Certified Canadian Diamonds. Deepak International is finalizing the purchase of two government-owned buildings in Yellowknife and the lease of related airport land as the site for their new NWT diamond manufacturing operations.

Quality Gold Completes Leslies Merger

Woodbridge International completed the sale of its client, Greenwich, Connecticut-based Leslies Jewelry Manufacturing Corporation this month to Quality Gold Inc. of Fairfield, Ohio. Quality Gold began taking orders for Leslies on January 2, started shipping orders on January 7 and by January 14, or earlier, it will begin processing returns, according to the companys announcement. Also by mid-January, Leslie’s sales force should be equipped to introduce more than 350 new items that Quality Gold expects to offer with the Leslie’s brand. By the second quarter, the company expects to aggressively introduce additional new products in both 10-karat and 14-karat gold and sterling silver. In May, prior to the Las Vegas shows, Quality Gold will introduce a new and expanded Leslie’s catalog.

MJGF Misses Expectations

Visitor traffic was light at the second edition of the Mumbai Jewellery & Gem Fair (MJGF), with exhibitors reporting activity mainly from their existing clients. Hari Krishna Exports said it expects footfall would increase as the show gains in prominence in years to come. Demand for dossiers, fancy shapes, SI and pique goods during the show was stable; buyers were mainly looking for dossiers in 30-40 pointers.

Helzberg Partners With Davids Bridal

Helzberg Diamonds became the exclusive jewelry retail partner for David’s Bridal in the U.S. The partnership creates a one-stop resource for brides-to-be, the companies stated. Helzberg believes it will be reaching a huge audience of brides to offer wedding bands, wedding jewelry and bridal party gifts. The affiliation with Davids also gives the retailer an opportunity to build relationships with women who are approaching marriage.

Huizenga Launches Collection at Neimans

Pamela Huizenga launched her gem infused gold and platinum jewelry collection with Neiman Marcus in Fort Lauderdale, Florida this month. The launch opened with a 22-piece collection that the designer will build upon throughout the first and second quarters. The collection includes colorful bracelets, pendants and earrings with statement rings coming soon. Huizengas designs pop in natural colors that engage and entice with fancy colored, rose-cut diamonds, rubellites, chalcedony, opals, tourmalines, rare stalactites and turquoise.

Cred Sources Fairtrade Silver

Cred Jewellery in the U.K. sourced what it called the worlds first Fairtrade & Fairmined silver in December. The metal originated in the Sotrami mine in Peru, one of the mines certified as Fairtrade & Fairmined by the Fair Trade Labeling Organization and the Alliance for Responsible Mining. The silver is found in small quantities at Sotrami alongside deposits of gold and, therefore, it received the same fair trade mark, according to Cred Jewellery.

GENERAL 	  

Anglo Appoints Cutifani

Anglo American has appointed Mark Cutifani as its new CEO to replace ‎Cynthia Carroll. Cutifani, who is currently CEO of AngloGold Ashanti Ltd., will begin his new ‎position on April 3, while Carroll is scheduled to leave at the end of April.‎ Cutifani was described as a seasoned miner and experienced executive with a focus on creating shareholder value.

Namibia Appoints Seber to Diamond Board

Burhan Seber, the president of the Diamond Manufacturers Association of Namibia (DAIMAN), was appointed to the Diamond Board of Namibia by the Honorable Isak Katali, Namibias Minister of Mines & Energy, for a term of four years. DIAMAN is one of the 16 members of the International Diamond Manufacturers Association (IDMA). Seber is the managing director and majority shareholder of Hardstone Processing (Pty.) Ltd., one of the 12 sightholders of the Namibian Diamond Trading Company (NDTC). Namibias Diamond Board consists of 14 government-appointed members.

HOF Names New Execs

Hearts On Fire promoted Gilly Strauss to executive vice president of global sales, Jacqueline Raffi was promoted to vice president for key accounts and Chris Croteau was made director of sale for North America. They will report to the vice president of sales, Rich Pesqueira, who oversees the sales operation. Additional executive promotions were given to Jason Bisset, now vice president and controller; Michael McArdle, vice president of business planning and analysis and Keith Spodek, vice president of operations.

King Crown Promotes Chinese Execs

King Crown of South Africa promoted Rose Yu to executive vice president of the companys operations for China to oversee its supply chain management and service operations within the greater China region. The company also named Linda Ao as its vice president of business development for China. King Crown set up its operations in China this past year with a local brand, Hao Guan. The companys priority this year is to build upon its independent sales and service operation in China particularly in Guangdong, Fujian, Zhejiang, Jiangsu and Shanghai, according to the group.

MINING 	  

Rockwells 3Q Loss at $5M

Rockwell Diamonds reported that diamond sales rose 23% year on year to $7.4 million for the third quarter that ended November 30. The company sold 4,043 carats at an average price of $1,821 per carat, in part due to several high-quality stones, greater than 50 carats, which contributed to a 64% increase in price per carat. The company reported a loss of $4.7 million.

DiamondCorp, Laurelton Finalize Agreement

DiamondCorp signed the contract with Laurelton Diamonds Inc. for a previously announced term loan of $6 million in exchange for an offtake agreement for diamond production from the Lace mine in the Free State province of South Africa. The terms of the loan were originally announced on November 16 and proceeds are to be released from escrow and complete the funding required for DiamondCorps 47-level block cave development at Lace. DiamondCorp expects to make its first withdraw on January 10 and a second on April 10.

Lucara Recovers Two Blue Stones

Lucara Diamond recovered two rare blue diamonds from its Karowe mine in Botswana. The larger of the two diamonds weighs 4.77 carats with the smaller diamond weighing 0.2 carats. Options for the sale of the rough diamonds are currently being considered, according to the company. Lucara recently sold a 9.46-carat blue diamond from the Karowe mine for $4.5 million.

Paragon Accesses New Licenses

Paragon Diamonds entered into a memorandum of understanding with a private company in Botswana that it said was the registered owner of a number prospecting licenses across diamond-prospective terrain. The licenses were issued to the private firm in July 2011, remain valid until June 2014, include one in the Orapa kimberlite field and can all be extended for an addition four years, according to Paragon. The agreement stipulates a six month period during which Paragon may review data on the licenses, undertake appropriate due diligence and negotiate earning an equity interest in the licenses in return for funding exploration costs, on terms to be finalized.

ECONWATCH 	  

Diamond Industry Stock Report

Solid gains were the rule this week as investors found jewelry retailers managed to hold margins in check given a very difficult selling environment. Birks +9%, Movado +14%, Signet +12%, Tiffany +6%, Zale +18%. Indian shares were mixed with C.Mahendra -22% and Gitanjali +17%. Stornoway +22% and Peregrine +17% pulled ahead in the mining sector. Read the extended industry stock report for this past week.
Jan. 10 Dec. 27 Chng.
$1 = Euro 0.754 0.755 -0.001
$1 = Rupee 54.58 54.95 -0.4
$1 = Israel Shekel 3.75 3.73 0.02
$1 = Rand 8.66 8.49 0.17
$1 = Canadian Dollar 0.98 0.99 -0.01

Precious Metals
Gold $1,673.60 $1,664.00 $9.60
Platinum $1,624.00 $1,532.00 $92.00

Stock Indexes Chng.
BSE 19,663.55 19,323.80 339.75 1.8%
Dow Jones 13,471.22 13,096.31 374.91 2.9%
FTSE 6,101.51 5,945.30 156.21 2.6%
Hang Seng 23,354.31 22,619.78 734.53 3.2%
S&P 500 1,472.12 1,418.09 54.03 3.8%
Yahoo! Jewelry 1,137.65 1,101.57 36.08 3.3%

Rapaport Weekly Market Comment Jan. 18, 2013

Market sentiment improving ahead of Chinese New Year but Far East retailers cautious. Chow Tai Fook warns of sluggish luxury growth as 3Q sales +4%, same store sales -8%. All eyes on the rough market with small De Beers sight expected next week as manufacturers reduce their 2013 rough purchasing budgets. Harry Winston to sell luxury brand to Swatch for $1B. Rio Tinto’s 4Q diamond production +9% to 3.25M Cts. Lazare Kaplan 2Q sales -28% to $16M. U.S. Nov. polished imports +22% to $1.9B, polished exports -11% to $578M. India’s Dec. polished exports -37% to $950M, rough imports +35% to $1.8B. Belgium’s Dec. polished exports -18% to $998M, rough imports +13% to $930M.

