Rapaport Weekly Market Comment Dec. 6, 2013

U.S. Thanksgiving weekend retail sales -3% to $57.4B. Cyber Monday sales +18% to $1.7B as consumers increase purchases through mobiles devices. Holiday demand supporting diamond prices but trading levels disappoint. November RapNet Diamond Index (RAPI) 1 ct. stable. Selective demand improving for 1-2 ct. collection clean (D-H, IF-VVS) certs. De Beers introduces forward contracts at auction sales. Next week’s sight expected to be about $600M. ALROSA signs cooperation agreement with Antwerp AWDC with 3Q revenue +41% to $1.2B, profit -4% to $252M. Luk Fook 1H revenue +70% to $1.3B, profit +72% to $125M. U.S. Oct. polished imports +54% to $2.2B, polished exports +35% to $1.5B.

RapNet Data: Dec. 5

Diamonds 1,064,822
Value $6,836,656,203
Carats 1,191,620
Average Discount -27.98%

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RAPAPORT ANNOUNCEMENTS

December
4-11
Wed-Wed

Rapaport Single Stone Auction

New York & Israel

View details.
December
9-12
Mon-Thu
Rapaport Melee Auction

New York

www.rapaportauctions.
QUOTE OF THE WEEK
U.S. 3Q revised GDP growth is not all good news. Inventories accounted for almost half of growth and businesses likely will cut back on investment in inventories in late 2013 and early 2014, weighing on near-term growth. Still, the economy did have some momentum heading into the government shutdown and will continue to expand in 2014. With less fiscal drag, a better global economy, continued gains in consumer spending, a pickup in business investment and the ongoing recovery in the housing market, growth in 2014 will be around 2.5%, noticeably stronger than the 1.7% pace this year.

Gus Faucher | PNC Financial Servi

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INDUSTRY 	  

Polished Prices Stable in Nov.

Certified polished diamond prices were stable in November supported by improving demand during the Christmas shopping season. Diamond dealers were focused on supplying U.S. jewelers with strong demand for lower-priced commercial-quality diamonds as consumers tighten their holiday shopping budgets.

The RapNet Diamond Index (RAPI™) for 1-carat certified diamonds was down 0.1% during the month of November. RAPI for 0.30-carat diamonds rose 1.4%, while RAPI for 0.50-carat diamonds increased 0.2%. RAPI for 3-carat diamonds declined 0.3%. Still, RAPI for 1-carat is down 4.7% year on year, 0.50-carat is down 1.7% and 3-carat fell 2.9%. However, RAPI for 0.30-carat is up 8.2% compared with November 2012.

ALROSAs Profit -4%

ALROSAs revenue rose 41% year on year to $1.2 billion (RUB 39.15 billion) in the third quarter of 2013 due to higher sales volume of gem-quality diamonds. However, profit declined 4% to $251.4 million. Gem-quality diamond sales rose by 59% to 5.4 million carats, while industrial diamond sales rose 37% to 2.6 million carats. ALROSA reported that the average price of its gem-quality diamonds sold during the period rose by 1% to $213.50 per carat.

ALROSAs supervisory board approved amended regulations on its dividend policy in which it will pay no less than 35% of net profit as determined by international financial reporting standards (IFRS). The minimum level of dividend in the previous version of ALROSAs policy, which was adopted in 2011, was 10% of net profit under the Russian Accounting Standards (RAS).

In other news, ALROSA and the Antwerp World Diamond Centre (AWDC) signed a three year cooperation agreement solidifying a commitment to share trade information, market intelligence, technology and business opportunities. The company’s clients in Antwerp affirmed that generic marketing efforts are vital to stimulate demand and a clear regulation framework is necessary to deal with synthetic diamonds entering the pipeli
Sinthetics

Martin Rapaport, the chairman of the Rapaport Group, published “Sinthetics,” an editorial that defines measures the diamond industry must take to ensure the integrity of natural diamonds and the trade.

Rapaport defines the 4-D’s: Differentiation, Detection, Disclosure and Documentation, and calls upon the trade to sample-test diamonds before delivery to retailers. Documentation on invoices stating that diamonds are natural is important, but not sufficient. Trust without verification is unacceptable and dangerous. Rapaport calls on the diamond mining sector to increase consumer education about natural diamonds so that they may be properly differentiated from synthetics.

View more information and read th

RETAIL & WHOLESALE 	  

Gold Jewelry Demand Falls By Value

Global gold demand for jewelry fell 15% year on year by value to $20.75 billion in the third quarter that ended on September 30, according to provisional calculations by the World Gold Council. The decrease was price related since gold demand for jewelry by weight increased 5% to 486.7 tonnes, reaching the highest level for the third quarter since 2010. Gold jewelry demand by value is up 6% for the first nine months of 2013 to $77.3 billion.

Chinas consumers generated the highest demand for gold jewelry by weight, accounting for 34% of global demand, as 24-karat gold (chuk kam) jewelry became extremely popular, according to the Council. Greater Chinas gold jewelry demand rose 3% by value to $7.34 billion during the third quarter. Demand for gold in India fell 23% by weight, mostly due to import restrictions. However, the World Gold Council noted that year-to-date demand for gold is up 13%. Indias gold jewelry demand by value fell 38% to $4.47 billion.

Gold jewelry demand in the Middle East fell 12% to $1.65 billion and U.S. demand slipped 8% to $1.5 billion.

Luk Fooks Profit +72%

Luk Fook Holdings reported that revenue rose 70% year on year ‎to $1.3 billion (HKD 10.06 billion) in the six months that ended on September 30. Same-store sales increased 62%. Group profit ‎jumped 72% to $124.5 million. The retailer observed a surge in gold product sales, and together with platinum, accounted for 72% of group sales. Wholesale ‎division revenue experienced a sales increase of 16% to $141.9 million. Sales from its ‎licensee partners rose 3% to $41.6 million.

Thanksgiving Holiday Retail Sales -3%

U.S. consumer spending over the four-day Thanksgiving weekend that kicked off the Christmas gifting season declined 2.7% year on year to $57.4 billion as the average household budget afforded less and retailers reduced prices to spark a buying frenzy, according to the National Retail Federation (NRF). The NRF noted that the shorter holiday shopping season coupled with retailers having promoted special discounts as early as October also led to decreased spending on this important holiday weekend.

Another observation confirmed that retailers who opened on Thanksgiving Day for the first time experienced a dramatic volume of sales, however, they simply attracted would-be Black Friday (or Super Saturday) shoppers since footfalls plummeted by double-digits over the holiday weekend. Of those consumers who shopped on the weekend, their average total spending declined 4% year on year to $407.02 per shopper, the NRF concluded. While 16.9% of weekend shoppers bought jewelry in stores, the group noted that 26.1% of those who shopped online made a jewelry purchase. The average online transaction for all products rose 3% year on year to $177.

Seasonal Online Sales Reach $24B

Early Christmas-season retail remained strong for ecommerce sales as more U.S. consumers shopped for deals and gifts from the comfort of their home or office. According to comScore Inc., ecommerce sales from retailers for the November 1 through December 2 timeframe jumped 8% year on year to $23.9 billion. The group also recorded strong sales increases from online shopping during the Thanksgiving holiday weekend and on Cyber Monday, which was December 2.

Online sales jumped 21% on Thanksgiving Day to $766 million, they rose 15% on Black Friday to $1.2 billion and sales jumped 34% to $1.6 billion for the weekend of November 30 and December 1. Cyber Mondays retail sales increased 18% year on year to $1.74 billion, setting a record high for a single day, according to comScore.

Christies London Sale Tops $11M

Christies London sale of important jewels achieved a total of $11,257,278 and was 76% sold by lot. The top lot was a mid-19th century diamond tiara/necklace, which sold for $1.03 million, followed by a 21.96-carat Burmese sapphire that sold for $470,901 or $21,444 per carat. A 4.77-carat Kashmir sapphire and diamond ring fetched $237,477, or $49,785 per carat, while a rectangular, 4.20-carat, Kashmir sapphire and diamond ring achieved $233,586, or $55,615 per carat.

U.S. Jewelry Sales to Rise 7%

IBISWorld Inc. predicts retail sales to increase 3.4% year on year to $68.9 billion for U.S. Christmas season. But IBISWorld noted that the average household plans to reduce expenses and purchase presents for a smaller network of people. Of those who receive gifts, IBISWorld expects more high-value items such as electronics and jewelry will be placed under the tree.

IBISWorld forecasts total spending on toys, sporting goods and hobby goods to increase 7.6% year on year to $3.72 billion, while spending on electronics is set to rise 6.6% to $8.32 billion and jewelry sales should jump 7% to $5.58 billion. If jewelry sales do increase as predicted, the rate of growth would be slightly less than the 8.8% increase jewelry stores have reported for the first nine months of 2013 and down from a 12% percent increase in December 2012, according to Rapaport News records.

Winsome Reports Quarterly Loss

Winsome Diamonds & Jewellery Ltd. reported interim results for the quarter that ended on September 30, which marked its sixth reporting period following a fiscal year extension by Indias Ministry of Corporate Affairs. Revenue plummeted to $1.5 million (INR 94.4 million) compared with $373.7 million (INR 23.2 billion) one year ago. The company recorded a loss of $39.6 million compared with a profit of $3 million. Liabilities, including short-term borrowing and trade payables, were reported at $675 million; however, outstanding trade receivables alone were $764 million, representing an overwhelming majority of the companys paper assets.
De Beers Introduces Forward Contracts

De Beers introduced forward contract auction sales to complement spot auction events and in order to provide customers with a choice to secure longer term supplies. Customers will have the opportunity to bid for future rough diamond supplies, determining the types and quantities of diamonds as well as when they will require them. Registered customers of De Beers auction sales were able to bid for future supplies up to three months in advance at the companys first forward contract auction event that was held this week. Approximately 10% of De Beers’ rough diamonds are sold through its auction platform.
Partners Launch Magic Square

Chow Tai Fook, Forevermark and Crossworks Manufacturing launched the ideal square-cut diamond under the “Magic Square” collection brand at Chow Tai Fook stores in Greater China. The Magic Square collection highlights use of ideal square-cut diamonds, which are designed by Crossworks and being sold in platinum through the De Beers Forevermark brand. The Magic Square reportedly was in the making for three years in order to achieve a most brilliant square-cut diamond status, according to Crossworks.

Forevermark Prepares for Australia

The Forevermark diamond brand selected Mazzucchelli’s, owned by De Beers sightholder M. Suresh, as its exclusive authorized Forevermark Jeweller for Australias Central Territory, Southern Australia, Victoria and Western Australia. Mazzucchelli’s joins Forevermarks other authorized jewelers in Australia, including Diamonds International, Musson and Percy Marks, which focus on premium diamonds such as the ideal square-cut from Crossworks Manufacturing through their local representative, Storch & Co.

MINING 	  

DiamondCorp Sale Achieves $279K

DiamondCorp sold 6,442 carats of rough stones in November for $278,574, or $43 per carat. The sale was the first of its kind for the company, offering rough diamonds recovered from tailings retreatment activity at the Lace diamond mine in the Free State province of South Africa and it included the first diamonds sold to Laurelton Diamonds, a subsidiary of Tiffany & Co. DiamondCorp plans to increase shift operation by February 2014.

CH-6 Sample Returns High Grade

Peregrine Diamonds Ltd. reported that bulk sampling from its CH-6 kimberlite pipe on the Chidliak diamond property returned a diamond grade of 2.70 carats per tonne. The resulting diamond parcel consisted of 600.50 carats of commercial-size (0.85 mm plus) stones including 48 diamonds that were greater than 1 carat in size and 137 diamonds greater than 0.50 carats. The largest stone was 3.54 carats and a significant portion of the parcel was of gem-quality diamonds, according to the junior explorer. Peregrine added that the grade is higher than that of any of the kimberlite pipes currently under advanced exploration or development in Canada.

Board Approves Gahcho Kue Permit

Construction is one step closer for the Gahcho Kue diamond project in the Northwest Territories of Canada following the approval of its land use permit by the Mackenzie Valley Land and Water Board. De Beers Canada and partner Mountain Province will begin land-based site work in preparation for the 2014 winter road season. The final regulatory step that will allow full construction and the development of the mine is expected in 2014. Construction is expected to complete in two years. The project is expected to process 31 million tonnes of ore containing roughly 49 million carats.

STATS 	  

U.S.A.

Oct. $Mil. %Chng. YTD $Mil. %Chng.
Polished imports $2,221 54% $19,269 17%
Polished exports $1,517 35% $16,230 16%
Net imports $705 120% $3,041 28%

Rough imports $33 22% $397 -2%
Rough exports $33 65% $243 -6%
Net imports $0 $152 3%

Net diamond account $705 115%

ECONWATC

Diamond Industry Stock Report

The biggest U.S. shopping weekend of the year resulted in lackluster sales and investors took notice, with share price declines across the board, even European retail shares fell as fears spread of a ho-hum season there, as well. Hong Kong shares lower with Chow Tai Fook (-7%) and Chow Sang Sang (-10%) leading declines. Indian shares mixed with Goldiam and Suashish (+3%) trending up. Miners mostly higher, led by Peregrine (+24%). View the extended stock report.

Dec. 5 Nov. 27 Chng.
$1 = Euro 0.730 0.740 -0.010
$1 = Rupee 61.76 62.55 -0.8
$1 = Israel Shekel 3.52 3.54 -0.02
$1 = Rand 10.46 10.23 0.23
$1 = Canadian Dollar 1.06 1.06 0.00

Precious Metals
Gold $1,226.20 $1,238.30 -$12.10
Platinum $1,357.00 $1,351.00 $6.00

Stock Indexes Chng.
BSE 20,957.81 20,420.26 537.55 2.6%
Dow Jones 15,821.51 16,097.20 -275.69 -1.7%
FTSE 6,498.33 6,649.47 -151.14 -2.3%
Hang Seng 23,712.57 23,806.35 -93.78 -0.4%
S&P 500 1,785.03 1,807.23 -22.20 -1.2%
Yahoo! Jewelry 952.35 972.95 -20.60 -2.1%

Rapaport Weekly Market Comment Dec. 13, 2013

Diamond markets driven by last minute U.S. demand as holiday sales fall below expectations. Trading outlook shifts to the Far East ahead of the Chinese New Year on January 31. De Beers sight estimated at $580M with stable prices and assortments. Antwerp holds first Marange tender of 300,000 cts. diamonds. Christie’s NY sells $65.8M (86% by lot) with rectangular-cut, 52.58ct, D, IF Golconda diamond selling for $10.9M ($207,600/ct.). Sotheby’s NY sells $60.6M (82% by lot) with 61.35ct. emerald and diamond ring selling for $4.6M. Dominion Diamond Corp. 3Q sales +79% to $152M, loss of $4M vs. profit of $3M a year earlier. U.S. jewelry sales +6% in Oct.

RapNet Data: Dec. 12

Diamonds 1,059,514
Value $6,767,618,036
Carats 1,181,010
Average Discount -27.77%

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RAPAPORT ANNOUNCEMENTS

December
17-26
Tue-Thu
Rapaport Melee Auction

New York & Dubai

View details.
January
14-22
Tue-Wed
Rapaport Melee Auction

New York & Dubai

www.rapaportauctions.com

QUOTE OF THE WEEK
We have seen Zimbabwes diamonds policy being put forward and a draft minerals policy, but nothing has been implemented... we have nothing against diamonds being sold, but issues of accountability and transparency must be addressed.

Tafadzwa Kuvheya | Centre for Natural Resource

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INDUSTRY

Swiss Watch Exports +1% 

Swiss Watch exports grew 1.1% year on year to $2.5 billion (CHF 2.2 billion) in October, achieving a record monthly value for the sector, according to the Federation of the Swiss ‎Watch Industry.‎ Growth by value was spurred by a 4.6% increase in steel watch exports, coupled with a 69% rise in the volume of platinum wristwatch units that were exported during the month. Exports of wristwatches rose 1.6% to $2.289 billion, while the number of units shipped increased by 1.4% to 2.79 million.

GJEPC, GII Open Detection Center

The Gem & Jewellery Export Promotion Council (GJEPC) and the Gemmological Institute of India (GII) opened a diamond detection and resource center (DDRC) at the Bharat Diamond Bourse (BDB) on December 6. The DDRC will provide companies with the ability to test any parcel of diamonds to ensure that synthetic diamonds and natural diamonds are not mixed together, therefore securing transparency in the diamond pipeline. The center will also offer services to diamond companies, including technical support and on the job training in detection method.

U.S. Jewelry Sales +6%

Jewelry sales in the U.S. during October rose 5.5% year on year, according to preliminary government figures, maintaining a 12-month running total of $69.8 billion. Sales of watches increased 7.5%, representing an annual total of $9.4 billion. Meanwhile, the U.S. consumer price index (CPI) for jewelry in October slipped 0.4%, while it increased 0.6% for watches.

At the same time, U.S. jewelry store sales rose 14.8% year on year in October to $2.512 billion. Jewelry store sales for the first 10 months of 2013 rose 9.4% to $24.453 billion. Department store sales, however, for November, which kicked off the Christmas shopping season, fell 4.3% year on year to $17.47 billion. Department store sales have had a difficult year, falling 5% for the first 11 months of 2013 to $150 billion.

RETAIL & WHOLESALE 	  

Christies Jewels Sale Nears $66M

Christie’s New York sale of magnificent jewels on December 10 achieved $65,790,125 and was 86% sold by lot. The top lot — a 52.28-carat rectangular-cut D, internally flawless Golconda diamond — accounted for $10,917,000 of that total. Bidding was very active with a lot of dealer attendance. While some dealers were able to score a piece, there was some grumbling about prices soaring to levels that would make the jewels unprofitable for them to resell. This sale combined with auctions in April and October brought the total for New York magnificent jewels at Christie’s in 2013 to $193,823,950.

Sothebys Jewels Sale Nears $61M

Sothebys New York sale of magnificent jewels on December 11 achieved $60,550,813, the highest total ever for one of its jewelry sales in Manhattan, and was 82.1% sold by lot. The top lot of the day was a 61.35-carat Colombian emerald and diamond ring that sold for $4,645,000 against an estimate of $1 million to $1.5 million. Colored gemstones fared well at this sale overall as did diamonds. But the composition of the sale was more about historic signed jewelry that highlighted a collection of Egyptian Revival pieces made by Cartier in the 1920s. Sothebys worldwide jewelry sales in 2013 have totaled $608 million, the highest annual total in company history.

Bradford Jewels Fetch $2M

Bonhams Londons sale of jewels from novelist Barbara Taylor Bradford achieved $2 million (GBP 1,229,250) on December 5. Bradfords collection included 40 pieces given to her by her husband Robert Bradford. The couple celebrates their 50th wedding anniversary on Christmas Eve. Each piece was accompanied by a short description of its history, as told by the author, including personal details such as when she was given them and why.

Lions to Sue State for Fraud

Lion’s Diamond charges that judicial authorities in Belgium committed fraud and intends to sue the state under rules of the Penal Court. In 2004, some of the companys diamonds were seized by the state and assessed at $1.6 million by judicial experts; however, the diamonds that were returned to Lions were valuated at only $200,000, according to the report in De Tijd. Lions attorney, Joke Vanden Branden, said other diamantaires face the same problem but they are stuck without hard evidence.

Antwerp Tenders Marange Rough

The first tender of rough diamonds from Zimbabwe to be held in Europe following the release of sanctions will take place at the Antwerp Diamond Tender Facility and conclude next week. The tender offers about 300,000 carats from Marange Resources, Diamond Mining Company (DMC), Anjin Investments and Jinan and Kusena Diamonds. The Antwerp World Diamond Centre is convinced that the influx of rough supply from Zimbabwe should significantly impact market transparency, contributing to sustainable social and economic development of Zimbabwe.

Ingle & Rhode Introduce Ready Made Pieces

Ingle & Rhode, which is committed to fair trade principles and prides itself on offering ethically sourced diamond jewelry in the U.K., created its first ready-to-wear collection of engagement rings in preparation for Christmas. The collection includes 15 engagement ring designs that are available in certified Fairtrade or recycled gold and platinum, and they are set with (mine of origin) traceable diamonds from Canada and Australia as well as sapphires that are ethically sourced from Sri Lanka.

Pure Gold Sets Pre-Expo Expansion

The Pure Gold Group will invest about $136 million (AED 500 million) to expand its operations in United Arab Emirates (UAE) between now and the World Expo 2020 in Dubai. The group expects to invest about $116 million in its Pure Gold Jewellers retail division, which is its core business. The group added that it will invest $20 million expanding the La Moda Exclusives sunglass retail chain. Pure Gold Jewellers will open an additional 65 stores in the UAE by 2020 and expand the La Moda Exclusives chain by adding 50 new stores.

Jewelry Exchange to Launch Infinity

The Jewelry Exchange reported that its same-store sales rose 13.7% in the month of November, but it didnt provide hard totals. Some of the top sellers in November included certified 1-carat solitaires, which the retailer listed at $1,990 and its new, classically-styled, 18-karat gold diamond rings. The Jewelry Exchange attributed the sales increase to offering new product lines and intends now to move forward its full launch of the diamond Infinity collection in time for Christmas. Originally, the retailer was planning to launch Infinity for Valentines Day 2014.

Fraudulent Returns to Increase

The National Retail Federation (NRF) estimated that fraudulent merchandise returns at the nations retailers in 2013 will decline slightly, by just 0.6% year on year, to $8.76 billion. However, fraudulent returns for the Christmas season were expected to surge 17.7% to $3.39 billion, according to the groups annual return fraud survey.

In NRFs survey, 94.8% of retailers have experienced the return of stolen merchandise in the past year, and 69% report that they have experienced the return of merchandise purchased on fraudulent or stolen tender, but that figure is down from 84.2% in 2012. However, employee return fraud or collusion with external sources is a much bigger problem this year, according to the NRF, with 93.1% of retailers having dealt with this problem in 2013 compared with 80.7% in 2012. Gift card fraud has increased but the use of counterfeit receipts has waned.

Florist Creates $5M Wreath 

Florist Pasi Jokinen-Carter designed a Christmas wreath with 138.83 carats of diamonds and rubies along with unusual seasonal flowers and berries for a made-to-order price of $4,645,800. The design features a central ruby of 17.49 carats and one 3.03-carat yellow diamond. Additionally, retailer 77 Diamonds, which supplied the stones, can create jewelry from the gems for no additional cost once the festive season has finished.

Marco Bicego Shop Debuts in NY

Marco Bicego debuted its first jewelry shop-in-shop with Bloomingdale’s at 59th Street in Manhattan, while incorporating its new visual identity that will be rolled out to partner locations in 2014. The Marco Bicego shop is located on the balcony level of Bloomingdales in the fine jewelry department. The jewelry brand already operates shop-in-shops in Tokyo, Puerto Rico, Italy, Dubai, Bulgaria, Azerbaijan and Kazakhstan and stores in Verona, Budapest, Crete and Mykonos.

Yael Designs Opens Showroom

Yael Designs opened its first jewelry showroom in San Franciscos popular Union Square neighborhood. Customers may visit the showroom by appointment. The showroom is located at 49 Geary Street, a famed art gallery building that houses more than a dozen fine art and photography galleries. Yael Designs’ 1,400-square-foot showroom will offer shoppers the brands fashion and bridal collections. Positioning the jewelry showroom alongside art galleries was a dream of Yael Designs’ CEO, Yehouda Saketkhou, who is also an avid art collector and a long-time San Francisco resident
Younger Shoppers Seek Transparency

Younger U.S. consumers are even more attracted to retailers who focus on ethical and sustainable practices when it comes to buying jewelry and other big ticket items, according to KPMG. Survey data revealed that about 41% of consumers under 30 years of age either always or frequently considered social issues when making a purchase of jewelry, computers, automobiles or large appliances. But only 24% of the general population was equally as interested, KPMG found.

The survey of 1,000 adults, 18 years of age and older, taken in early November, revealed that nearly 70% of consumers under the age of 30 considered social issues such as sustainability, human rights and fair trade before making any type of purchase. This far outpaced the less than 50% of consumers overall who felt the same way. Retailers should introduce more transparency into their product labels and identify fair trade, conflict-free and environmentally friendly practices, according to KPMG.

MINING 	  

Dominion Diamond Reports Loss

Dominion Diamond Corporation reported that sales of rough diamonds rose 78.8% year on year to $151.64 million for the third quarter that ended on October 31. One year ago, before the mining company sold Harry Winston Inc., sales from rough diamonds and the retail segment combined totaled $180.4 million. Dominion Diamond recorded a loss of $4 million in the third quarter compared with profit of $4 million one year ago. The companys loss attributable to shareholders was $2.9 million compared with profit of $3.4 million.

By mining segment, sales from the Diavik mine totaled $52.9 million or $118 per carat, while Ekatis sales reached $98.7 million or $271 per carat. Gross margin as a percentage of sales was 24.4% at Diavik and 5.2% at Ekati, producing a group gross margin total of 11.9%.

Stornoway Raises $10M 

Stornoway Diamond Corporation raised $10.1 million through its previously announced bought-deal private placement to finance exploration on its Renard project, located in the James Bay region of north-central Quebec. The funding comes from the issuance of flow-through common shares — shares issued by a corporation to investors who then receive tax incentives — by Stornoway specifically for the purpose of additional work on Renard. The company believes Renard has the potential to be a “significant” producer of high-value rough diamonds over a long mine life.

Anjin Reduces Workforce

Anjin Investments, which mines diamonds in Zimbabwes eastern Marange fields, expects to lay off 190 employees from its 845-strong workforce, according to Pretoria News. The company stated that rough diamond prices have been falling and the company needs to switch to more expensive underground mining as alluvial supplies are depleted. The Zimbabwe Mining Development Corporation (ZMDC), which is a joint partner with Anjin at the Marange operation, is on the list of U.S. sanctioned companies.

Pangolin Moves Drilling Target

Pangolin Diamonds Corporation completed core drilling at its GK6 geobotanical anomaly at Jwaneng South in Botswana but did not intersect kimberlite. Drilling intersected an igneous intrusion, which accounted for the botanical anomaly, the magnetic and gravity profiles, as well as the trace element results obtained over the feature. The drilling team has been relocated to a different geophysical target within the project area, where drilling has commenced. The target currently being drilled is modeled to be in excess of 20 hectares in size.

Russia to Approve Lukoil Rough Exports

Arkhangelskgeoldobycha (AGD), a diamond mining subsidiary of Lukoil, will receive a license to export rough diamonds in 2014, according to Interfax. ALROSA and its subsidiaries already have rough diamond export licenses. AGD holds the license to the Verkhotina property where the Grib pipe was discovered in 1996 and it expects to tap $11 billion worth of diamonds over the life of the mine.

Trans Hex 1H Production Falls

Trans Hexs diamond production at its South African operations fell 39% year on year to 21,849 carats during the first half of its fiscal year that ended on September 30. Diamond production at the Somiluana mine in Angola, which Trans Hex holds a 33% stake, jumped 58% to 35,779 carats during the first half. Trans Hex didnt provide sales figures for the first half, however, diamond revenue from April through December 5 amounted to $41.9 million from the sale of 39,701 carats.

Rockwells Production +54%

Rockwell Diamonds production rose 53.7% year on year to 9,148 carats during its third quarter that ended on November 30. Revenue from diamond sales of 6,066 carats increased 45.3% to $10.7 million, representing an average price decline of 3% to $1,764 per carat. Rockwells royalties from mining contracts delivered $357,500.

Two Execs Join True North Board

True North Gems Inc. appointed Raymond Simpson and James R.W. Pounds, both of whom are executives of Dominion Diamond Corporation, to the companys advisory board. Simpson is currently an executive vice president of Dominion Diamond and has more than 20 years of experience in the diamond industry.

ECONWATCH 	  

Diamond Industry Stock Report

Losers outnumber gainers in the U.S. with Birks (-19%) and Zale (+13%) defining the spread. European and India shares were all lower except for C. Mahendra (+1%). Hong Kong shares up. Mining shares mixed with Stellar (+9%) and Mountain Province (-9%) on the win/loss fringes. View the extended stock report.

Dec. 12 Dec. 5 Chng.
$1 = Euro 0.727 0.730 -0.003
$1 = Rupee 61.82 61.76 0.1
$1 = Israel Shekel 3.50 3.52 -0.02
$1 = Rand 10.39 10.46 -0.07
$1 = Canadian Dollar 1.06 1.06 0.00

Precious Metals
Gold $1,227.20 $1,226.20 $1.00
Platinum $1,357.00 $1,357.00 $0.00

Stock Indexes Chng.
BSE 20,925.61 20,957.81 -32.20 -0.2%
Dow Jones 15,739.43 15,821.51 -82.08 -0.5%
FTSE 6,445.25 6,498.33 -53.08 -0.8%
Hang Seng 23,218.12 23,712.57 -494.45 -2.1%
S&P 500 1,775.50 1,785.03 -9.53 -0.5%
Yahoo! Jewelry 930.68 952.35 -21.67 -2.3%

Rapaport Weekly Market Comment Dec. 20, 2013

Market sentiment improving in last week before Christmas. Very strong international demand for GIA dossiers. Rough market improving with increased trading activity as sightholders take full allocations. Rough prices steady with slight premiums on the secondary market. Banks tightening credit policy in 2014 with ABN Amro reducing credit facility for rough purchases from 100% to 70%. ALROSA targets flat production of 36M cts. in 2014. Kristall projects 2013 sales -14% to $360M, polished production -7% to 160,000 cts. India’s Nov. polished exports -22% to $1.1B, rough imports +26% to $1.1B. Rapaport Group launches The Diamond Show in Basel. Happy Holidays.