RapNet Data: Jan. 17

Diamonds 940,937
Value $6,119,309,826
Carats 1,034,890
Average Discount -27.64%

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January
15-23
Sun-Mon

Rapaport Melee Auction

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January
21-29
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January 21-25, New York
January 28-29, Miami
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January
23-30
Wed-Wed

Rapaport Single Stone Auction

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QUOTE OF THE WEEK
The U.S. economy has been recovering in fits and starts and it shows in small retailer sales growth numbers. When you step back and look at the big picture, small businesses are operating in a much better environment today than two years ago. Yet, recent data seems to indicate that retailers faced stronger headwinds at the end of 2012 and it remains unclear how ongoing uncertainty in Washington will impact small businesses heading into 2013.

Marc Bernstein | Wells Fargo

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RETAIL & WHOLESALE 	  

Swatch to Buy Harry Winston Retail

Harry Winston Diamond Corp. will sell its diamond jewelry and timepiece division to ‎The Swatch Group for $1 billion, consisting of $750 million in cash and debt ‎repayment of $250 million. Harry Winston will change its name to Dominion Diamond Corp. once the transaction is completed. Cash from the sale will leave the mining company well equipped for upstream ‎opportunities in an environment where cash has become a strategic resource, according to the firm.

Harry Winston agreed to buy the Ekati diamond mine from BHP Billiton for $500 million and, pending a positive outcome from litigation attempting to halt the sale, it expects to close the deal by May 15. Harry Winston is also interested in buying Rio Tintos stake in the Diavik diamond mine.

As reported in the Rapaport Tradewire of January 11, Swatch recorded 2012 revenue from its watches and jewelry segment up 16% year on year to $7.9 billion. The company noted double digit growth rates for almost all of its brands, outside of Greater China. Total group sales rose 14% year on year to $8.8 billion. The company will report income on February 21.

Jewelry Store Sales +8% in Nov.

U.S. jewelry store sales jumped 8.2% year on year in November to $2.663 billion, while the consumer price index (CPI) for jewelry in November fell 2%. Jewelry store sales for the January through November period increased 4.3% year on year to $24.514 billion, while the CPI was up almost 2%.

In other retail news, the National Retail Federation (NRF), after predicting Christmas-season retail sales would increase by 4.1%, determined that consumer spending at the nations stores for the months of November and December combined rose only 3% to $579.8 billion. Online retail sales rose 11.1%, just shy of the groups prediction of 12%. Economic uncertainty and the fiscal cliff chaos likely weighed on consumer spending during Christmas, according to the NRF.

Jewelry CPI -3% in Dec.

The U.S. consumer price index (CPI) for jewelry eased again in December, falling 2.9% year on year to 176.87 points in response to marginally weaker prices for precious metals and gemstones. The index was also lower than Novembers reading of 177.68 points; however, the CPI maintained a historically strong trend and December marked 24 consecutive months of a reading of more than 170 points. The CPI reached a record 185 points in January, but then prices for polished diamonds, gold and platinum have since remained under pressure. The average CPI rate for the calendar year rose 0.9% to 178.23 points compared with 176.56 points in 2011.

Lazare Kaplan 2Q Sales -28%

Lazare Kaplan reported anticipated revenue for its second-quarter of fiscal year 2013, fell 28% year on year to $15.6 million. Lazare Kaplan observed a drop in sales of both polished and rough diamonds during the quarter. The company also filed a notice that the quarterly financial statement would be delayed due to online material uncertainties.

In other news, Lazare Kaplan acquired a 50% stake in the NamGem Diamond Manufacturing Company in December. Lazare Kaplan has had an existing strategic cooperation agreement with NamGem for cutting and polishing diamonds in Namibia. Under the terms of that agreement, Lazare Kaplan provides technical assistance and supervises the manufacturing of stones deemed suitable to cut and polish.

Chow Tai Fook Sales +4%

Chow Tai Fook reported group sales rose a modest 4% year on year in its third ‎fiscal-quarter that ended on December 31, while same-store sales declined 8%. The company did not provide sales figures in ‎its report and it observed weak condition on Mainland China. The ‎National Day Golden Week sales performance in October was worse than expected ‎significantly dragging down sales. The company’s sales in Hong Kong and Macau, however, grew 11%, while same-store sales fell 6%. Chow Tai Fook opened a net 70 points-of-‎sale during the quarter bringing its total to 1,802 as of December 31. ‎

Michael Hills Sales +9%

Michael Hill International reported that revenue for five months plus preliminary sales from December grew 8.8% year on year to $262.1 million, however, same-store sales for the jeweler rose by only 2.6%. By region and local currency, Australias sales jumped 10.8% with same-store sales up 4.2%; New Zealands sales rose 3.7% and comparable-store sales increased 3.1%; jewelry sales in Canada surged 21.6% and same-store sale rose 3.9%, whereas U.S. revenue and comparable-store sales inched higher by 3.9%

Enterprise Software Improves Operations

WATCH NOW: Integrated software solutions created specifically for the diamond and jewelry industry are streamlining operations and improving supply chain performance from the backend all the way up to a companys ecommerce and social media outreach. Check out what ChainDrive and HansaWorld are doing for their jewelry clients and see what PMI Digital marketing is doing to enhance their jewelers online engagement from the floor of NRFs Big Show in Manhattan.

Also during the show, Signet announced the completion of its major integration of online and mobile presence with IBM, which the retailer claimed dramatically improved its customer experience and added a 49% year on year revenue increase to online Christmas sales this year.

Separately from the show, independent jeweler James Allen launched its Diamond Display Technology, which magnifies diamonds 15-times in high-resolution and gives online shoppers the ability to flip the actual diamond for sale by 360 degrees online. Blue River Diamonds Jewelry introduced the Blueriver47 app, which can be found in the Apple iTunes store, for iPhones and iPads. The app was designed to simplify the diamond-buying process and to allow users to select or design their engagement rings, wedding rings, earrings, necklaces, bracelets and other pieces through Facebook, Twitter or Google+.

Kingold Secures Cash, Gold Lease Credit Deal

Kingold Jewelry Inc. entered into a subscription agreement with three individuals, providing seven million shares of its common stock at a price of $1.80 per share for proceeds of $12.6 million. The gold jewelry manufacturing firm also issued, on a pro rata basis, warrants to purchase up to an additional 2.8 million shares at an exercise price of $1.80, which warrant is not cashless exercise but is exercisable at any time in whole or in part for 12 months. Kingold intends to use the proceeds to purchase additional raw materials for its products, working capital and other general corporate purposes.