RapNet Data: Dec. 19

Diamonds 1,063,140
Value $6,844,589,991
Carats 1,184,486
Average Discount -27.64%

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RAPAPORT ANNOUNCEMENTS
December
17-26
Tue-Thu
Rapaport Melee Auction

New York & Dubai

View details.
January
14-22
Tue-Wed
Rapaport Melee Auction

New York & Dubai

www.rapaportauctions.com
March
27-31
Thu-Mon

The Diamond Show - Basel

Markthalle building

Register Now:
www.thediamondshow.net

Closed for Jewish Sabbath Mar. 29

QUOTE OF THE WEEK
The U.S. holiday season has been marginal to just OK. Retailers are doing anything they can to get rid of merchandise.

Joel Bines | AlixPartners

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 	  

De Beers Sight Estimate at $580M 

The De Beers December sight had an estimated value of $580 million with prices and box values kept relatively stable. Sightholders took goods that were deferred from November and they sought to build inventory for their factories. Trading on the secondary market improved following December’s sight. There was also some ex-plan supplied at the sight, which are goods made available over and above sightholders’ previously applications for goods.

Sightholders noted that they purchased goods that will maintain their operations through the relatively long period, until the next sight, which begins on January 20. Signs also point to tighter bank credit in 2014, with ABN Amro confirming that it is reducing its financing of rough purchases from all sources from 100% to 70% on January 1. Manufacturers will, therefore, have to finance 30% of their future purchases.

ALROSA Maintains Production Forecast

ALROSAs supervisory board approved the companys budget for 2014, expecting to maintain the same level of spending and production for the year ahead. ALROSAs preliminary production estimates for 2013 suggest it will have mined more than 36 million carats compared with 34.4 million carats in 2012.

ALROSAs board approved investing $1.2 billion during 2014, the same amount it had this year, on capital projects, with a 30% year on year spending increase for underground mines the bulk of which will be for construction of the Udachny underground mine. The board stated that it foresees a stable balance between rough diamond supply and demand, with a potential for a 2% to 3% increase in prices during 2014.

RETAIL & WHOLESALE

U.S. Christmas Retail Sales +2%

ShopperTrak reported that U.S. retail store sales fell 0.8% year on year for the week that ended on December 15, while store foot traffic plunged 19.9%. So far this Christmas season, which began on November 1, ShopperTrak estimated that sales are up 2% year on year to $176.7 billion, which is in line with forecast of 2.4% growth. The busiest shopping weekend of the year begins December 20.

Similarly, this past week, Gallups consumer survey of daily spending on a 3-day and 14-day rolling average was about the same as it was one year ago at $81 and $91, respectively.

Meanwhile, the National Retail Federation (NRF), which measure retail plus food sales, has maintained its Christmas forecast growth rate of 3.9%, but the trade group stated that discounting is weighing on overall sales. ShopperTrak forecasts 10% fewer shoppers will visit brick and mortar stores this Christmas season compared with 2012.
About 18% Purchase Jewelry This Season

Prosper Insights & Analytics found that 49.9% of those in the U.S. who have not yet finished their Christmas gift buying expect to do so online, marking the highest percentage in the surveys history. The group conducted research on behalf of the NRF and also found that 45.4% of shoppers expect to finish gift buying at a favorite department store, while 37.4% expect to wrap up shopping at discount stores.

The most popular gift items so far have been apparel, representing 49.6% of gifts purchased, toys at 38.7%, electronics at 26.6%, personal care items at 19.6%, home-related decorations/items at 18.4% and jewelry at 17.5%. Slightly more than 34% have purchased gift cards.

U.S. online Christmas-season retail sales rose about 10% year on year to reach $37.8 billion for the period of November 1 through December 15, 2013, according to comScore Inc. Growth was running slightly lower than forecast of 14%, but the group maintains its target as the heaviest spending week of the year was yet to be included.

Inventory High for Sales Forecast

Independent small business owners rode into the Christmas season with a very cautious outlook, according to the National Federation of Independent Business (NFIB). Overall, sentiment increased less than one point to what the group called a dismal 92.5, coupled with lots of dismal views of the economy coming in 2014.

NFIBs Index has a “trading range” between 86.4 and 95.4 since the Great Recession, down from an average reading of 100 points from 1973 through 2007. The net percent of owners expecting higher real sales in December rose 1 point to 3% after falling 6 points in October, NFIB found. The pace of inventory reduction continued with a seasonally adjusted net negative 7% of owners reporting growth in inventory, 1 point worse than in October.

The negative outlook for the economy and real sales shows that inventory levels are too high and the net percent of owners planning to add inventory this month was a net 0%.

Kristalls Sales to Drop

Kristall estimated that its sales were 14% lower year on year at $360 million for 2013, according to an exclusive interview through Interfax. Cut diamond production is expected to show a 7% drop to 160,000 carats. The company called todays polished market at rock bottom, jewelers are ordering smaller, lower-quality stones and profit margins for diamond cutters is tighter than ever. Additionally, Kristall stated that there are no fundamental reasons for polished prices to increase anytime soon.

Loehmanns to Liquidate Quickly

U.S. retail chain Loehmann’s filed for Chapter 11 bankruptcy on Monday after failing to find a buyer as a going concern and claimed assets of between $50 million and $100 million, far less than liabilities of between $100 million and $500 million. Loehmann’s, which offers some jewelry, is selling the right to hold a going-out-of-business sales at its 39 locations during an auction in early January, with liquidation expected to begin in the middle of the month.

Retail analyst Howard Davidowitz of Davidowitz & Associates explained that Loehmanns lost its critical mass customer to larger chains, especially since most retailers are selling nearly the same merchandise at the same or lower price point. We are in the most promotional holiday season in 20 years. Thats what Loehmanns ran into, and thats why they filed now, he concluded.

Jared Opens in Carle Place

Jared The Galleria Of Jewelry opened in Carle Place, New York, marking the jewelry retailers 200th store. Jared opened its very first store 20 years ago at the Plaza at Chapel Hill in Cuyahoga Falls, Ohio. Jared stores offer diamonds, gold, colored gemstones and luxury Swiss timepieces at a variety of price points. Brands include Neil Lane Bridal and Neil Lane Designs, Open Hearts by Jane Seymour, the Leo Diamond, Tolkowsky, Sea Magic Cultured Pearls by Mikimoto, LeVian and many more.

Titan Reaches Store Count Milestone

Titan Company Ltd. celebrated a company milestone in opening its 1,000th retail store this week. The company retails in the watches, jewelry and eyewear sectors with a footprint in 177 cities, 26 states and three Union Territories. The companys most famous diamond jewelry line is under the Tanishq brand. The new store in Bangalore marked a fascinating retail journey that began in that city in 1988 with its World of Titan watch store at Safina Plaza.

Bovet 1822 Opens in NYC

Swiss timepiece manufacturer Bovet 1822 opened its new flagship store at 50 Central Park South in Manhattan on December 12. This boutique is the brands fourth location after Moscow, Baku and Berlin and sits directly across the street from Central Park in the base of the Ritz-Carlton Hotel. Bovet 1822 created a new collection, featuring 50 timepieces unique to the New York address and engraved to commemorate the grand opening. These timepieces will not be sold anywhere else.

Diamond Show Debuts in Basel

A new exclusive diamond show featuring the best diamonds from the world’s leading diamonds manufacturers and dealers will open in Basel, Switzerland on March 27. The show will be located in the iconic Markthalle building, only 300 meters from the Basel SBB train station and will be open to the trade, as well as private collectors and investors. The Diamond Show will provide an innovative trading environment for buyers and sellers of diamonds and diamond jewelry with direct access to 60 of the best diamond manufacturers and dealers in the world. It will also include a specialized salon for natural fancy colored diamonds.

For more information visit: thediamondshow.net

GENERAL
IDCA Elects Officers

The Indian Diamond & Colorstone Association (IDCA) Inc. announced the names of its board of directors for 2014.

President, Mehul Shah of Shivani Gems Inc.
Vice Pres., Ashok Sancheti of Pioneer Gems
Secretary, Prakash Mehta of Interings Inc.
Treasurer, Nilesh Sheth of Nice Diamonds Inc.
Joint Sec., Sourabh Lashkery of Gemorex Intl.

Directors:
Rakesh Barmecha of Niru NY Ltd.
Sushil Goyal of Liberty Gems Inc.
Anu Hirawat of Vimco Diamond Corporation
Kailash Jhalani of Prompt Gem Importers Inc.
Alok Mehta of IDD
Atit Mehta of Atit Diamond Corporation
Jay Mehta of Paras Diamond Corporation
Rayaz Takat of Takat Gems USA Inc.

Russias Rough Exports +70%

Russias Finance Ministry told Interfax that the country exported 7.781 million carats of rough diamonds in the third quarter of 2013, up 70% from one year earlier. By value, rough diamond exports surged 42% to $979 million. The top destination for rough diamonds was Antwerp, followed by Surat and Dubai

Google Ranks Top Searches

Google tracks and then mined search word data for the past year to create a top search trends report, touching upon numerous subject areas in which that the top jewelry brands were Gucci, Kendra Scott, Sucre, Jennifer Meyer and Jennifer Fisher and Gemfields (owner of Faberge).

Overall, the top apparel brands and retailers included Kohls, JCPenney, Nordstrom, Forever 21 and Victorias Secret. Specifically for diamonds search, the terms diamond ring, engagement ring and Helzberg Diamonds all featured prominently, while Pandora garnered a high ranking from jewelry searches.

Yinren Group Acquires Antwerp Diamond Bank

The Shanghai-based Yinren Group will purchase Antwerp Diamond Bank (ADB) from KBC for an undisclosed sum. The deal is subject to regulatory approval and pending closure, ADB remains committed to continuing its business activities and serving its customers, according to KBC. The sale of ADB is expected to have only a negligible upfront impact on the KBC groups earnings but it is expected to free up about $137 million worth of capital for KBC, primarily by reducing risk-weighted assets, which will ultimately improve KBCs tier-1 ratio (Basel II).

The Yinren Group is a diversified enterprise group with activities in real estate, international trade and the diamond industry. The group has operations in mainland China, Hong Kong and Brazil.

MINING 	  

Petra Sells Two Large Stones

Petra Diamonds Ltd. sold a 126.40-carat rough diamond for $8.52 million, or $67,405 per carat, along with a 91.50-carat rough stone for $3.78 million, or $41,311 per carat, during a special tender this month. Petra recovered the two exceptional diamonds in November. In addition to these two stones, Petra reported that it recorded solid prices at the December tender but provided no further details. Petra intends to publish a trade update on January 28 for the six month period that ends on December 31.

Kimberley Diamonds Raises $11M

Kimberley Diamonds, the owners of the Ellendale mine in Australia, raised $10.8 million through a private share placement of 12 million new shares that were priced at 90 cents each. The proceeds will be used to fund re-starting costs at the Ellendale 4 mine and the companys Lerala mine in Botswana.

Peregrine Raises $3M

Peregrine Diamonds Ltd. arranged a non-brokered private placement of 4,616,222 common shares at a price of 65 cents per share for gross proceeds of $3 million. The common shares that were issued under the placement will be sold on a flow-through basis, pursuant to the Income Tax Act (of Canada) and purchased by institutional investors. A cash fee equal to 6% of the gross proceeds will be paid as a finders fee to Secutor Capital Management Corporation. Proceeds from the placement will be used for Peregrines mineral exploration projects in Canada, including Chidliak.

Botswana Diamonds Raises $882K

Botswana Diamonds has conditionally raised $882,000 in cash through issuing 21.6 million new ordinary shares at 1 pence each, plus two warrants per new share, forming one unit, at a price of 2.5 pence each. The junior explorer also settled $327,000 of existing liabilities with directors of the company by issuing units and, in aggregate, issued 29.6 million new shares and 59.2 million warrants, each of which have the right to subscribe for one new ordinary share at 2.5 pence per share for a period of six months.

Minister Disbands Boards

Zimbabwes Mines Minister, Walter Chidhakwa, dissolved the management boards of the Zimbabwe Mining Development Corporation (ZMDC), the Minerals Marketing Corporation of Zimbabwe (MMCZ) and Marange Resources -- all of which are on the U.S. sanctions list. The minister said that duties and functions of those boards will be assumed by the permanent secretary of the Ministry of Mines and Mining Development, professor Francis Gudyanga, until the appointment of new boards.

The NewsDay newspaper said the shakeup was linked to the alleged disappearance of 1.3 million carats of diamonds in 2010, following the breakdown of Canadile Mining, a failed joint venture diamond mining firm involving the ZMDC.

Kennadys Sample Grade Improves

Kennady Diamonds Inc. recovered approximately 3,454 kilograms of kimberlite from 21 holes drilled at the northwest lobe of the Kelvin kimberlite at the Kennady North diamond project this past summer. The kimberlite was processed at the Geoanalytical Laboratories Diamond Services at the Saskatchewan Research Council and returned an average sample grade of 4.56 carats per tonne. Two drill campaigns have now produced a combined sample grade of 5.38 carats per tonne. A total of 362 commercial-size diamonds were extracted from the summer drill program and 112 were produced during the Kelvin 2013 winter drill program.

Paragon Buys Processing Plant

Paragon Diamonds Ltd. agreed to buy the Mothae kimberlite processing plant in Lesotho from Lucara Diamond Corporation through its subsidiary Meso Diamonds. Paragon Diamonds expects to relocate the plant in the first quarter of 2014 after minimal site preparations at its Lemphane project. Under the terms of the agreement, Meso Diamonds will pay to Lucara Diamond a consideration of $1.15 million, comprised of $50,000 cash and $400,000 in new Paragon Diamonds shares at a price of 5.5 pence per share upon signing the asset purchase agreement, followed by $200,000 cash and $500,000 in new Paragon Diamonds shares at a price of 5.5 pence per share on completion of the plants relocation.

Paragon Diamonds plans to initiate a first stage of production by the third quarter of 2014, covering a two year period and recovering at least 20,000 carats at an estimated average value of $750 per carat.

ECONWATCH

Diamond Industry Stock Report

U.S. shares mixed but trading close to flat, except for JCPenney (-7%). Europeans shares up by low single-digits, while Indian shares mainly down. Mining shares mixed with Rockwell (-10%) and Shore Gold (+8%) defining the spread. View the extended stock report.