Kingold also signed a gold leasing agreement with China Construction Banks Wuhan JiangAn branch. The agreement is similar to a revolving credit line, with the bank providing Kingold reusable credit of up to approximately $40.2 million; however, draw downs under the facility, and repayment thereunder, will be made in gold rather than currency, according to Kingold.

TBZ Opens New Showroom

Tribhovandas Bhimji Zaveri Ltd. (TBZ) opened a showroom in Nagpur, expanding its reach in India’s western state of Maharashtra. The new store will cater to the needs of local communities in the Vidarbha region. The opening was timed to serve customers during the auspicious Uttarayan, known as Makar Sakranti in other parts of India, and the pre-wedding buying season. The 2,500-square-foot showroom is located at Dharampeth in Nagpur.

Israels Top Exporters

Company by rank, name
and revenue in 2012.

$Mil.	2011 $Mil.	%Chng.	2011 Rank

Leo Schachter $317 $403 -21% 1
M.I.D. House Of Diamonds $238 $239 0% 2
A.A. Rachminov Diamonds $180 $216 -17% 3
Safdico (Israel) Ltd. $154
Niru Diamonds Israel $120 $111 8% 6
E.Z. Diamonds Ltd. $95 $140 -32% 4
Ofer Mizrahi Diamonds $92 $96 -4% 9
Andre Messika Ltd. $87 $101 -14% 8
Yoshfe Diamonds Intl. $84 $130 -35% 5
Poligem Ltd. $81 $67 21% 13
Rosy Blue Sales Ltd. $74 $85 -13% 10
Royal Gem (Israel) Ltd. $68 $68 0% 12
O.S.G. Polishing Ltd. $64 $50 28% 18
Rachminov Diamonds $63 $61 3% 15
Masingita Ltd. $48 $65 -26% 14
Eran Diamonds - Yehuda Sayag $47 $47 0% 20
D.N. Diamonds 2007 Ltd. $41
Shlomo Bichaci Diamonds Ltd. $40
Eliyahu Yona Diamonds Ltd. $40
Eshed-Diam Ltd. $38 $47 -19% 21
S.N. Asia (Israel) Ltd. $38 $59 -36% 16
Waldman Diamond Company $38 $45 -16% 23
A. Schwartz & Sons Diamonds $36 $43 -16% 24
Z.I.P. Diamonds Ltd. $34 $46 -26% 22
Yoram Dvash Diamonds Ltd. $31

GENERAL 	  

Sisk Dies at 59

Gerald (Jerry) D. Sisk, Jr., the co-founder and executive vice president of Jewelry Television®, passed away peacefully in his sleep on January 13, at the age of 59. His death was unexpected. He is survived by his wife Karen, his mother, a sister and several other relatives. Sisk was a graduate gemologist from the Gemological Institute of America (GIA), a member of the International Colored Gemstone Association and he served as a Gemstone Industry & Laboratory Conference committee member. He was a frequent guest speaker and was honored to be chosen as one of the five most powerful people in the world of gems and gemology on the JCK 2012 Power List.

Diamond Bourse of Canada Appoints Kumar

The board of directors for the Diamond Bourse of Canada unanimously voted Deepak Kumar, from Deepak International Ltd., to the post of bourse director. Kumar will assume a director’s post vacated by Filip Zimmerman, of Zimmy Diamonds. Kumar’s diamond company recently concluded its purchase of two diamond manufacturing facilities in Yellowknife, Canada and was granted the exclusive rights, by the government of the Northwest Territories, to manufacture their iconic Canadian diamond brand “Polar Bear.”

IDI Appoints Gefen

The Israel Diamond Institute Group of Companies (IDI) representative office in Hong Kong, IDI – Asia Pacific Ltd., named Gilat Elizov Gefen its managing director to replace Michal Gordon, who served in this position for the past two years. Gefen has served in several capacities with the Jewish Womens Association in Hong Kong, where she currently resides. Gefen holds a BSc in Industrial Engineering from the Technion and an MBA from the Recanati School of Management in Tel Aviv University.

MINING 	  

Rio Tinto Production +9%, Albanese Out

Rio Tinto reported that its diamond production grew 9% year on year to 3.248 ‎million carats in the fourth quarter of 2012, with increases registered at all of its operations.‎ Production at Rio Tinto’s fully-owned Argyle mine in Australia rose 5% to 2.01 ‎million carats due to an increase in processed ore and higher-grade ore. Rio Tinto’s 60% share of production from the Diavik mine in Canada jumped 19% to 1.141 million carats. Harry Winston owns the remaining 40% in Diavik and is ‎reportedly looking to acquire Rio Tinto’s stake. Rio Tinto’s 78% share in production at the Murowa mine in Zimbabwe rose 11% to 98,000 carats.

In other news, Rio Tinto informed shareholders that it would take a $14 billion impairment charge, primarily from coal and aluminum operations, when it reports fiscal results in February. Tom Albanese, the CEO, stepped down and was replaced by Sam Walsh.

Fipke Files Claim to Prevent Ekati Sale

C. Fipke Holdings Ltd. filed a claim with the Ontario Superior Court of Justice to prevent BHP Billiton Canadas sale of the Ekati diamond mine to Harry Winston unless, and until, BHP provides it with revised offers. Fipke, which holds a 10% interest in Ekatis core zone joint venture and the buffer zone joint venture, alleged that BHP did not comply with a pre-emptive rights agreement and was complicit in the non-compliance.

All parties involved entered into an agreement which provides for the trial and any appeal to be conducted on an expedited basis, with a view to obtaining a final ruling no later than April 15. Harry Winston and BHP both claimed the suit is without merit and plan to vigorously defend the action.

Guinea Renews Droujba License

Stellar Diamonds received its long awaited renewal of the Droujba diamond exploration license in Guinea. The exploration license, which hosts a 3 million carat JORC-defined resource, was renewed for two years, while three exploration licenses adjacent to Droujba are pending. Stellar relinquished a 14-square-kilometer parcel not considered to be prospective for diamonds, reducing the Droujba license area to seven-square-kilometers. The three licenses awaiting renewal cover 100-square-kilometers and are located to the immediate west of Droujba.

STATS 	  

India

Dec. $Mil. %Chng. YTD $Mil. %Chng.
Polished exports $950 -37% $16,986 -16%
Polished imports $581 -49% $5,592 -72%
Net exports $369 2% $11,394 54%

Rough imports $1,762 -35% $14,986 4%
Rough exports $79 -39% $1,525 -10%
Net imports $1,683 43% $13,461 0%

Net diamond account ($1,314) ($2,067)

U.S.A

Nov. $Mil. %Chng. YTD $Mil. %Chng.
Polished imports $1,876 22% $18,292 -9%
Polished exports $1,298 -11% $15,342 -7%
Net imports $578 596% $2,950 -20%

Rough imports $49 -28% $453 -22%
Rough exports $39 -5% $297 -23%
Net imports $10 -63% $156 -21%

Net diamond account $588 435% $3,106 -19%

Belgium

Dec. $Mil. %Chng. YTD $Mil. %Chng.
Polished exports $998 -18% $13,211 -10%
Polished imports $775 -29% $12,905 -8%
Net exports $223 100% $306 -50%

Rough imports $930 13% $12,253 -9%
Rough exports $1,394 17% $13,518 -6%
Net imports ($464) ($1,265)

Net diamond account $687 43% $1,571 -1%

ECONWATCH 	  

Diamond Industry Stock Report

U.S. shares were modestly higher overall, except for Blue Nile (-12%), JCP (-5%), Zale (-3%). Euro shares were higher with Richemont, Swatch and PPR (all +6%) but Indian shares were mixed. Three mining company stocks fell by double digits: Rockwell (-13%), True North (-13%), Gemfields (-19%). Read the extended industry stock report for this past week.