Dec. 19 Dec. 12 Chng.
$1 = Euro 0.732 0.727 0.005
$1 = Rupee 62.17 61.82 0.3
$1 = Israel Shekel 3.51 3.50 0.01
$1 = Rand 10.41 10.39 0.02
$1 = Canadian Dollar 1.07 1.06 0.01

Precious Metals
Gold $1,189.10 $1,227.20 -$38.10
Platinum $1,316.00 $1,357.00 -$41.00

Stock Indexes Chng.
BSE 20,708.62 20,925.61 -216.99 -1.0%
Dow Jones 16,179.08 15,739.43 439.65 2.8%
FTSE 6,584.70 6,445.25 139.45 2.2%
Hang Seng 22,888.75 23,218.12 -329.37 -1.4%
S&P 500 1,809.60 1,775.50 34.10 1.9%
Yahoo! Jewelry 938.84 930.68 8.16 0.9%

Rapaport Weekly Market Comment Dec. 27, 2013

U.S. holiday sales exceed low expectations despite consumer caution. Diamond trading centers quiet as U.S. and Belgium markets close for Christmas. Markets now focusing on Chinese New Year demand. Rough markets stable with increased manufacturing to relieve polished shortages. Liquidity challenges persist. Courts order Tiffany to pay Swatch $450M in contract dispute. Antwerp Diamond Bank sold to Yinren Group. Marange Antwerp tender sells 279,723 cts. for $10.7M ($38/ct.). Belgium’s Nov. polished exports -1% to $1.1B, rough imports -1% to $1.1B. Hong Kong 3Q polished imports +15% to $4.8B. All of us at Rapaport wish you and yours a happy, healthy, prosperous and peaceful New Year.

RapNet Data: Dec. 26

Diamonds 1,041,938
Value $6,730,979,303
Carats 1,158,277
Average Discount -27.71%

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RAPAPORT ANNOUNCEMENTS

January
14-22
Tue-Wed
Rapaport Melee Auction

New York & Dubai

View details.

January
15-22
Wed-Wed

Rapaport  Single Stone Auction 

New York & Israel

www.rapaportauctions.com
March
27-31
Thu-Mon

The Diamond Show

Markthalle Building, Basel, Switzerland

Visit - Exhibit - Learn More:
www.thediamondshow.net

QUOTE OF THE WEEK
You cant get a suit fitted on the Internet. You cant get a bra fitted on the Internet; you cant win a great prize, you cant be in line and have a bit of fun, and thats what its about. Weve got to recreate that theater in-store to bring customers back.

Bernie Brookes | Myer

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.

RETAIL & WHOLESALE

U.S. Jewelry Sales +9%

Jewelry sales in the U.S. during November, which kicked off the Christmas shopping season, rose 9.1% year on year, according to preliminary government figures, maintaining a 12-month running total of $72.6 billion. Sales of watches increased 11.3%, representing an annual total of $9.9 billion. Meanwhile, the U.S. consumer price index (CPI) for jewelry in November was flat, while it increased 3.9% for watches.

Comparatively, department store sales in November fell 4.3% year on year to $17.47 billion. Department store sales have had a difficult year, falling 5% for the first 11 months of 2013 to $150 billion. Retail sales for all product categories in November rose 4.7% year on year to $432.3 billion. Retail trade sales increased 4.6% year on year and nonstore retail sales improved 9.4% compared with November 2012.

Analytics firm RetailNext determined that foot traffic to stores fell 2.8% year on year in November; however, conversions rose so sales improved 1%. When coupling Black Friday with Thanksgiving Day, overall traffic was up 1.3%, according to RetailNext and total sales for both days increase 5.8% compared with the same holiday weekend in 2012

U.S. Jewelry CPI Flat

The U.S. consumer price index (CPI) for jewelry was basically flat, or down by just 0.5%, year on year at 176.16 points in November; however, the reading was 1.5 points lower than October a full three points lower than Septembers index. The highest CPI was 183.19 points in January 2012. The average monthly CPI for the first 11 months of the year was 0.3% lower year on year at 177.78 points.

The jewelry CPI reading in November marked its 34th consecutive month with a reading of more than 170 points, continuing to maintain a historically strong inflation trend. After reaching a record early in 2012, the prices of gold, platinum and diamonds have remained under pressure, contributing to a slightly lower CPI for most of this year. Gold was about 27%lower year on year in November and platinum was down by nearly 15%. The RapNet Diamond Index (RAPI), the global benchmark for polished diamond prices, dropped 4.7% year on year for 1-carat diamonds in November, the index for 0.50-carat diamonds fell 1.7% and it declined 2.9% for 3-carat stones. However, RAPI for 0.30-carat diamonds jumped 8.2% in November.

U.S. Seasonal Retail Sales +2%

Depending upon which measurements are used, U.S. Christmas sales forecasts remained in the range of 1% to better than 3%. But according to preliminary figures, MasterCard Advisors SpendingPulse was the most optimistic so far, claiming that key product sales rose 2.3% year on year during the November 1 through December 24 period. Jewelry sales outperformed its competing categories such as apparel and electronics, according to SpendingPulse.

However, ShopperTrak estimated that retail sales had increased 2% during the period as in-store retail sales fell 3.1% year on year for the week that ended on December 22 and foot traffic plunged 21.2%. ShopperTrak observed that despite markdowns and promotional efforts, sales slipped 0.7% on Super Saturday, which was December 21 and in-store traffic decreased 18.1%. ShopperTrak maintains that post-Christmas markdowns and sales will drive robust retail sales and store traffic in the days to come, particularly on December 26 and 28.

As for ecommerce, comScore found that retail sales rose 10% to $42.8 billion from November 1 through December 22, which was below its prediction of a 14% increase.

Amazon Reveals Top Jewelry Gifts

Amazon.com told investors that it completed its most successful Christmas season to date and shipped merchandise to 185 countries. The online retailers membership program, Amazon Prime, registered 1 million new subscribers in the week leading up to Christmas, which technically qualified them for free two-day shipping on many items.

While there were a number of popular Christmas gifts, Amazon listed three jewelry items that made its best sellers list this season. The top gift was a set of sterling silver and amethyst flower earrings that retailed for about $55 from Amazon Curated Collection; a sterling silver "I Love You To The Moon and Back" two-piece pendant necklace from SilverCloseOut that was listed for $22.95 and a Tree of Life silver, expandable bracelet from jeweler Alex & Ani that sold for about $28.

Shree Ganesh Plans Restructuring

Shree Ganesh Jewellery House Ltd. requested debt restructuring with the State Bank of India (SBI). The process is a mechanism that permits viable companies additional time to meet debt obligations, subject to certain terms and conditions, besides providing a path to restructure debt. Shree Ganesh Jewellery went public in 2010 and it is engaged in trading, manufacturing and exporting gold and diamond jewelry.

Tiffany Lowers Guidance After Settlement

Tiffany & Co. was ordered to pay $449.5 million (CHF 402.7 million) to Swatch Group over their failed joint venture. Tiffany & Co. lowered its earnings guidance about 37% following the court ruling in Holland to between $2.30 and $2.35 per share. Tiffany & Co. and Swatch established a partnership in December 2007 to produce and market watches, but the deal ended in a bitter and expensive court battle. Swatch sued Tiffany in December 2011 for breach of contract, prompting Tiffany to countersue a few months later.

In addition to the arbitration penalty, Tiffany & Co. must also pay approximately $800,000 to cover two-thirds of the arbitration costs and reimburse Swatch an amount of $8.8 million for legal fees and expenses incurred by the group.

Bloves Receives Funding

Shanghai-based The BLOVES, a firm that customizes and sells diamond and wedding rings, announced it had received $30 million in funding from Hong Kong-based Omaha Capital China. The BLOVES stated that some of the capital will be used to build a customization center and additional funds will be used to integrate upstream resources including global diamond resources.

India Revisits SEZs Rules

Indias department of commerce claimed that some manufacturers are using special economic zones (SEZs) to import diamonds illegally in an effort to avoid paying duty. SEZs were set up specifically for adding value to imported products for the purpose of exporting finished goods. The government is considering a ban on diamond and gem imports to SEZs, according to The Economic Times, while it introduces stringent rules on what defines added value to the final product. Officials found several firms in Surats SEZ were trading gold, pearls and diamonds locally rather than manufacturing these items for exporting to other destinations. The duty on diamonds is 2%, golds import duty rose this year to 11.5%.

Lypsa Approves Hong Kong Deal

The board of directors for Lypsa Gems & Jewellery Ltd. approved creating a subsidiary in Hong Kong, though a time frame was not provided. Lypsa Gems & Jewellery is based in Mumbai and it has affiliates in Antwerp, Dubai and Moscow. The companys manufacturing facilities are located at Navsari and at SurSez, Surat. The diamond firm specializes in rough preparation and distribution, catering to small and mid-size diamond manufacturers based in Mumbaj.

GENERAL 	  

ALROSA Elects Board

ALROSAs shareholders voted to elect 15 supervisory board members including the following:

Fyodor Andreev, ALROSAs president and CEO; Sergey Barsukov, a director of the financial policy department for Russias Ministry of Finance; Pavel Borodin, a vice president at VimpelCom; Ivan Demyanov, a vice president at ALROSA; Sergey Dubinin, the chairman of the supervisory council for VTB Bank; Dmitry Zakharov, the general director of RIC-Finance; Valentina Kondratyeva, Yakutias head of state autonomous agency center for strategic research; Nadezhda Kononova, the deputy general director of Republican Investment Company; Vasily Lukyantsev, the first deputy head of administration for Lensk district municipality; Sergey Mestnikov, the first deputy minister of Yakutias property and land relations; Denis Morozov, a representative of Russias board of directors of the European Bank for Reconstruction and Development; Nina Osipova, a deputy finance minister in Yakutia; Oleg Fyodorov, an adviser to the head of Federal Agency for State Property Management; Alexander Shokhin, the president of the Russian Union of Industrialists and Entrepreneurs and Ilya Yuzhanov, a board member for OTKRITIE Financial Corporation.

ALROSAs shareholders also voted to approve the revised version of regulations for the remuneration of the supervisory board members. The election was also convened following the tragic deaths of former board members Victor Yefimov and Alexander Morozkin.

CEBR Ranks Future Economies

The Centre for Economics and Business Research (CEBR) forecasts China to overtake the U.S. as the worlds largest economy in 2028 with a gross domestic product (GDP) valued at $33.5 trillion and, at the same time, India will overtake Japan to become the third largest economy with a GDP valued at $6.6 trillion. Other noteworthy predictions take place beforehand. Brazil is forecast to overtake the U.K. and Germany as the fifth largest economy in 2023 with a GDP of $3.8 trillion. The U.K. is predicted to become the fifth largest economy in 2018 with a GDP of $3.1 trillion, overtaking France, but then it will slip behind Brazil and India in 2023 and settle at No. 6 behind Germany in 2028.

By 2028, France (No. 5 in 2013) and Italy (No. 9 in 2013) drop out of the top 10 world economies, while Russia maintains its spot at No. 8, Mexico joins the top 10 at No. 9 and Canada holds its position at No. 10.

Rapaport Partners With Show Provider

U.S. Antique Shows partnered with the Rapaport Group for its jewelry trading platform and brokerage services to provide an efficient platform for companies to trade at the shows, granting buyers access to jewelry from around the U.S. and providing suppliers with the ability to sell jewelry to a large buyer base. The Rapaport Group will be selling a large assortment of closeout, estate and signed jewelry at The Original Miami Beach Antique Show in January. In addition, the Rapaport Group will sponsor the LA Antique Jewelry & Watch Show, the Las Vegas Antique Jewelry & Watch Show and New York Antique Jewelry & Watch Show in 2014. Rapaport Group’s partnership also includes booths at both The Original Miami Beach Antique Show and Las Vegas Antique Jewelry & Watch Show.

Zimbabwe Plans Second Tender in Antwerp

Zimbabwe plans a second tender of Marange diamonds at the Antwerp World Diamond Centre (AWDC) from February 12 to 19 following a $10.7 million sale of rough stones earlier in December. The tenders were made possible after the E.U. eliminated sanctions against the Zimbabwe Mining Development Corporation (ZMDC), which is still under U.S. sanctions as is diamond miner Marange Resources and Diamond Mining Company. The second tender anticipates offering rough diamond parcels from the aforementioned firms along with Anjin Investments, Jinan and Kusena Diamonds.

Available diamonds are expected to varying widely in quality and size, state of cleaning, sorting and composition. Zimbabwes treasury designates a 15% royalty on the sale of diamonds that originate from its mines. In his 2014 national budget, Zimbabwes Finance and Economic Development minister, Patrick Chinamasa, said that President Robert Mugabe directed the treasury and the Ministry of Mines to reform the industry to ensure greater transparency, according to the Zimbabwe Independent newspaper. The president ordered a tripartite control overseeing diamonds, including the ministries of state finance, mining development and the Minerals Marketing Corporation of Zimbabwe (MMCZ), which is also on the U.S. sanctions list.

MINING 	  

Diavik Meets Compliance Specs

Diavik Diamond Mines Inc. successfully obtained the International Organization for Standardization (ISO) and Occupational Health and Safety Advisory Services (OHSAS) recertifications for its health, safety, environment, and quality systems. Det Norske Veritas Certification Inc. (DNV), a Norwegian classification society, conducted external audits before awarding certification at the mines site outside of Yellowknife. The recertification process entailed a comprehensive evaluation of Diavik’s strategic business systems, procedures and a compliance assessment. ISO recertification is conducted every three years after two annual surveillance audits.

NDTC Declares Dividend

The Namibia Diamond Trading Company (NDTC) declared a dividend of $7.72 million (NAD 80 million), the second of the year following a payout of $3.9 million earlier. NDTCs joint shareholders include the government and De Beers. The company estimated that 2013 revenue was likely to have increased 26% year on year to $1.06 billion.

Lucaras Resource Estimate Grows

Lucara Diamond Corporation updated its resource estimate for the Karowe diamond mine in Botswana, resulting in a greater than $1 billion increase in the estimated in-situ value of the indicated mineral resource. The update was completed by Mineral Services Canada Inc. and took into account the mines production of high-value stones since production started in April 2012. The updated mineral resource was based on the large amount of new information generated since the start of production at Karowe.

The presence of exceptional stones within the center and south lobes is now reflected in the size frequency distributions and the modeled average price. In 2013, Lucara sold more than 438,000 carats of diamonds for gross proceeds in excess of $180 million. Included in these were 23 diamonds that each sold for over $1 million, including nine diamonds which sold for more than $3 million each.