Jan. 17 Jan. 10 Chng.
$1 = Euro 0.747 0.754 -0.007
$1 = Rupee 54.37 54.58 -0.2
$1 = Israel Shekel 3.72 3.75 -0.03
$1 = Rand 8.82 8.66 0.16
$1 = Canadian Dollar 0.99 0.98 0.01

Precious Metals
Gold $1,687.60 $1,673.60 $14.00
Platinum $1,689.00 $1,624.00 $65.00

Stock Indexes Chng.
BSE 19,964.03 19,663.55 300.48 1.5%
Dow Jones 13,596.02 13,471.22 124.80 0.9%
FTSE 6,132.36 6,101.51 30.85 0.5%
Hang Seng 23,339.76 23,354.31 -14.55 -0.1%
S&P 500 1,480.93 1,472.12 8.81 0.6%
Yahoo! Jewelry 1,174.34 1,137.65 36.69 3.2%

Rapaport Weekly Market Comment Jan. 25, 2013

Diamond markets conservative as Far East retailers complete Chinese New Year purchases. Expectations rise for upcoming Golden Week as China’s 4Q economic growth of 7.9% beats forecasts. Indian government raises gold import duty to 6%, expected to help its trade deficit but hurt the jewelry sector. De Beers keeps prices stable but continues to restrict supply with Jan. sight estimated at $550M. BHP Billiton’s FY2Q diamond production -39% to 295K Cts. as minority partners protest Ekati sale. Richemont’s FY3Q jewelry sales +4% to $2B. India’s Bharat Diamond Bourse inaugurates trading floor.

RapNet Data: Jan. 24

Diamonds 940,925
Value $6,030,300,856
Carats 1,030,303
Average Discount -27.43%

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QUOTE OF THE WEEK
Blue Nile has a strong and growing international presence and the company has identified China as a core market in which to continue that growth. Cooperation with a leading Chinese luxury shopping site is an effective way to enter the Mainland China market.

Vijay Talwar | Blue Nile

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INDUSTRY 	  

India Hikes Gold Duty Again

India raised its gold import duty from 4% to 6% in an effort to thwart a surging current account deficit. But industry analysts believed this move would lead to more smuggling activity, while the tax is unlikely to have much of an impact on consumer demand. The duty comes to about INR 60,000 per kilogram of gold, which is a difference of 7% between the international and domestic price, according to Prithviraj Kothari, the managing director of RiddiSiddhi Bullions Ltd.

The All India Gems and Jewelry Trade Federation (GJF) stated that gold smuggling increased after the government doubled the import tax from 2% to 4% one year ago. GJF seeks a reduction in the duty. Nomura added that gold demand has risen as a hedge against inflation and imposing the duty will shift gold imports from official to unofficial channels. Angel Commodities, meanwhile, suggested that the duty may impact short term demand for jewelry, but overall demand is expected to be firm due to wedding and festival seasons.

India’s current account deficit for the first fiscal half, which ended on September 30, 2012, stood at $38.7 billion, or 4.6% of its gross domestic product (GDP), much above sustainable levels of 2.5%.

Italian Brands Adapt to Changing Marketplace

WATCH COVERAGE: The VicenzaOro Winter Show hosted jewelry manufacturers and buyers from 120 countries this week, but there were very few diamond exhibitors among the 1,500-strong list of participating brands. Italian jewelry makers reported the need to adapt to changing market conditions, in part due to emerging mass-market production centers in the Far East. Mixed economic conditions from major markets also seemed to weigh on participating buyers decisions to place orders at the show. Italian manufacturers are increasingly producing more affordable price points by using lower-quality diamonds and more silver and colored stones in their designs.

RETAIL & WHOLESALE 	  

Richemonts 3Q Jewelry Sales +4%

Luxury group Richemont reported that revenue performance for the third quarter that ended on December 31, was highlighted by robust jewelry sales and continued retail channel momentum. Nonetheless, Richemont concluded that its wholesale channel was relatively weak, reflecting a cautious approach by the group’s retail partners in the watch business.

Sales at a constant-exchange-rate rose 5% year on year to $3.8 billion for the third quarter. While revenue growth was observed across all segments, Richemonts retail sales jumped 9% and wholesale revenue was up 2%. Jewelry brand sale increased 4%, however, specialty watchmaker sales surged 9%.

Pure Gold Budgets Expansion Funds

Pure Gold Jewellers budgeted for a $75 million expansion this year with plans to open 30 new stores, targeting locations in Jordan, Sri Lanka, India, Maldives and Saudi Arabia. In 2012, Pure Gold Jewellers opened new retail outlets in four countries it had not previously served, and it reported that revenue grew 18% overall. The retailer is focused on penetrating high-density cities.

Blue Nile Gains New TM, Access to China

The U.S. Patent & Trademark Office (USPTO) approved the trademark It Starts With The Diamond In Your Mind for online retailer Blue Nile Inc. on January 15. In other news, Blue Nile selected Xiu.com, a shopping website serving China, as its exclusive third-party online distributor for fashion jewelry in Mainland China. Blue Niles presence on Xiu.com launched January 18, marking its official entrance to the marketplace in Mainland China. Blue Niles jewelry offerings range from the equivalent of about $20 to $160,000.

Baume & Mercier Debut Clifton

Baume & Mercier premiered a new mens collection, Clifton, this week at the Salon International de la Haute Horlogerie (SIHH) show in Geneva. The Clifton collection will be available at retailers in April. The watches are powered by Swiss-made mechanical movements and the company defined their style as contemporary, while depicting a modern interpretation of the mens classic round watch.

The watches feature an uncluttered sun satin-finish dial, double-beveled design, curves on the case and the bezel, sapphire case back and small complications on some of the references. Each model is clad in steel or 18-karat red gold and they are finished with an alligator strap or stainless steel bracelet.

Stuller, Gemvision Combine Sales Force

Stuller Inc. and Gemvision combined their sales teams into one organization in an effort to improve customer relationships. Expert teams are now more personalized to offer convenient service for customers, according to Bob Cox, the vice president of business development at Stuller. The united force is comprised of 11 regional sales directors.

Sharma Unveils Season of Love

Bollywood actress Anushka Sharma announced the “Season of Love” offer from Gitanjali Group and unveiled the new Valentine collection from Gili in Mumbai. Under the banner of Leading Jewelers of the World (LJOW), Gitanjali is offering discounts of up to 20 percent on diamond jewelry purchase above $186 (INR 10,000). The month long offer will be available on jewelry brands such as Asmi, Gili, Ddamas, Nakshatra, Parineeta, Diya, Sangini, ME Jewels, Gitanjali Jewels, Shuddhi, Gdivas, Jewel Souk, Menz, Sagaee and Amore.

BDB Christens SG Jhaveri Trading Hall

The Bharat Diamond Bourse (BDB) inaugurated its trading floor, with an aim to widen the scope of trading within the complex and facilitate the operations of smaller companies and traders. Currently, there are 425 offices of 300 companies operational within the premises, while work on the interiors of another 415 offices is nearing completion. The SG Jhaveri Trading Hall will help accelerate this process of shifting the entire operations of the industry from the Opera House to BDB.