STATS 	  

Belgium

Nov. $Mil. %Chng. YTD $Mil. %Chng.
Polished exports $1,140 -1% $12,847 5%
Polished imports $1,004 -3% $12,424 2%
Net exports $136 12% $423 416%

Rough imports $1,086 -1% $12,138 7%
Rough exports $1,289 12% $13,308 10%
Net imports ($203) ($1,170)

Net diamond account $339 448% $1,593 80%

Hong Kong

3Q $Mil. %Chng. YTD $Mil. %Chng.
Polished imports $4,783 15% $13,667 13%
Polished exports $3,091 15% $8,894 2%
Net imports $1,692 15% $4,773 24%

Rough imports $469 48% $1,425 19%
Rough exports $641 55% $2,023 47%
Net imports $172 ($181)

Net diamond account $1,520 11% $2,855 -22%

ECONWATCH 	  

Diamond Industry Stock Report

U.S. retailers were mainly higher now that Christmas season is over and sales appear to have improved by low single-digits. Indian firms mixed with Gitanjali (+33%) and Rajesh (-11%) defining the spread. Mining shares were mainly even except for Lucara (+16%) and Gemfields (-5%). View the extended stock report.

Dec. 26 Dec. 19 Chng.
$1 = Euro 0.730 0.732 -0.002
$1 = Rupee 61.90 62.17 -0.3
$1 = Israel Shekel 3.49 3.51 -0.02
$1 = Rand 10.36 10.41 -0.05
$1 = Canadian Dollar 1.06 1.07 -0.01

Precious Metals
Gold $1,211.10 $1,189.10 $22.00
Platinum $1,354.00 $1,316.00 $38.00

Stock Indexes Chng.
BSE 21,074.59 20,708.62 365.97 1.8%
Dow Jones 16,479.88 16,179.08 300.80 1.9%
FTSE 6,694.17 6,584.70 109.47 1.7%
Hang Seng 23,179.55 22,888.75 290.80 1.3%
S&P 500 1,842.02 1,809.60 32.42 1.8%
Yahoo! Jewelry 946.89 938.84 8.05 0.9%

Rapaport Weekly Market Comment Jan. 3, 2014

Diamond prices firm in December as difficult year ends on a positive note. 2013 RapNet Diamond Index (RAPI) for 0.30ct. +10.1%, 0.50ct. -0.7%, 1ct. -4.5%, 3ct. -4%, Rapaport Melee Index (RMI) +3.6%. Markets quiet with improved sentiment after positive U.S. holidays and record stock market year-end close. Expectations rise for Chinese New Year despite cautious economic outlook. Far East gold demand strong as prices plunge 28% in 2013. Indian diamond manufacturing below capacity with tight liquidity. Rough trading stable but manufacturers expected to restrain buying as bank credit tightens.
RapNet Data: Jan. 2

Diamonds 1,011,938
Value $6,404,245,926
Carats 1,112,930
Average Discount -27.75%

www.rapnet.com

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RAPAPORT ANNOUNCEMENTS

January
14-22
Tue-Wed
Rapaport Melee Auction

New York & Dubai

View details.

January
15-22
Wed-Wed

Rapaport  Single Stone Auction 

New York & Israel

www.rapaportauctions.com

March
27-31
Thu-Mon

The Diamond Show

Markthalle Building, Basel, Switzerland

Visit - Exhibit - Learn More:
www.thediamondshow.net
QUOTE OF THE WEEK
People from around the world are being attracted to Dubai during Dubai Shopping Festival because of the many life changing stories that have been created here, thanks to our mega raffles, such as the gold promotion. In fact, this annual gold raffle has contributed to a tremendous inflow of tourists during Dubai Shopping Festival, as they have discovered that Dubai, the City of Gold, is the best place to buy gold and jewelry.

Saeed Mohammad Mesam Al Falasi | Dubai Festivals

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.

RETAIL & WHOLESALE

Hong Kongs Nov. Jewelry Sales +8%

Hong Kongs retail sales increased 8.5% year on year in November to $5.1 billion (HKD 39.6 billion), while the volume of items sold rose 9%. Year-to-date retail sales are up 11.6% to $57.3 billion. Revenue from the category of jewelry, watches, clocks and valuable gifts increased 8.3% during the month to $1.1 billion.

Sales from the jewelry and gift category in the first 11 months of the year have risen 24.6% to $13.77 billion. The government determined that the volume of sales for jewelry, watches and clocks jumped 13.3% in November, whereas it improved 7.6% for apparel, 6.4% for footwear and accessories and volume fell 7.4% for motor vehicles sales.

U.S. Jewelry Show Ownership Consolidates

The Onex Corporation will acquire George Little Management LLC (GLM) through its subsidiary Emerald Expositions for $335 million, subject to certain adjustments at closing. In June, the companys private equity fund, Onex Partners III, acquired Emerald Expositions, which operates 65 tradeshows and brands, including Couture, JA New York, Special Delivery New York and the National Jeweler website.

GLM operates business-to-business (B2B) events for the lifestyle, design, product sourcing and antique sectors, including antique and jewelry shows in Los Angeles, Las Vegas, Miami and New York. Onex stated that it believed it could grow Emerald Expositions through accretive add-on acquisitions of smaller exhibition businesses. Onex Partners III will make an equity investment of approximately $140 million to acquire GLM, of which Onexs share is approximately $34 million. The balance of the acquisition total will be funded with debt financing. The transaction is anticipated to close in January 2014
Pure Golds Sales Rise

Pure Gold Jewellers reported double-digit sales growth in 2013, and while the retailer didnt provide hard totals, stronger sales were driven by lower gold prices and better than expected performance during the Dubai Shopping Festival, Eid and Diwali.

“Growing consumer confidence and tumbling gold prices resulted in higher sales for us in 2013. Low prices also gave us more room to offer better bargains to customers,” stated Firoz Merchant, the chairman of Pure Gold Jewellers. “This year we also entered Saudi Arabia and Sri Lanka, and we have experienced significant growth in these markets.” Merchant also noted that the company will expand next year within the Gulf Cooperation Council (GCC), or countries bordering the Persian Gulf. Pure Gold Jewellers will open 17 new stores in Qatar, Kuwait, Saudi Arabia and in the United Arab Emirates (UAE).

Michael Kors Same-Store Sales +20%

Retail Metrics estimated that Michael Kors same-store sales in December jumped 20.4%, even with heavy discounting during the highly promotional Christmas season. The retailer has observed its revenue double since 2011 and Retail Metrics predicted sales to hit $3 billion this fiscal year. Michael Kors has effectively captured key designer trends of every season and offers it to the masses as affordable luxury, according to analysts.

Michael Kors has captured market share from other luxury and aspirational luxury brands, according to Marshal Cohen of the NPD Group. Michael Kors is expecting to advance its footprint by 40 stores in Europe this year and expects to eventually support 400 stores across North America, up from the current 264.

Nepal Weighs Gold Purity Rates 

The Nepal Bureau of Standards and Metrology (NBSM) is preparing to file legal claims against six jewelers for selling 24-karat gold below government purity standards of 99.5%. According to a report by the Republica newspaper, a government inspection of the jewelers also found silver content had been mixed into the gold.

The newspaper reported that 24-karat gold products failed to meet the requirements from Shree Sunrise Jewelers, Baba Jewelers, Good Luck Jewelers, Suryamukhi Jewelers, Shree Ma Aarati Jewelers and Shree Jay Laxmi Gahan Griha. However, Mani Ratna Shakya, the president of the Federation of Nepal Gold and Silver Dealers´ Associations, told the newspaper that government monitoring teams did not include bullion experts and that the purity tests were unscientific and unacceptable
GIA Revises Report Format

The Gemological Institute of America (GIA) introduced a revised format for its diamond grading and gem identification reports beginning January 1. GIA will offer no-cost reissues for reports that are dated from July 1, 2013 through December 31 upon request. Reissues of reports dated January 1, 2013 through June 30 will be available for a nominal fee. The previous reports must be returned to GIA before the reissues can be processed.

Laboratory clients may check GIA.edu or contact their GIA client service representatives for further information. The new reports have dimensions similar to the prior versions but they will consume less paper and other materials; and they have enhanced security features including a unique and durable proprietary paper. QR codes printed on each report will provide direct access to GIA’s online report check service, which allows clients and consumers to confirm the authenticity of GIA grading and identification reports with their smartphones.

Laxmi Opens Admin Offices

The Laxmi Diamond Group inaugurated its new administrative office building near Gajera Circle in Katargam, Surat, in December. The space boasts the latest in equipment and technology, according to the firm, and includes 231,000 square feet with 20% dedicated to manufacturing high-quality diamonds. Laxmi employs 2,500 personnel at the new space, which marks the companys fifth property in Gujarat.

PC Jeweller Presents Spectrum

PC Jeweller presented its new jewelry line, Spectrum, at all of its 39 showrooms across India this week. The company defined the Spectrum collection as one that keeps diamond jewelry light and easy to wear as younger consumers shift their tastes in that direction for earrings, bracelets, pendants and jewelry Spectrum was inspired by the colors of the rainbow and designs highlight diamonds and colored stones and trendy shapes in yellow or white gold.

Price points are generally in the $160 (INR 10,000) to $2,000 (INR 120,000) range. The company created a special counter display at its showrooms for the Spectrum line that it believes will encourage consumer interaction.
Market to Women on Pinterest

Pew Research Center concluded that 73% of U.S. adults who are online use social networking websites with Facebook being the most dominant, accounting for 71% of adults in 2013 compared with 67% in 2012. However, brand marketers must expand their reach beyond Facebook, since 42% of adults now use multiple social networking sites on a weekly basis.

While Facebook is the most demographically diverse, Pinterest holds appeal to female users where they are four times as likely to be sharing and collaborating as men, and LinkedIn is especially popular among college graduates and Internet users in higher income households. Twitter and Instagram have particular appeal to younger adults, urban dwellers and non-whites and there is substantial user overlap.

The report noted that Facebook has high levels of engagement among its users with 63% visiting the site at least once a day, 57% of Instagram users visit its portal daily and 46% of Twitter users are daily visitors
TBZ, Kiran, Laxmi Win Awards

The third annual IJ Jewellers Choice Design Awards were unveiled during the Jaipur Jewellery Show and presented by Indian Jeweller magazine. The awards recognized innovative and creative designs this year across 12 categories, most of which were grouped by price points. Some of the top winners included Kiran Jewels (Kiran Gems) of Mumbai and Mirari of New Delhi for diamond jewelry; Sona Chandi of Kanpur and BR Designs Pvt. Ltd. of Surat for colored stones; Raniwala Jewellers Pvt. Ltd. of Jaipur and Laxmi Jewellery Export Pvt. Ltd. of Ahmedabad for gold jewelry; KGK Entice Pvt. Ltd. of Jaipur and Tribhovandas Bhimji Zaveri (TBZ) Ltd. of Mumbai for designer pieces and the best bridal went to Kalajee Jewellery of Jaipur, TBZ and Aisshpra of Gorakhpur.

GENERAL 	  

U.S. Small Biz Confidence Mixed

Small business owners in the U.S. are slightly more pessimistic today than one year ago, according to the Wells Fargo/Gallup Small Business Index. Of 605 small business owners who were interviewed for the survey, Gallup found that 28% evinced less optimistic feelings about their future in 2014, while 23% said they had a slightly more positive outlook than one year ago. Forty-nine percent of the respondents stated that their sense of optimism was unchanged from December 2012.

About one-quarter of business owners believe that operating conditions would even worsen in the new year, while an equal number foresee improving conditions. These small business owners’ apprehensions about the new year were basically split between government and business factors, ranging from the potential effect of the Affordable Health Care Act, to federal and state taxes, both of which are out of their control. The other half of respondents were more concerned with traditional business issues, such as developing successful, competitive marketing strategies and hiring issues in the year ahead.

U.S. Confidence Steady

U.S. consumer confidence rose steadily during December but it remained in negative territory, according to the Gallup Economic Confidence Index. For the week that ended on December 28, Gallup found that consumer confidence measured at negative 17, significantly improved from negative 39 in mid-October during the federal government shutdown. But the December index reading wasnt much improved from negative 21 points at the beginning of the year.

The indexs best performance in 2013 came in early June at which time index was at negative 3 points and the indexs average for the year was negative 16, according to Gallup. Even still, Gallups Economic Confidence Index average for 2013 was the best performance in the surveys six-year history and it was up from an average of negative 21 points in 2012. Gallup surmised that for the index to finally breach into positive territory, consumers must see clearer signs of an economic recovery and friendlier and more productive politics in Washington D.C. as opposed to the gridlock and brinkmanship of the past year.

EU Renews GSP for 90 Countries

The European Union (EU) reduced the number of country participants in its generalized system of preferences (GSP) scheme in 2014 to 90 from 177 last year. The revised scheme continues to reduce or eliminate tariffs on most traded goods including pearls, precious or semi-precious stones and metals, clocks and watches and imitation jewelry from Angola, Liberia, Sierra Leone, Myanmar, Sri Lanka, Armenia, China and India, to name the top diamond and gem participants.

Sri Lankas government issued a statement thanking the EU for renewing its GSP status, claiming great benefits from the scheme in recent years for the trading of diamonds and gems as well as tea and rubber. Trade between Sri Lanka and the EU in the previous year approached $5 billion. The GSP ended this year for some majors in the diamond industry, including the United Arab Emirates (UAE), Russia, Cote dIvoire, Zimbabwe, Namibia and Botswana.

Fiera di Vicenza Names Pres. 

Fiera di Vicenzas new board named Matteo Marzotto as the groups president. Marzottos name was put forward by the groups shareholders. The announcement was made as Fiera di Vicenza prepares for its most important event of the year -- the VICENZAORO winter jewelry show -- which will be held January 18 to 23.

Marzotto, 47, has been the president of Fondazione CUOA, one of Italys most important business schools, since June 2013. He has served as president of the non-profit organization Associazione Progetto Marzotto since October 2012 and as president of the Mittelmoda Fashion Awards since September 2008. As an entrepreneur, in January 2009 he acquired and subsequently relaunched the Vionnet fashion house, serving as president of Vionnet S.p.A until January 2013. Prior to that role, he worked for 15 years in his familys group of companies and from 2003 to 2008 he also served as chief operations officer and then as president of Valentino S.p.A.

MINING 	  

Kennady Raises $2M

Kennady Diamonds Inc. closed its non-brokered private placement of flow-through common shares, achieving proceeds of $2,290,484 for 398,345 flow-through common shares at a price of $5.75 each. The shares are subject to a four month holding period, expiring on April 28. Proceeds will be used to fund an expanded 2014 exploration program at the companys Kennady North diamond project, which is located in Canadas Northwest Territories. A finders fee of 5% was paid to Dundee Securities Ltd. in relation to the private placement.

Kennady North covers 13 leases and claims that are located immediately to the north and west of the four leases controlled by the Gahcho Kue joint venture between De Beers Canada and Mountain Province. Kennady Diamonds aims to identify resources along the Kelvin-Faraday kimberlite corridor, as well as find new kimberlites outside of the corridor.