MINING 	  

BHP Production -39%

BHP Billitons diamond production from the Ekati diamond mine in Canada fell 39% year on year to 295,000 carats during the second quarter that ended on December 31. Rough diamond production for the first half of the companys fiscal year fell 35% to 608,000 carats.

BHP reiterated its agreement to sell all interests in the Ekati mine to Harry Winston for $500 million. As Rapaport Tradewire reported January 18, Charles Fipke (C. Fipke Holdings) sued BHP and Harry Winston to prevent the sale, unless and until BHP provides him with revised offers. All parties did agree to fast-path the case. BHP expects the sale to close in the first half.

TIZ Urges Zim Parliament to Oversee Mining

The group Transparency International Zimbabwe (TIZ) urged Zimbabwes Parliament and cabinet to oversee mining rights and licenses in an effort to curb corruption and ensure transparency. TIZ claimed mining deals benefit certain government officials and that there is an urgent need for reform as ministers were behind the most corrupt activities concerning the extraction, sale and export of gold and diamonds in Zimbabwe.

TIZ alleged that all of the companies mining diamonds in the Marange hold close ties to senior politicians. TIZ rated Zimbabwe 163rd out of 176 countries on its corruption perception index, making it the most corrupt nation in the SADC region.

Cameroon Exports Its First KP Rough

Cameroon exported its first round of rough diamonds as a new Kimberley Process (KP) member country. Export certificates were given for rough from C & K Mining, a Cameroon and South Korea joint venture, which operates the Mobilong Diamond reserve field. C & K expects monthly production of about 6,500 carats.

DiamondCorp Begins Lace Development

DiamondCorp commenced its development activities for the 47-level block cave at its Lace mine, following the receipt of $3 million in funding from Laurelton Diamonds, a subsidiary of Tiffany & Co. The junior miner will receive a second $3 million tranche on April 10 as part of its funding agreement with Tiffany. DiamondCorp stated that the Tiffany loan, combined with $6.6 million of convertible bonds and $24.6 million from the Industrial Development Corporation of South Africa, completed the Lace project financing package.

The main pipe at the Lace mine contains 33.1 million tonnes of kimberlite indicated and inferred to 855-meters depth, containing approximately 13.4 million carats in both resource categories at an average grade of 40.1 carats per hundred tonnes (cpht). The resource has an in-ground value in excess of $2 billion at $160 per carat, according to the company.

De Beers Angola Prospects Improve

De Beers sees Angola as a high-priority for diamond exploration and expects to unveil an economically viable diamond deposit that will help the company regain almost $250 million it has invested searching for diamonds. The company was awaiting evaluation results from three kimberlites at Mulepe, located 500 miles east of Luanda, within the next two months.

De Beers has also found diamonds in a 3,000-square-kilometer concession near Lucapa in the Luanda North province, the last remaining site out of the five that De Beers has explored in Angola since 2005. De Beers has allocated an annual budget of $30 million for prospecting in Angola, which in 2011 produced 8.32 million carats of diamonds worth more than $1.16 billion.

Escom Targets Production by May

Escom Investimentos e Participacoes expects to be producing diamonds from its operations in Angola by May 2013, the companys chairman, Helder Bataglia, told Jornal de Angola. Escom operates the Luo diamond mine and the Tchegi alluvial property, which together could account for about 35,000 carats per month by the end of this year.

The Escom group’s mining business is concentrated in Angola, where it has 15 diamond concessions. Luo has been in operation since 2005. Other areas of business for the company include real estate, oil and gas, energy and public works.

Mining Investment Surges in Canada

The Mining Association of Canada (MAC) reported record global interest for the nations minerals and metals during 2011, which was the most recent reporting year. Exploration spending in Canada that year reached $3.9 billion, and MAC estimated investment was expected to have been even higher for 2012.

Since 2002, MAC determined that exploration spending in Canada surged 585%, and by 2011 Canada had become the top destination for exploration spending, representing 18% of global investment. Canadas mineral production value rose 21% year on year in 2011 to a record $50.3 billion. While MAC didnt cite the diamond figures specifically, Kimberley Process statistics ranked Canada third in the world for rough production in 2011 at $2.6 billion.

ECONWATCH 	  

Diamond Industry Stock Report

U.S. stocks pointed higher, except for Birks (-7%), Blue Nile (-1%) and Tiffany (-2%). European shares were mixed, Damiani (+5%) pulled ahead, Richemont (-4%) dropped. Indian shares were lower across the board with biggest declines for Classic Diamonds (-13%), Asian Star and C. Mahendra (-9%). Gainers far outnumbered losers on mining stocks with a spread between Namakwa (-13%) and Mwana (+17%). Read the extended industry stock report for this past week.

Jan. 24 Jan. 17 Chng.
$1 = Euro 0.748 0.747 0.001
$1 = Rupee 53.68 54.37 -0.7
$1 = Israel Shekel 3.71 3.72 -0.01
$1 = Rand 9.05 8.82 0.23
$1 = Canadian Dollar 1.00 0.99 0.01

Precious Metals
Gold $1,668 $1,688 -$19.6
Platinum $1,679 $1,689 -$10.0

Stock Indexes Chng.
BSE 19,923.78 19,964.03 -40.25 -0.2%
Dow Jones 13,825.33 13,596.02 229.31 1.7%
FTSE 6,264.91 6,132.36 132.55 2.2%
Hang Seng 23,598.90 23,339.76 259.14 1.1%
S&P 500 1,494.82 1,480.93 13.89 0.9%
Yahoo! Jewelry 1,166.07 1,174.34 -8.27 -0.7%

RAPAPORT NEWS SERVICE | Feb. 1, 2013 www.rapaport.com | news@rapaport.com

Industry
Retail & Wholesale
EconWatch
Mining
India
General

 	Rapaport Weekly Market Comment Feb. 1, 2013 

Polished markets uncertain as Chinese wholesale demand slows ahead of Feb. 10 New Year and U.S. economy contracts slightly in 4Q. Tight rough supply pushing prices as Indian cutters come back into the market. Dealers selling De Beers boxes at about 5% premium after 2012 production falls 11% to 27.87M Cts. Petra Diamonds 1H production +31% to 1.24M Cts., revenue +54% to $156M. Gem Diamonds 4Q Letšeng sales -41% to $48M with average price -33% to $1,703/ct. Titan Industries 3Q sales +23% to $556M, profit +24% to $38M. Sotheby’s 2012 jewelry sales total $461M with average 84% sold by lot.

RapNet Data: Jan. 31

Diamonds 925,703
Value $6,100,633,436
Carats 1,032,126
Average Discount -27.53%

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QUOTE OF THE WEEK
Royal Asscher established a firm foothold in the Japanese market for 45 years, where we supply 125 jewelers. Next to the U.S. and European markets, the Peoples Republic of China is the fourth greatest market for our 159-year-old Asscher family company. We believe that Sparkle Rolls market leadership and extensive distribution network will help expand our reach across the broad spectrum of target audiences in China and reinforce our presence in the market.

Edward Asscher | Royal Asscher

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INDUSTRY

De Beers Production -11%, Jan. Sight at $550M

De Beers diamond production rose 24% year on year to 8.051 million carats during the fourth quarter that ended on December 31, dramatically improved by the resumption of operations at Jwaneng mine in Botswana. A slope failure incident in June at the Jwaneng mine disrupted output. However, De Beers production for 2012 declined 11% year on year to 27.875 million carats. Operations continued to focus on waste stripping and maintenance activities initiated in the fourth quarter of 2011, in response to softer global demand for diamonds throughout the year.

De Beers January sight had an estimated value of $550 million as the company ‎continued to limit rough supply. Prices were basically stable with slight changes made to ‎assortments. ‎The market mood remains cautious, according to Nigel Simson, the head of ‎beneficiation at De ‎Beers. Sightholders noted that demand for De Beers goods on the secondary market improved ‎slightly in January due mainly to a decline in supply during the past year. As a result, ‎premiums rose slightly in January to sell on average at around 5% above list. ‎Prices at other suppliers have also increased marginally with reports from the BHP ‎Billiton January tender indicating increases of around 2% to 3%. ‎
Explorers & Damas Jump Start Spring Plans

WATCH NOW. Gemfields completed its acquisition of Faberge this week and emerald production jumped 82% to 14.5 million carats for the first half. Peregrine Diamonds prepares for surface trenching at the Childliak property. Stornoway Diamond completed its capital cost estimate for Renard, realizing a savings of about $50 million. Damas unveiled its new Spring Collection of diamond jewelry crafted in 18-karat yellow gold, and using semi-precious stones and diamonds to celebrate color.

RETAIL & WHOLESALE 	  

LVMH Jewelry Comps +6%

LVMH recorded revenue of $38.2 billion for fiscal year 2012, an increase of 19% year-on-year. Organic growth, representing comparable-store sales and constant-exchange-rates, increased 9%. LVMHs group share of profit jumped 12% to $4.6 billion. In terms of organic growth for jewelry and watches, sales increased 6% year on year; however, total revenue, which benefited from the acquisition of Bulgari, surged 46% to $3.9 billion. Profit from recurring operations of the jewelry and watch business rose 26% to $453 million. The company predicts a robust year of growth ahead as, despite mix messages, luxury goods sales in Europe and Asia remain particularly strong.

Titan 3Q Profit +24% 

Titan Industries, which owns the Tanishq brand, reported that sales rose 23% year on year to $556 million in the third fiscal quarter that ended on December 31, driven by growth across all businesses. Expenses increased by 23% to $512.4 million and profit jumped 24% to $38 million. Jewelry sales, including those from its flagship Tanishq brand, ‎rose 27% year on year to $468.8 million, while watch sales increased 11% to $78.9 million.

Sothebys Jewels Set Record Year

Jewelry sales for Sothebys in 2012 surged to a record $460.5 million. The auction house stated that revenue from its jewelry sales was propelled by the success of private collections, exceptional diamonds and gemstones and historical jewels with noble provenance. Sotheby’s jewelry auctions worldwide achieved an average of 84% sold by lot. Seventy-two lots sold for more than $1 million, with six surpassing the $5 million mark. One highlight for the year came from a record sale of various-owner jewels at Sotheby’s Geneva, where the total achieved $108.4 million in May.

In the Americas, Sotheby’s experienced its highest single-day total for jewelry in December when its New York auction achieved $64.8 million. Sotheby’s annual total of $114.5 million in Hong Kong marked the company’s second-biggest year of jewelry and jadeite sales in Asia.
Valentines Day Jewelry Outlook Brightens

The 2013 Valentine’s Day spending survey conducted by BIGinsight for the National Retail Federation (NRF) found the sales of jewelry and watches should increase 7% year on year to $4.4 billion. Nearly 20% of shoppers expressed interest in buying jewelry for a loved one, up from 19% in 2012. While nearly 40% of shoppers plan to hit discount stores for gifts, 11% expect to visit jewelry stores before February 14.

Royal Asscher Partners With Sparkle Roll

Royal Asscher formed a strategic alliance in China and Macau with the Sparkle Roll Group Ltd., a leading distributor of top-tier luxury goods in China. Under the terms of the agreement, the alliance will run for 10 year period, with an option to renew for an additional decade. Sparkle Roll will facilitate Royal Asschers growth and expansion of sales of Royal Asscher Cut diamonds, other Royal Asscher jewelry lines and notably the Stars of Africa Collection in China.

Sterlings Injunction Request Denied

Sterling Jewelers lost its request for a preliminary injunction against rival Zale Corporation claiming that Celebration Fire diamonds were the most brilliant in the world. The judge ruled that Sterling had fallen short of its burden to demonstrate a clear case of irreparable harm to its brand. Additionally, the court determined that Sterling failed to establish that it had no legal remedy and simply argued that Zales marketing campaign provided competition, which resulted in taking an unfair portion of their market share. The judge stated that such damage would be calculable, not requiring a preliminary injunction. The next step in the case is likely to be a trial.

Juno Lucina Expands Offline

Juno Lucina will expand its specialty jewelry line to select authorized retail locations in 2013, following a sharp increase in sales this past year. The brand, which was previously available only at JLucina.com, first created diamond jewelry push presents for expectant mothers in 2011, after company founder Erik Kaplan was uninspired by the quality and availability of push presents available for his own expectant wife. Kaplan designed his own push present, styled in the shape of Juno Lucina, the Roman goddess who protected women in childbirth. The line now features diamond pendants, drops and studs and gift sets

Shane Opens Large Format Store

Shane Co. moved its St. Louis, Missouri-area jewelry retail store to a new location at 9643 Olive Boulevard in Olivette. The new address replaced a previous location in Brentwood, but the retailer also stated that this store represents the largest jewelry store in the Midwest. The store features flat panel TV screens showing educational material for jewelry and behind-the-scenes videos about gemstone buying, in-house designing and profiles of salespeople. Shane Co. created a large diamond viewing area where customers can examine and compare diamonds in natural light and a customer lounge area with a flat panel TV
Ross-Simons Preps Sidney Thomas Jewelers

Ross-Simons plans to rename 10 stores this year as Sidney Thomas Jewelers with a focus on higher-end jewelry and a much more pampered customer experience. The retailers catalog, two outlet stores and its flagship space in Rhode Island would retain the stores original name. Sidney Thomas Jewelers has already secured its trademark, domains and social media presence in preparation for rebranding in the third quarter. The late Sidney Thomas Ross founded Ross-Simons in 1952.

GENERAL

GJEPC Lobbies for Duty Free

The Gem & Jewellery Export Promotion Council (GJEPC) lobbied the government for duty free import quotas (with limits) for cut and polished diamonds since the levy of 2% duty on polished diamonds lowered trading activity in 2012. India aimed to curb round-tripping with the levy last year. In addition, GJEPC recommended correctly implementing the Benign Assessment Procedure of Income Tax for the diamond industry in the way of reduction of net profit to 2.5% of turnover instead of 6%. GJEPC urged the government to establish special notified zones for importing and trading of rough diamonds; and a special $3 billion to $5 billion fund to refinance borrowing by export industries.

Izhakoff Steps Down in June

Eli Izhakoff, the longtime president of the World Diamond Council (WDC), will conclude his term on June 30. His decision was not unexpected as he originally informed the board of his intentions in May 2012. Izhakoff has served as president for 13 consecutive years. Izhakoff said that the time had come for the WDC to prepare for the future and a steering committee that he tapped to create reforms would complete the exercise by June.
ADTF Concludes on Positive Feedback

Exhibitors at the fourth annual Antwerp Diamond Trade Fair (ADTF) appeared pleased with the quality of buyers at the invitation-only event and reported better sales activity than the previous show. A few logistical issues frustrated some attendees, however, the overall mood was positive. Buyers expressed satisfaction with the availability of goods and some, who had made their first trip to Antwerp for this event, were pleased to have met new suppliers and establish new business relationships.