True North to Raise Funds 

True North Gems Inc. will conduct a non-brokered private placement under which it intends to issue up to 16,666,667 units at a price of 9 cents each for gross proceeds of up to $1.5 million. Each unit will include one common share of True North Gems and one-half of one common share purchase warrant, with each full warrant exercisable for two years for an additional share at a price of 12 cents. The securities to be issued under the financing will be subject to a four month hold period and terms of this placement are subject to the approval of the Toronto Stock Exchanges venture exchange. True North Gems intends to use the proceeds to advance development of its Aappaluttoq ruby project in Greenland.

ECONWATCH 	  

Diamond Industry Stock Report

How well did your favorite industry firms shares perform in 2013? In general, there were no real surprises, with U.S. and Europes retailers performing solidly well except for LMVH (-6%); Indias shares mainly lower by double-digits, except for C. Mahendra (+126%) and Vaibhav (+424%). Miners were largely mixed with the best performance by Lucara (+155%) and the worse by Stellar (-63%). View the extended stock report.

Jan. 2, 2014 Jan. 2, 2013
$1 = Euro 0.731 0.758 -0.027
$1 = Rupee 62.3 54.9 7.4
$1 = Israel Shekel 3.49 3.73 -0.24
$1 = Rand 10.69 8.45 2.24
$1 = Canadian Dollar 1.07 0.99 0.08

Precious Metals
Gold $1,222.80 $1,673.80 -$451.00
Platinum $1,397.00 $1,539.00 -$142.00

Stock Indexes
BSE 20,888.33 19,426.71 1,461.62 7.52%
Dow Jones Avg. 16,441.35 13,106.06 3,335.29 25.45%
FTSE 6,717.91 5,897.81 820.10 13.91%
Hang Seng 23,340.05 22,656.92 683.13 3.02%
S & P 500 1,831.98 1,426.26 405.72 28.45%
Yahoo! Jewelry Index 959.82 1,110.16 -150.34 -13.54%

Rapaport Weekly Market Comment Jan. 10, 2014

U.S. holiday season good but discounting reduced profit margins. Market sentiment improving. Indians increasing memo consignments to China with high hopes for strong Chinese New Year. Hong Kong very quiet, cautious and not as optimistic. Rough trading stable ahead of upcoming ALROSA and De Beers sales. Chow Tai Fook 3Q revenue +26%, same-store sales of gem-set jewelry +8%. Signet Jewelers notes heavy discounting during Christmas with Nov./Dec. sales +8% to $1.3B. U.S. Nov./Dec. online retail sales +10% to $46.6B. U.S. Nov. polished imports +1% to $1.9B, polished exports +23% to $1.6B.

RapNet Data: Jan. 9

Diamonds 1,042,581
Value $6,587,674,704
Carats 1,147,332
Average Discount -27.56%

www.rapnet.com
Get Current Price List | Subscribe to Rapaport | Join RapNet
RAPAPORT ANNOUNCEMENTS
January
14-22
Tue-Wed
Rapaport Melee Auction

New York & Dubai

View details.

January
15-22
Wed-Wed
Rapaport Single Stone Auction

New York & Israel

www.rapaportauctions.com

March
27-31
Thu-Mon

The Diamond Show

Markthalle Building, Basel, Switzerland

Visit - Exhibit - Learn More:
www.thediamondshow.net

QUOTE OF THE WEEK
Anjin and Marange Resources no longer discharge waste in the (Save) river, as of last year. Our problem is with Diamond Mining Co. They still discharge harmful substances in the Save River, but we have since intervened. They have installed a thickener, which separates solids and water, but it is not yet working and Im not aware when it will be. So, it means pollution is still flowing.

Kingstone Chitotombe | EMA Zimbabwe

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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 Fall in 2013 

Polished diamond prices fell in 2013 as economic growth slowed in China and India. Diamond trading was supported by stable U.S. demand and a shift toward lower price point, commercial-quality diamonds. Sentiment improved in December due to steady U.S. Christmas holiday sales and rising expectations for the Chinese New Year. However, liquidity in the cutter and dealer markets remains tight. Profit margins are low and banks have reduced their credit for rough purchases in the manufacturing sector.

The RapNet Diamond Index (RAPI™) for certified 1-carat polished diamonds rose 0.2% in December; however, it fell 4.5% for the year. RAPI for 0.30-carat diamonds rose 10.1% in 2013, RAPI for 0.50-carat diamonds declined 0.7% and RAPI for 3-carat diamonds dropped 4%.

The trend for commercial-quality diamond demand will continue as attention shifts to the Far East for the Chinese New Year festival that begins on January 31. Far East jewelry retail sales are being driven by strong gold demand, but the major jewelers are expected to make a strong push to ramp up diamond sales.

RETAIL & WHOLESALE 	  

Chain-Store Sales +3%

The International Council of Shopping Centers (ICSC) estimated that Christmas season retail sales on a comparable-store basis in the U.S. rose 3% year on year. Same-store sales rose 2.1% in November and by 3.4% in December. ICSC observed uneven gains across product categories and a highly competitive and promotional environment this season. Retail sales for 2013 rose 3.3%, according to ICSC, which was slightly stronger than 2012 but below the rate of growth in 2011.

Chow Tai Fooks Comps +11%

Chow Tai Fook estimated that revenue grew 26% year on year in the third quarter that ended on December 31. Without citing hard totals, the retailer observed that same-store sales rose 11%, with gem-set jewelry up 8% and gold jewelry rising 15%. Chow Tai Fook reported improvement in its wholesale sector and said that inventory replenishment demand remained strong at new and existing stores.

Signets Comps +5%

Signet Jewelers Ltd. reported that same-store sales rose 5% year on year for the eight weeks that ended on December 28, the period that included the all-important Christmas season. Signet was the first major jeweler to comment on the 2013 holiday season. During the period, same-store sales increased 5.6% year on year for Kay and Jared in the U.S., but comparable-store sales fell 2.3% at regional brands, which included Ultra. In the U.K., same-store sales jumped 8% at Ernest Jones and rose 3.3% at H.Samuel, marking the best performance in several years.

Signet confirmed that additional discounting was necessary in a highly promotional retail environment that included challenging customer traffic trends and lower than anticipated commodity cost savings. Total sales during the eight week period increased 7.7% to $1.276 billion, while ecommerce sales increased by 24.8% in the U.S. and 37.5% in the U.K.

Macys Comps +4%

Macys Inc. reported that same-store sales rose by 3.6% year on year for the Christmas season, which included the months of November and December. When sales from departments that were licensed to third parties are factored into the mix, comparable-store sales increased 4.3%. Macys also announced a corporate restructuring program, which includes the closure of five underperforming stores this quarter, district consolidation and the termination of approximately 2,500 employees.
U.S. Online Sales +10%

Online U.S. retail sales for the whole Christmas season, which comScore Inc. measured as November 1 through December 31, rose 10% year on year to $46.55 billion, short of the predicted gain of 14%. While the jewelry category made the top gaining product sectors during one week of the Christmas season, ultimately, the top performers for the whole period were apparel and accessories, consumer electronics, computer hardware, toys and hobbies and video games and accessories, all of which experienced sales increases of 12% to 13%, according to comScore.

New Smartwatches Debut at CES

MetaWatch created a new corporate identity and brand image, META, as part of its evolution into offering premium smartwatches. META is presenting models of its first line of smartwatches at the 2014 International Consumer Electronics Show (CES) in Las Vegas this week. In addition, META collaborated with Frank Nuovo and his Design Studio Nuovo for a new watch line, which is presented through the Art of the Glance marketing campaign.

East West Micro (EWM) Corp. of Hong Kong, a maker of health monitoring hardware, debuted its gold and diamond smartwatch at CES. The latest creation, which includes its patented vital sign tracker (VST) Sensor Engine, was crafted in 18-karat gold with 200 diamond accents for a retail price of $30,000. EWM will also show its $49 and $99 health smartwatches in a variety of colors, mix-and-match styles and the same features based on its VST products.

Eurostar Launches New Campaign

Eurostar Diamond Traders created the Best Deserves the Best campaign to kick start a new year. The theme is aimed at promoting the brand’s quality, value and service. The look and feel of the campaign is meant to evoke a fresh, delicate yet playful approach to diamonds.

Rahaminov Debuts Fresh Campaign

Rahaminov Diamonds created a new advertising and marketing campaign to start off the new year, featuring a charismatic, blond model wearing the latest diamond creations by Tamara Rahaminov Goldfiner. The diamond brand will debut these advertisements in leading jewelry trade and select consumer lifestyle magazines. Print and digital ads were shot on location in Malibu, California by luxury lifestyle photographer Geoffrey Ragatz.

Jewelers Make Least Stress List

U.S. jewelers made the list of least stressful jobs in 2014, according to job-search portal CareerCast of Carlsbad, California. While jewelers ranked third on its least stressful career list, behind audiologist and hair stylist, it was the only profession with a negative job growth outlook, projecting a decline of 5%. Other low stress jobs included a tenured university professor, seamstress/tailor, dietitian, medical records technician, librarian, multimedia artist and drill press operator. The list also compiled salaries from the Bureau of Labor Statistics, for which jewelers earn a median of $35,350, according to CareerCast.

JVC Produces Assurance Kit

The Jewelers Vigilance Committee (JVC) created a Supply Chain Assurance Kit to help the U.S. industry navigate the “conflict free” mineral source provision in section 1502 of the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act. JVC created a largely customizable kit in a do-it-yourself format to create strong management systems, assess and identify risk and meet compliance requirements in the purchase and trading of tungsten or gold.

MINING 	  

Mbada Vows to Invest

Mbada Diamonds, which faces U.S. sanctions, remained committed to investing hundreds of millions of dollars into exploring for kimberlite in Zimbabwes Marange region, according to the Zimbabwe Independent. Nonetheless, Mbada said exploration work showed alluvial diamonds were still in abundance across the Eastern Highlands. Other miners in the region include Anjin Investments, Diamond Mining Company (DMC), Gye Nyame, Jinan Mining Private Ltd., Kusena, DTZ-OZ Geo. and Marange Resources.

The newspaper also confirmed that DMCs operations pose serious health risks to the communities that draw water from Save River, where the mining company is reportedly discharging toxic chemicals and sludge. Investigations by The Zimbabwean indicated that Mbada, Anjin and Marange Resources, which were sued by villagers for polluting the Save, have adopted environmentally friendly mining strategies in the past year.

Brazil Minerals Sells Polished

Brazil Minerals Inc. sold its first parcel of polished diamonds to a U.S.-based investor group for future delivery, according to a company statement that did not provide a sales total. The junior miner produces diamonds and gold from its Duas Barras licensed area in Minas Gerais in Brazil, but had only been offering rough diamonds and gold for sale to local buyers prior to this milestone.

Early in December, Brazil Minerals was cutting and polishing some of its rough diamond inventory in Brazil for about $50 per gem and then sending the diamonds to the Gemological Institute of America (GIA) for grading. The highest color obtained for this parcel was an F and the highest clarity was VVS1, according to the mining company.

Lucapa Recovers 32-Ct. Stone

Lucapa Diamond Company Ltd. recovered a 32.20-carat, D, type IIa rough diamond from the Lulo concession in Angola. The diamond was produced from bulk sampling and is the largest recovered by Lucapa through its new dense media separation (DM5) plant, which was commissioned in November. The company described the diamond as irregular, dodecahedral and of exceptional color and clarity. Lucapa also believes the stone could be flawless but it will require thorough testing to confirm.

STATS 	  

U.S.A.

Nov. $Mil. %Chng. YTD $Mil. %Chng.
Polished imports $1,897 1% $21,166 16%
Polished exports $1,595 27% $17,825 16%
Net imports $302 -48% $3,341 13%

Rough imports $73 49% $470 3%
Rough exports $24 -39% $267 -10%
Net imports $49 400% $203 30%

Net diamond account $351 -40% $3,544 14%

ECONWATCH 	  

Diamond Industry Stock Report 

Tough week for stocks as losers far outnumber gainers in the U.S. and E.U., only Macys (+5%) and Damiani (+14%) closed the week ahead. Indian shares were mixed with Classic Diamond (+17%) leading gains. Mining shares were mostly higher except for ALROSA (-6%), Anglo (-5%) and Rio TInto (-8%). View the extended stock report.

Jan. 9 Jan. 2 Chng.
$1 = Euro 0.735 0.730 0.005
$1 = Rupee 62.03 62.30 -0.3
$1 = Israel Shekel 3.50 3.49 0.01
$1 = Rand 10.79 10.69 0.10
$1 = Canadian Dollar 1.09 1.07 0.02

Precious Metals
Gold $1,228.20 $1,222.80 $5.40
Platinum $1,414.00 $1,397.00 $17.00

Stock Indexes Chng.
BSE 20,713.37 20,888.33 -174.96 -0.8%
Dow Jones 16,444.76 16,441.35 3.41 0.0%
FTSE 6,691.34 6,717.91 -26.57 -0.4%
Hang Seng 22,787.33 23,340.05 -552.72 -2.4%
S&P 500 1,838.12 1,831.98 6.14 0.3%
Yahoo! Jewelry 917.69 959.82 -42.13 -4.4%

Rapaport Weekly Market Comment Jan. 17, 2014

Sentiment improving due to solid U.S. market. Cautious Far East demand as jewelers complete Chinese New Year purchases. Polished trading stable with dossiers strong. Pent up rough demand might cause price hikes at next week’s De Beers sight. Rio Tinto 4Q diamond production +38% to 4.5M Cts. Dominion 4Q production at 1.2M Cts. Luk Fook 3Q same store sales +9% with gold products +19%, gem-set jewelry -4%. Swatch Group 2013 watch & jewelry sales +9% to $9.5B. Tiffany & Co. Nov./Dec. sales +4% to $1B. Zale Corp. Nov./Dec. sales -2% to $556M. Birks 3Q revenue -7% to $94M. Israel’s 2013 polished exports +12% to $6.2B, rough imports +4% to $3.9B.

RapNet Data: Jan. 16

Diamonds 1,044,531
Value $6,648,085,639
Carats 1,151,312
Average Discount -27.30%

www.rapnet.com

Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS

January
14-22
Tue-Wed

Rapaport Melee Auction

New York & Dubai

View details.
January
15-22
Wed-Wed

Rapaport  Single Stone Auction 

New York & Israel

www.rapaportauctions.com
March
27-31
Thu-Mon

The Diamond Show

Markthalle Building, Basel, Switzerland

Visit - Exhibit - Learn More:
www.thediamondshow.net
QUOTE OF THE WEEK
There are some places where mining cannot be done without forever damaging landscapes, wildlife, businesses and communities. Bristol Bay (Alaska) is one such place. We, along with many of our fellow jewelers, urge the Environmental Protection Agency to use its authority under the Clean Water Act to safeguard Bristol Bay and the communities and fishery it supports.

Michael J. Kowalski | Tiffany & Co.