MINING 	  

Marange Operators Export $685M in Rough

The Zimbabwe Mining Development Corporation (ZMDC) reported that four companies operating in the Marange earned a total of $684.5 million from diamond exports in 2012. Mbada Diamonds contributed $308.3 million in exports, Anjin sold and exports $209.9 million, Diamond Mining Corporation exported $100.8 million and Marange Resources $236,317 worth of rough. Diamond royalties to the government came to $102.7 million and the diamond companies received $10.2 million from sales to local diamond and polishing companies. ZMDC predicted that rough diamond output in 2013 would double to 16.9 million carats.
Gem Diamonds Revenue -30%

Gem Diamonds reported that sales from the Letšeng mine in Lesotho fell 41% year on year to $48.2 million as rough ‎prices slumped in 2012. ‎Gem Diamonds sold 28,324 carats of Letšeng goods for an average price of $1,703 per carat ‎during the fourth quarter, representing a decline in average prices of 33%, but it was an increase of 2% from the third quarter.‎ Production at Letšeng rose 1% to 30,181 carats during the fourth quarter. ‎Full year production increased 2% to 112,367 carats. Gem Diamonds revenue for 2012 fell 30% to $207.9 million.

Petras Production +31% 

Petra Diamonds production rose 31% year on year to ‎‎1.247 million carats during the six months that ended on December 31. Revenue during the half year rose 54% to $156.3 million from 1.066 million carats ‎of diamonds sold. The average price achieved at its larger operations was relatively ‎steady. Petra said that run of mine production at Finsch and Cullinan would remain a ‎challenge with volatile grades, due to the aging mine, until new mining areas have been ‎accessed in fiscal 2015.‎

Namakwa Tender Nets $6M 

Namakwa Diamonds recent sale of rough diamonds from its Kao diamond mine in Lesotho fetched $5.5 million and was 100% sold by lot. The company reported that a total of 21,506 carats sold for an average price of $254.74 per carat compared with $384 per carat achieved at the previous sale, which was held in December. The company is also in the process of investigating several initiatives to modify and improve the recovery process, which will affect production at the plant as the company will need to shut it down for repair work to be done.
Lucara Nets $54M in 2012

Lucara Diamond Corp. reported it had produced 303,060 carats of diamonds from the Karowe diamond mine in 2012, and it conducted five sales of rough diamonds for a total of $54 million in revenue. Lucara sold an exceptional 9.46-carat blue diamond for $4.5 million or $447,272 per carat during the year.
ECONWATCH

Diamond Industry Stock Report

U.S. retail shares decidedly mixed but Birks, Blue Nile and Zale up about 5%, European shares all down except PPR; Chow Sang Sang and Chow Tai Fook down 2%, India shares flat except C. Mahendra -14%, Asian Star +10%. Mining shares lower with double digit drops for Firestone and Namakwa. Read the extended industry stock report for this past week
$1 = Euro 0.736 0.748 -0.012
$1 = Rupee 53.27 53.68 -0.4
$1 = Israel Shekel 3.71 3.71 0.00
$1 = Rand 8.95 9.05 -0.10
$1 = Canadian Dollar 1.00 1.00 0.00

Precious Metals
Gold $1,663.80 $1,668.00 -$4.20
Platinum $1,675.00 $1,679.00 -$4.00

Stock Indexes Chng.
BSE 19,894.98 19,923.78 -28.80 -0.1%
Dow Jones 13,865.95 13,825.33 40.62 0.3%
FTSE 6,278.88 6,264.91 13.97 0.2%
Hang Seng 23,729.53 23,598.90 130.63 0.6%
S&P 500 1,498.28 1,494.82 3.46 0.2%
Yahoo! Jewelry 1,182.24 1,166.07 16.17 1.4%

Rapaport Weekly Market Comment Feb. 8, 2013

Far East wholesalers on vacation. Markets hoping for strong jewelry sales during Chinese New Year Golden Week. U.S. retailers offering deep discounts to increase Valentine’s Day sales. Indian consumer sentiment weakens as economic growth slower than expected and new 6% tax reduces gold imports. India approves bonded warehouses in duty free zones for diamonds and gems. 1 ct. RapNet Diamond Index (RAPI) +0.1% in Jan.‎ Swiss watch exports +11% to $23B in 2012. BHP Billitons partners drop action to block Ekati sale. Rapaport Group opens new India headquarters at Bharat Diamond Bourse. Rapaport Group wishes everyone a prosperous Year of the Snake.

RapNet Data: Feb. 7

Diamonds 921,432
Value $6,050,014,751
Carats 1,026,210
Average Discount -27.51%

www.rapnet.com

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QUOTE OF THE WEEK
We think consumption will be one of the key drivers of the Chinese economy this year. And the consumer should be stronger because of more confidence, faster economic growth and fast gains in income. So retail sales should be good and that should be reflected in the data we get for the Lunar New Year sales that will come out later in the month.

Dariusz Kowalczyk | Credit Agricole

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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. View jobs now.

INDUSTRY 	  

Polished Prices +0.1% in January

The RapNet Diamond Index (RAPI™) for 1-carat certified polished diamonds rose 0.1% in January, RAPI for 0.3-carat diamonds increased 0.9%, while 0.5-carat ‎stones fell 0.1% and 3-carat diamonds declined by 0.3%. Prices have held ‎relatively steady in the past three months, easing the downtrend that was prevalent for ‎most of 2012.‎ Far East demand was steady ahead of the Chinese ‎New Year Golden Week. Tight rough supply has also spurred polished demand resulting ‎in shortages of select in-demand stones, ‎such as non-tinted, 0.40-carat to 0.90-carat, G-, VS-SI, Triple Ex goods.

A possible increase in polished supply may ease those shortages after ‎diamond cutters increased their rough buying in the fourth quarter and have begun to ‎ramp up their manufacturing to pre-Diwali levels. As a result, trading on the rough dealer ‎market improved in January, and prices increased slightly. De Beers held its prices ‎basically stable at its sight but the mining company continues to restrain production.

For more detail, Rapaport Researchs Snake-Like Stability report is available for purchase.

Swiss Watch Exports Soar 

WATCH NOW: The Swiss watch industry recorded a 10.9% jump in the value of watch exports in 2012, at $23.4 billion, according to the Federation of the Swiss Watch Industry trade group. Month-to-month variations in exports were more pronounced in the second half as the market weakened and exports contracted in September and December. Swiss watch industry exports were comprised mainly of wristwatches, which rose 11.5% to $22 billion; however, the number of units shipped fell 2.2% to 29.1 million. Higher-priced watch exports rose

RETAIL & WHOLESALE 	  

U.S. January Sales

U.S. chain-store sales rose 4.5% year on year in January, according to the International Council of Shopping Centers (ICSC). Drug stores, which have been a drag on sales, experienced a surge and consumers went bargain hunting at department and apparel stores, providing a much needed lift. For the fiscal year of 2012, ICSC said chain-store sales rose 2.1%.