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 n

INDUSTRY 	  

Rap Melee Index +4% 

The Rapaport Melee Index (RMI™) for small diamonds increased by 4% to 130.54 points during the fourth quarter and it is up 3.5% year on year. The diamond market stabilized toward the end of the year after a period of weak demand and price declines in the second and third quarters. Melee diamond prices increased during the last quarter as overall trading was boosted by Christmas demand combined with shortages in supply. Polished trading is expected to improve during the first quarter driven by the Chinese New Year and as U.S. retailers start to replenish sold inventory.

Rapaport Diamond Auctions sold over 115,000 carats of diamonds for $24.5 million during the fourth quarter. While the U.S. wholesale market is solid, demand from overseas buyers continues to drive up market prices.

U.S. Jewelry Store Sales +11%

U.S. jewelry store sales jumped 11.2% year on year in November to $3.008 billion. Meanwhile, the U.S. consumer price index (CPI) for jewelry during the month was flat. Jewelry store sales for the first 11 months of 2013 have risen 9.6% to $27.467 billion. As reported earlier by Rapaport News, jewelry sales from all retail channels in November improved 9.1%, while sales of watches increased 11.3%.

RETAIL & WHOLESALE 	  

U.S. Retail Sales to Improve

ShopperTrak anticipates that U.S. retail sales will increase 2.8% for the first quarter of 2014, despite its prediction of a 9% decrease in store foot traffic. The data collection firm stated that with more shoppers purchasing online or researching products online before heading to stores – retailers who deliver a seamless customer experience both in the store and across all channels will emerge ahead of their competitors. ShopperTrak found that Christmas season retail sales rose 2.7% year on year to $265.9 billion; however, foot traffic to stores plunged 14.6%.

U.S. Jewelry CPI -1%

The U.S. consumer price index (CPI) for jewelry declined 0.7% year on year to 175.59 points in December, a full 6.5 points lower than the highest reading of the year, which was 182 points in August. The highest CPI for jewelry so far has been 183.19 points in January 2012. The average CPI for 2013 was 177.6 points, down 0.4% from the average in 2012.

December gold was about 27% lower, while platinum was down by nearly 20%. The RapNet Diamond Index (RAPI), the global benchmark for polished diamond prices, was basically flat in December for 1-carat diamonds, while the index for 0.50-carat diamonds rose 1.1% and it improved 2.8% for 0.30-carat stones. However, RAPI for 3-carat diamonds fell 0.8%.

Tiffanys Sales +4%

Tiffany & Co. reported that sales increased 4% year on year to $1.03 billion during the two-month long Christmas season. Comparable-store sales rose 6%. Revenue from stores in the Americas increased 6% to $550 million, while comparable-store sales rose 7%. Sales from the Asia-Pacific region increased 5% to $196 million and same-store sales were flat. Tiffany’s business in Japan experienced a 12% decline in sales to $135 million due to the negative translation effect from a weaker yen; however, same-store sales increased 10%. Sales in Europe improved 11% to $131 million and comparable-store sales rose 3%.

Tiffany & Co. informed shareholders that it would take a $300 million charge, or $2.33 per diluted share, in the fourth quarter that ends on January 31, related to an arbitration ruling with the Swatch Group.

Richemonts Sales +3%

Richemont reported that its sales grew by 2.8% year on year to $4 billion (EUR 2.94 billion) during the third quarter that ended on December 31. By line of business, sales from jewelry maisons increased 3% to $2 billion and revenue from specialist watchmakers improved 4% to $1.1 billion; however, sales fell 4% at Montblanc to $298 million. By region, sales in Europe and the Middle East and Africa, rose 7%, sales from the Asia Pacific region rose 1%, and revenue across the Americas rose 6%

Zales Sales -2%

Zale Corporation reported that revenue fell 1.9% year on year to $556 million for the Christmas season, which included the months of November and December. However, same-store sales rose 0.7% and that figure was slightly higher, up 2%, when based on constant-exchange-rates. Same-store sales figures included ecommerce revenue. The decrease in revenue during the all-important holiday period was primarily the result of having closed 91 stores in the past year, coupled with a weaker Canadian dollar.

Birks Sales -7%

Birks Group Inc. reported that revenue fell 6.8% year on year to $94.5 million for the third quarter that ended on December 28. The jeweler blamed a lower sales total on operating five fewer stores compared with one year earlier. However, the companys same-store sales were flat, rising 2% in the U.S. but falling 2% in Canada. Birks same-store sales for the Christmas season, which the jeweler considered to be November 3 through December 28, fell 1% year on year. Comparable-store sales rose 2% in the U.S.; however, this was offset by a 3% drop in Canad
Swatchs Sales +8%

Swatch Group reported that its revenue grew 8.3% year on year to $9.768 billion (CHF 8.817 billion) in 2013, despite negative exchange rates against the yen and U.S. dollar. Watch and jewelry sales rose 9% to $9.46 billion.

The group will report its 2013 earnings on February 20.

Lazare Kaplans Revenue Rises

Lazare Kaplan International Inc. anticipates that its second quarter revenue rose nearly 86% year on year to $29 million, though sales of goods and services fell 13.5% to $13.5 million. Revenue for the companys first half increased 22% to $42.5 million and sales declined 23% to $27 million in large part due to lower sales of commercial polished diamonds. Lazare Kaplan received a one-time payment of $15 million in the second quarter from a license settlement agreement with the Gemological Institute of America (GIA).

Lazare Kaplan has been unable to file its official financial statements since May 2009 due to material uncertainties. In the latest litigation proceedings with KBC Bank N.V. and Antwerp Diamond Bank N.V., Lazare Kaplan expects a hearing on civil and criminal proceedings against the banks on February 13, and, in the U.S., the discovery process related to its RICO suit against the lenders is ongoing.

Banks Call on Winsome

Winsome Diamonds & Jewellery Ltd. informed the Bombay Stock Exchange (BSE) that the board of directors approved closing its Bangalore unit, since operations have ceased at the plant. In addition, when the board met on January 10 it appointed Jaikumar Kapoor and Harimohan Namdev as additional directors of the company. Namdev will be categorized as an independent director, according to the filing.

Meanwhile, the Gems & Jewellery Export Promotion Council (GJEPC) issued a public statement saying that Punjab National Bank (PNB) and Central Bank have served legal notices on Winsome Diamonds and Forever Precious Jewellery to recover loans. The banks allegedly claimed willful default status against Winsome, alleging it overstated profit to obtain the loan and that proceeds were diverted to non-core business use. Winsome claims uncollected account receivables of nearly $1.2 billion and outstanding loans of about $900 million.

JCPenney to Close 33 Stores

In its latest effort to reduce costs and improve earnings, J. C. Penney Company Inc. will close 33 underperforming stores in the U.S. to focus operating resources on its highest potential growth opportunities. JCPenney anticipates that store closings will reduce annual costs by approximately $65 million, beginning in 2014. JCPenney expects to incur estimated pre-tax charges of approximately $26 million in the fourth quarter of fiscal 2013 and approximately $17 million in future periods. The closings will eliminate approximately 2,000 positions.

Chow Tai Fook Pursues Infringement

Chow Tai Fook found that Taobao and numerous Mainland China and Hong Kong jewelry shops are selling counterfeit, and in some cases illegally producing, Bao Bao Family collections, which infringes upon the retailers trademarks and copyrights. Chow Tai Fook launched the Bao Bao Family collection in 2002. Chow Tai Fook stores, official eshops and Chow Tai Fook authorized ecommerce platforms are the only authorized dealers for the collection.

Kalyan Plans Gulf Expansion

Kalyan Jewellers plans to invest $38 million (AED 140 million) in adding at least 14 showrooms across the Gulf Region after opening outlets in Abu Dhabi, Sharjah, Karama, Qusais, Bur Dubai and Meena Bazar in Dubai. Kalyan Jewellers plans to open three retail outlets in Kuwait, two outlets in Qatar and one each in Bahrain, Muscat and Oman. The group operates 58 showrooms, mainly in India, where it expects to open 15 more showrooms within the next year. The company anticipates turnover to reach $2.5 billion by 2015.

Alliance Time Receives Capital

Equity firm Monroe Capital LLC provided a $27 million senior secured term loan in conjunction with a $40 million revolving line of credit provided by Bank of America Merrill Lynch to support the growth of Alliance Time and Ashford.com. Alliance Time distributes a range of watches and presents more than 40 luxury watch brands, including Milleret, Golana Swiss and ByJoy watches, along with jewelry on Ashford.com.

GENERAL 	  

Cartier Reigns With Chinas Wealthy

Chinas high-net-worth community selected Cartier as the best of the best jewelry brand this year as well as for the best jewelry watch and Patek Philippe was named the best watch brand, according to the 10th annual Hurun Report on luxury spending. In addition, wealthy consumers in China selected Cui Huang Ge for the best jade, Montblanc for the best writing instrument and Patek Philippe as the best watch with complications. The best new arrival in the jewelry and watch categories included the Omega Laymatic and Blancpain Chinese Calendar Red.

The annual survey revealed that jewelry brands experienced a difficult year in China as spending fell and non-jewelry brands gained in popularity with wealthy consumers. Red wine was the top gift choice for men by men and for men by women. The best gifts for women, in order, were jewelry, apparel, watches, travel vouchers and electronics. Other top gifts for men from men, in order, were Baiju, watches, electronics and cigars, while gifts for men from women were watches, electronics, art and cigars. The top 10 brands for gifting by men included Hermes, Apple, Louis Vuitton, Chanel, Gucci, Cartier, Prada, Montblanc, Giorgio Armani and Burberry. The top 10 brands for gifting by women were Chanel, Louis Vuitton, Apple, Hermes, Gucci, Dior, Cartier, Prada, Giorio Armani and Bulgari.

The Hurun Report noted that overall spending on luxury goods dropped 15% in the past year in Mainland China and gift-giving spending plunged 25%, perhaps due to stronger anti-corruption initiatives, the report opi
Zim Plans Oversight

Zimbabwes Minister of Finance and Economic Development, Patrick Chinamasa, said the government will continue to pursue nationalizing its strategic resources with a view to ensure inclusive economic growth and increased participation by indigenous people. He was optimistic that a transparent process for diamond marketing would help boost revenue and stated that the government was working to consolidate the diamond sector to improve oversight of production.

Factor Advisors Close Two ETFs

Factor Advisors LLC will close and liquidate its PureFunds ISE diamond/gemstone exchange traded fund (ETF) and the PureFunds ISE mining service ETF on or about January 24, with proceeds being distributed to shareholders.

The last day of trading of shares will be January 23.

Groups Urge EPA to Stop Pebble Mine

In its final impact report on Alaskas Bristol Bay, the U.S. Environmental Protection Agency (EPA) concluded that even under the best mining practices, extracting deposits of gold and copper would destroy up to 94 miles of salmon streams, 5,350 acres of wetlands, lakes and ponds and devastate 33 miles of streams through reduced flows, resulting in reduced salmon production. Additionally, mining would generate water pollution that would require capture and treatment long after mining ends.

The Pebble mine was originally proposed at Bristol Bay by partners Anglo American and Northern Dynasty Minerals; however, Anglo dropped its stake in the project in 2013 as Pebble attracted a chorus of opposition from jewelers, native Alaskans and commercial fishermen. Opponents of the Pebble mine have now petitioned the EPA and the White House to use the Clean Water Act’s section 404(c) to block the project once and for all.

MINING 	  

Rio Tintos Production +38%

Rio Tintos diamond production grew 38% year on year to 4.489 ‎million carats in the fourth quarter that ended on December 31. Production at Argyle jumped 57% to 3.153 ‎million carats, its 60% share of production from the Diavik mine in Canada increased 9% to 1.240 million carats and its 78% share in the Murowa mine grew 7% to 105,000 carats. For the full year, Rio Tinto’s diamond production rose 22% year on year to ‎‎16.027 million carats with Argyle accounting for the majority at 11.395 million carats.

Dominion Recovers 1M Cts.

Dominion Diamond Corporation recovered approximately 1.193 million carats of diamonds from its Ekati and Diavik assets during the fourth quarter of 2013. The company reported that production at Ekati, in which Dominion owns an 80% stake, amounted to 367,000 carats during the quarter. Dominion also owns a 40% stake in the Diavik mine, where production grew by 11% year on year to 2.1 million carats, leaving a share of 826,000 carats.

Rockwell Narrows Loss

Rockwell Diamonds revenue rose 35% year on year to $11.9 million, which included sales of rough diamonds as well as royalties from contractor operations, for the third fiscal quarter that ended on November 30. The mining company narrowed its loss to $400,000 from $4.7 million one year earlier. The company sold 6,066 carats of rough diamonds during the period for proceeds of $10.7 million, representing an average price decline of 3% year on year to $1,764 per carat. However, the average price from its own operations rose 24% to $2,198 per carat.

Diamcor Sale Achieves $1M

Diamcor Mining Inc., the operator at the Krone-Endora at Venetia project, sold 3,955 carats of rough diamonds for $1.43 million in the companys third-quarter that ended on December 31. The majority of these diamonds were recovered in conjunction with testing and commissioning exercises. Diamcor Mining held approximately 1,500 carats ready for sale at the end of its quarter.

BD, ALROSA Begin Exploring

Botswana Diamonds (BD) started its exploration project with ALROSA at the PL117 license in the Orapa region of Botswana. The license covers 2.9 square kilometers and is located near the Karowe diamond mine, which is operated by Lucara Diamond Corporation. Botswana Diamonds previously discovered diamonds in the AK10 kimberlite in the same license area in 2004. The company secured enough capital to launch the joint venture with ALROSA through a successful round of fundraising in December 2013.

Firestone Secures $140M in Funds 

Firestone Diamonds reported that it has secured $140 million, which it needed to develop the main treatment plant at its Liqhobong diamond mine in Lesotho. The company previously reported that it would require $222.4 million to construct and commission Liqhobongs main treatment plant. The new funding package, together with an $82 million debt facility secured in November 2013, will allow the company to commission the mine. Firestone anticipates raising $40 million through the placement of 813,107,289 new ordinary shares with new and existing shareholders. Liqhobong is projected to produce up to 1 million carats per year once full production begins in 2016.