The the following table reflects quarterly results for the period through the end of January:
$Mil %Chng. Comps %Chng
Costco $43,770 9% 6%
Kohls $6,343 5.4% 1.9%
Macys $9,350 7.2% 3.9%
Neiman Marcus $1,360 6.5% 5.3%
Nordstrom $3,596 13.5% 6.3%
Target $22,370 6.8% 0.4%

Arjav, ABN Amro Reach Deal

Arjav Diamonds in Antwerp and ABN Amro reached an agreement to settle all pending legal disputes arising from their former commercial relationship. While both parties agreed to not disclose details, ABN Amro and Arjav discontinued measures introduced or brought against each other, and ended their relationship. In December, ABN Amro had Arjavs safes sealed negotiations failed regarding the diamond company’s debt. Arjav filed a counter claim against the bank for damages.
Swatch Profit +26%

The Swatch Groups net income rose 26% to $1.78 billion in 2012 and is subsequently optimistic about its long term growth prospects going into 2013. This past month, the Swiss watchmaker reported that its sales increased 14% to $8.94 billion.

Kristalls Revenue -18% 

Kristalls sales fell 18% in 2012 to $457 million primarily due to a weaker second half and late year loss from the resale of rough diamonds, the company told Interfax. Polishing was also unprofitable, however, conditions have improved. Kristall closed 2012 with a pretax profit of $1.6 million.

India Approves Bonded Warehouse Provision

India re-introduced a provision for private/public bonded warehouses in Special Economic Zones (SEZs) and Domestic Tariff Areas for importing and exporting diamonds and gemstones. The Gem & Jewellery Export Promotion Council (GJEPC) stated that after the imposition of a 2% import duty on polished diamonds in January 2012, it lobbied the Department of Commerce to re-introduce facilitating bonded warehouses.

The government also allowed for single revolving bank guarantees on different transactions for the import of silver or gold or platinum for the gems and jewelry sector. The bank guarantee furnished by the importer can be used for subsequent consignments, if the importer has fulfilled the export obligation and export proceeds realized in respect of the earlier consignments. The bank guarantee may be used for subsequent import consignments, provided it is sufficient to cover the duty involved and has validity for a sufficient time period with a self-renewal provision built in.

RBI Weighs Recommendations on Gold 

The Reserve Bank of India (RBI) will weigh a panel study recommending measures such as introducing new gold-backed financial products, designing inflation indexed bonds and prohibiting bank finance for purchases of gold bullion to curb demand. There is a need to moderate the demand for gold imports, considering its impact on the current account deficit, which hit a record high of 5.4% of the gross domestic product (GDP) in the second fiscal quarter that ended in September.

A combination of demand reduction measures, supply management measures coupled with measures to increase monetization of idle stocks of gold need to be put in place, the panel concluded. The government has increased gold import duty for the third time in about a year, while appealing to the people to moderate their demand. The duty currently stands at 6%.

Forevermark Expands in India

Forevermark will expand its reach to 130 stores in India by the end of this year. De Beers launched Forevermark in India two years ago and has grown to 85 doors. Its newest retail partnership is with Mumbai-based Kundan Jewellers. Actress Suhasi Dhami also unveiled the Forevermark Encordia collection, which is comprised of exquisite jewelry pieces with contemporary designs in rings, bracelets, pendants and earrings.

JVC Guide Addresses Trade Materials

The Jewelers Vigilance Committee (JVC) published “The Essential Guide to the U.S. Trade in Materials From Plant and Wildlife Products” in partnership with the American Gem Trade Association (AGTA). The guide concentrates on gem materials that have been classified by international, federal, and/or state laws as protected. The guide includes information that jewelry manufacturers must be familiar with and follow, including important laws governing the trade in protected species; USFWS import/export license and filing; exemptions for jewelry retailers and collectors; obtaining permits and filing declarations; penalties and fines and state laws.

Indias Luxury Growth Set at 15%

India’s luxury market is likely to touch $15 billion by 2015, rising 25% per year from the current level of $8 billion, according to an ASSOCHAM-Yes Bank report. Consumer spending is also likely to rise across the country due to increasing brand awareness amongst young shoppers and from greater purchasing power out of the upper classes in Tier 2 and Tier 3 cities. Luxury product sales, of which 31% include jewelry, are projected to rise to $5.38 billion in 2015 from $2.85 billion this year. ASSOCHAM also noted that private equity (PE) investments in the luxury sector would rise and support the enhanced size of the countrys luxury market. Globally, consumer spending is forecast to reach $40 trillion by 2020.

MINING 	  

Fipke Drops Ekati Action

C. Fipke Holdings Ltd. discontinued its court action against BHP Billiton Canada and Harry Winston Diamond Corp., Stuart Blusson, Archon Minerals and various associated companies in conjunction with the Ekati mine sale. Harry Winston, which bid to purchase Ekati for about $500 million, has been advised by BHP that all of Ekatis joint venture partners agreed to waive their rights of first refusal in respect of the sale. The sale may now proceed, subject to satisfaction of closing conditions, including regulatory approvals. BHP hoped to finalize the sale in the second quarter.

Paragons Lemphane Update

Paragon Diamonds Ltd. reported that a 3.71-carat, sawable rough diamond achieved the value of more than $2,300 per carat out of its Lemphane kimberlite project in Lesotho. WWW International Diamond Consultants tested and valued the diamond along with a parcel of 114 carats produced during bulk sampling at Lemphane, but the results were considered to be encouraging overall, indicating the presence of large, high-value diamonds in the kimberlite. The company will commission WWW to model the diamond prices once the bulk sampling has produced a parcel of about 1,000 carats.

Lucara Production, Sales Rise 

Diamond production for Lucara Diamond Corp. rose to 303,060 carats in 2012 from 14,773 carats in 2011, with all production originating from the Karowe mine in Botswana. Five sales generated $54 million in revenue. Lucara started trial mining at its Mothae project in Lesotho and transitioned the project to a smaller care and maintenance team. The company noted that it would continue to look into development options for Mothae, as a preliminary economic assessment indicates that the project is at present not feasible.

Canadas Ice Road Opens

The Diavik Diamond Mines, in Canada’s Northwest Territories, began its annual mine resupply program and expects to transport approximately 3,500 loads of fuel, cement and other operating supplies using the winter ice road. The Tibbitt to Contwoyto Winter Ice Road opened on January 30 and supplies three diamond mines, Diavik, Ekati and Snap Lake, and various exploration companies. It is expected to transport approximately 7,500 loads northbound from Yellowknife.

ECONWATCH 	  

Diamond Industry Stock Report

Jittery retail environment sank most U.S. and European shares with Blue Nile -6%, JCP -4%, Tiffany -5%, LVMH -6%; Indian shares and miners were mixed.. Read the extended industry stock report for this past week
Feb. 7 Jan. 31 Chng.
$1 = Euro 0.746 0.736 0.010
$1 = Rupee 53.22 53.27 -0.1
$1 = Israel Shekel 3.69 3.71 -0.02
$1 = Rand 8.91 8.95 -0.04
$1 = Canadian Dollar 1.00 1.00 0.00

Precious Metals
Gold $1,671.40 $1,663.80 $7.60
Platinum $1,718.00 $1,675.00 $43.00

Stock Indexes Chng.
BSE 19,580.32 19,894.98 -314.66 -1.6%
Dow Jones 13,944.05 13,865.95 78.10 0.6%
FTSE 6,228.42 6,278.88 -50.46 -0.8%
Hang Seng 23,177.00 23,729.53 -552.53 -2.3%
S&P 500 1,509.39 1,498.28 11.11 0.7%
Yahoo! Jewelry 1,155.08 1,182.24 -27.16 -2.3