ECONWATCH 	  

Diamond Industry Stock Report

Investors reacted to mixed 4Q retail results with Birks (-31%), Blue Nile (-1%) and Tiffany (-5%) weaker but they continued to reward Zale (+6%) for promising better margins someday. Indian shares and mining stocks were mixed with Classic (+26%) rising above the rest, but Goenka (-10%) recorded the biggest drop; Firestone (+22%) and Lucara (-12%) defined their sectors spread. View the extended stock report.
Jan. 16 Jan. 9 Chng.
$1 = Euro 0.734 0.735 -0.001
$1 = Rupee 61.49 62.03 -0.5
$1 = Israel Shekel 3.49 3.50 -0.01
$1 = Rand 10.89 10.79 0.10
$1 = Canadian Dollar 1.09 1.09 0.00

Precious Metals
Gold $1,242.70 $1,228.20 $14.50
Platinum $1,427.00 $1,414.00 $13.00

Stock Indexes Chng.
BSE 21,265.18 20,713.37 551.81 2.7%
Dow Jones 16,417.01 16,444.76 -27.75 -0.2%
FTSE 6,815.42 6,691.34 124.08 1.9%
Hang Seng 22,986.40 22,787.33 199.07 0.9%
S&P 500 1,845.89 1,838.12 7.77 0.4%
Yahoo! Jewelry 932.20 917.69 14.51 1.6%

Rapaport Weekly Market Comment Jan. 24, 2014

Markets optimistic but concerned about higher rough prices reducing profit margins. De Beers hikes rough prices by average 5% with all goods sold at Jan. sight. Cutters afraid to raise polished prices as HK-China demand weak and program buyers demand stable prices for stable orders. Petra Diamonds recovers 29.60ct. blue diamond at Cullinan mine, 1H revenue +19% to $186M, production +31% to 1.6M cts. Michael Hill 1H revenue +10% to $240M, same store sales +5%. Swiss Nov. watch exports -1% to $2.8B. Christie’s 2013 auction sales +16% to $7.1B. India’s Dec. polished exports +16% to $1.1B, rough imports -7% to $1.7B.
RapNet Data: Jan. 23

Diamonds 1,040,408
Value $6,508,182,023
Carats 1,142,605
Average Discount -27.19%
www.rapnet.com
Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS

Jan-Feb
27-10
Mon-Mon

Rapaport Jewelry Sale

Miami & New York

View details.
February
4-12
Tue-Wed
Rapaport Melee Auction

New York & Belgium

View details.
February
4
Tue
Centurion Scottsdale

Special Presentation by Martin Rapaport
9 a.m. to 10 a.m.

www.centurionjewelry.com
March
27-31
Thu-Mon

The Diamond Show

Markthalle Building, Basel, Switzerland

Visit - Exhibit - Learn More:
www.thediamondshow.net

QUOTE OF THE WEEK

There’s no guarantee that you’re not buying a blood diamond whenever you buy a diamond from a store. They can say that it’s not a blood diamond, but, once it comes through the processing centers in the states, they all get mixed up and there are blood diamonds and non-blood diamonds and you never know which is which.

Meredith Butler | DiamondsAreEvil
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 	  

Israels Top Exporters

Israels diamond commissioner in the Ministry of Economy published the countrys top 20 diamond firms, based upon their stated value of exports in 2013. Net polished diamond exports for these major firms reached $1.952 billion, representing about 32% of the countrys total polished diamond exports in 2013. Nineteen companies requested anonymity and were excluded from the list.

2013 Rank Company Name $Mil.
1 Leo Schachter Ltd. $328
2 MID House of Diamonds Ltd. $247
3 AA Rachminov Diamonds (2000) Ltd. $210
4 Niru Diamonds Israel (1987) Ltd. $112
5 Ofer Mizrahi Diamonds Ltd. $103
6 Andre Messika Ltd. $100
7 D.N. Diamonds 2007 Ltd. $94
8 Yoshfe Diamonds International Ltd. $91
9 Rosy Blue Sales Ltd. $82
10 O.S.G. Polishing Ltd $77
11 Royal Gem (Israel) Ltd. $76
12 Kuperman Brothers Diamonds Ltd. $64
13 Poligem Ltd. $61
14 Masingita Ltd. $57
15 Rachminov Diamonds (Israel) Ltd. 1891 $53
16 Eshed-Diam Ltd $46
17 Eran Diamonds - Yehuda Sayag $42
18 Shlomo Bichachi Diamonds Ltd. $40
19 Yoram Dvash Diamonds Ltd. $37
20 Segaldiam Ltd. $32

RETAIL & WHOLESALE 	  

Swiss Watch Exports Flat

Swiss Watch exports fell 0.5% year on year to $2.8 billion (CHF 2.1 billion) in November, according to the Federation of the Swiss ‎Watch Industry.‎ The decline in exports was due to a decrease in the volume and value of gold and bi-metallic watches shipped. Wristwatch exports fell 1.5% to $2.202 billion, while the number of units shipped decreased by 4.5% to 2.676 million. The value of other products grew by 12% to $58.1 million. Exports to Hong Kong fell 6.5% to $433.5 million, while exports to the U.S. declined 2.5% to $233.7 million. Exports to China continued to lose ground and fell 27% to $138.5 million.

Pandoras Sales +35% 

Pandoras preliminary revenue projections for the fourth quarter indicated that sales jumped 30% year on year to $509 million (DKK 2.8 billion). The jeweler chain estimated that revenue for 2013 rose more than 35% to $1.63 billion and it anticipates gross margin of 67% compared with 66.6% in 2012. Pandora closed 2012 with no improvement in revenue compared with the previous year and it also reported that earnings plunged 41% to $211 million. Previous guidance from Pandora for 2013 anticipated revenue of about $1.6 billion. Same-store sales from Pandoras Concept stores in the fourth quarter, which included Christmas, rose 5.1% at U.S. locations, surged 17.9% in the U.K., improved 5.7% in Germany and jumped 25.5% in Australia.

Christies Auction Sales +16%

Christies auction house reported that sales in 2013 rose 16% year on year to $7.13 billion (GBP 4.54 billion), representing the highest total to date for the company. Christies added that sales growth was driven by a 30% jump in the number of new buyers, who accounted for 22% of total sales. Auction sales rose 15% year on year to $5.9 billion, while private sales surged 20% to $1.19 billion.

Christie’s reported a record year for global jewelry sales, with a total of $678.3 million or an 18% increase from 2012. Upon executing the sale of The Winston Legacy in May and The Orange in November, Christie’s Geneva led the company’s jewelry sales with $228.4 million. More than 120 jewels sold in excess of $1 million each, 14 lots sold above $5 million each and five above $10 million. Colored and colorless diamonds, natural pearls, distinguished private collections and three online-only jewelry auctions all contributed to strong results.

The top lot of the year at Christies was a Francis Bacon, three studies of Lucian Freud oil painting on canvas in three parts, painted in 1969, that sold for $142.4 million. The top jewelry lot was, of course, The Princie Diamond, a 34.65-carat, cushion-cut, fancy intense pink Golconda diamond that achieved a record price of $39.3 million.

Michael Hills 1H Sales +10%

Michael Hill International anticipates that revenue rose 10% year on year to $240 million (AUD 270.9 million) for the six months that ended on December 31, according to preliminary results. Same-store sales rose 4.7% based on Australian dollars. In local currencies, the largest decline in revenue came from the jewelers U.S. operations where sales fell 8.4% to $5 million; however, same-store sales rose 2%, while sales in New Zealand dropped 3.5% to NZD 60.9 million and same-store sales fell 4.1%. Otherwise, revenue improved 5.5% in Australia to AUD 171.7 million, where same-store sales rose 5.5% and Canada surged 28.5% to CAD 37.9 million as same-store sales rose 7.9%.

Richemont Eyes India

Richemont applied to open single-brand jewelry stores in India for an estimated investment of $5 million, according to news site Domain-b. If approved, Richemont would be allowed to open a store that carries a single brand, such as Cartier. India allegedly allows full foreign direct investment on condition that one third of materials are sourced locally. Richemont confirmed that India presents a growing market of affluent young consumers.

Trapani Keeps Board Seat

Francesco Trapani, the current head of LVMHs watches and jewelry division, will step down from his position on March 1. Trapanis change in roles follows the successful integration of Italian brand Bulgari into the group, LVMH said. LVMH acquired Bulgari in 2011 for $5.2 billion. Trapani will continue to be involved in the group and serve as adviser to the retailers chairman Bernard Arnault. He will also keep his seat on LVMHs board of directors.

Mellier Praises Strong Relationships 

Philippe Mellier, the CEO of De Beers Group, told sightholders this week in Gaborone that relationships are key to this industrys future. During the annual kickoff for a new sightholder sales year, he cited strong relationships between De Beers and Botswana, and sightholders and consumers as a firm foundation for establishing new relationships across the pipeline to secure confidence in diamonds. De Beers relationship with Botswana has helped lift the country into a leading trading hub and the companys ongoing relationships with sightholders will evolve and adapt toward building new demand in key growth markets.

Mellier observed that Chinas economy is showing healthy signs with a positive outlook for diamond sales around Chinese New Year festivities and full year expectations that are on par with 2013. Despite strong prospects for India in 2014, concerns remain for inflation and currency volatility in the short term.

Costco May Argue for Generic Tiffany

U.S. District Judge Laura Taylor Swain ruled this past week that Costco Wholesale Corporation may proceed with its defense argument and discovery process that the Tiffany setting is a generic term as it faces charges of infringement and counterfeiting from Tiffany & Co.

Tiffany & Co. sued Costco in February 2013, claiming that the Tiffany setting is protected by its trademark. Defendant Costco, which also acts as a counterclaim-plaintiff, asserted that Tiffany & Co.s federal trademark registrations were invalid in that they purported to exclude others from using the word Tiffany to describe a ring, setting or any jewel.

The judge wrote that for a term to be declared generic, even when presumed valid by the U.S. Patent & Trademark Office, the principal significance of the word must be its indication of the nature or class of an article, rather than an indication of its origin. In meeting its burden, Costco included dictionary definitions and generic use of Tiffany setting by competitors, manufacturers and consumers. Both parties were instructed to meet for settlement purposes and to update the discovery schedule prior to their June 27 pretrial conference.

Ritani Lands Forbes List

Forbes named the top 100 most promising companies in the U.S. for 2014 and selected Ritani at No. 40. The annual list ranked high-growth, privately held firms that reported revenue of less than $250 million for the most recent year. Additionally, Forbes looked for sustainable growth, along with strong sales, responsible hiring practices, quality of the management team and its investors, solid margins, market size and key partnerships. Ritani reported revenue of $13 million and it employs 45 professionals.

GENERAL 	  

CNRG Says Name, Shame Offenders

The Centre for Natural Resource Governance (CNRG) said Zimbabwes Mines and Mining Development Minister, Walter Chidhakwa, must avoid being drawn into the corrupt activities of his predecessor and he must name and shame those who attempt to bribe him or conduct illegal diamond activity. Chidhakwa, who claimed he has turned down bribes, has vowed to bring transparency and accountability into the mining sector.

However, CNRG surmised that too many powerful and untouchable individuals are corrupting the mining sector and the Zimbabwe Anti-Corruption Commission (ZACC) must be allowed to carry out investigations without interference. Chidhakwa recently dissolved the boards of Zimbabwe Mining Development Corporation (ZMDC), Mineral Marketing Corporation of Zimbabwe (MMCZ) and Marange Resources -- all of which are on the U.S. sanctions list-- citing conflicts of interest.

Digital Predictions for 2014

What are some of the digital issues that retail brands and marketers need to address in 2014?

MillwardBrown Digital contended that with the availability of video content and the technology to view across devices, screens become agnostic and ads must be seamlessly optimized for the screen size at the point of exposure. If a brand creates a video or streaming ad, research to optimize viewing untilization and dont misunderstand the multitude of ways video content will be consumed in 2014.

Secondly, this year, the popularity of micro-video ads, coupled with the ease with which the content can transcend the mobile, tablet, PC and even TV gap, could eventually result in micro-video becoming the most portable video format across screens, according to MillwardBrown. Brands must also make fundamental decisions about where they should be active, how appropriate these formats are to their target consumers, and whether they can adequately pursue a micro-video strategy before embarking in this direction.

Wearable technology will offer unique media opportunities in 2014 for brands to captivate target audiences. MillwardBrown suggested creating a device, such as a smartwatch, or work through friendly apps to enhance the consumer experience. The challenge will be developing a deep understanding of what consumers want from wearable devices and screens so that brands can deliver relevance from its existing proposition.

MillwardBrown reminded brands that consumers of tomorrow are attracted to game-changers and trendy and fashion-forward brands today. Therefore, successful youth-targeted mobile ads will be noticeably different from conventional TV ads or even online ads, in order to demonstrate that the brand is on-trend and up to date.

Anti-Corruption Gains Steam

The Partnering Against Corruption Initiative (PACI), a World Economic Forum program that was begun a decade ago, named a community of top business leaders this week to form the PACI Vanguard — a group of executives who are committed to being the voice of a most robust anti-corruption agenda. This group of 20 CEOs builds on the more than 100 leading companies that are PACI members, including Rio Tinto, that have signed on to the PACI principles for countering corruption.

The PACI Vanguard expects to establish a harmonized legal framework that can address corruption consistently and lead to more effective enforcement. Collaborating with the Organisation for Economic Co-operation and Development (OECD), PACI Vanguards members will support the implementation of the OECD convention on combating bribery with G20 countries and others. In addition, the larger PACI business community developed new PACI principles for countering corruption based on a zero tolerance policy.

MINING 	  

Petra Uncovers Exceptional Blue

Petra Diamonds recovered a 29.60-carat, vivid blue diamond at its Cullinan mine in South Africa and defined the stone as possessing extraordinary saturation, tone and clarity. Petra expects to sell the diamond shortly.

The company said that revenue grew 19% year on year to $185.5 million for the first half that ended on December 31. The volume of diamond carats sold during the period rose 33% to 1,140,479 million. Petra’s production increased 31% to 1,635,716 million carats. Petra held three rough tenders during the first half, with four tenders scheduled to take place in the second half. On December 31, Petras diamond inventory was valued at $49.1 million and it held $27.5 million in cash.

Renard Drill Program Update 

Stornoway Diamond Corporations planned 2014 resource expansion drill program at the Renard diamond project in Quebec will test the resource potential of the Renard 2 kimberlite below the base of the currently defined indicated mineral resource at 600 meters below surface. Stornoway stated that it is at that level where Renard 2 shows its maximum size. The drill projects objectives will attempt to convert an estimated 6.2 million carats of inferred mineral resources to an indicated resource; identify areas to target for further exploration between 700 meters and 1,000 meters in depth and explore drilling potential at four additional kimberlites that are not contained within any current estimates.

Endiama to Reopen Mines

Endiama plans to resume operations at the Shiri, Sangamina, Camafuca and Camazambo diamonds mines within the next two years following their closure in 2009 due to viability concerns. Angolas diamond production has been slow to recover following the global financial meltdown. While figures for 2013 have not yet been released, Angola produced about 8.3 million carats in 2010, 2011 and 2012, down from and 9.7 million in 2009.

Victor Touts Kidney Looping 

De Beers Canadas Victor diamond mine completed its first year of cleansing equipment oil through the kidney looping process to reduce waste and costs as part of the companys sustainability goals. The operations team cleanses hydraulic oil from its 50- and 100-tonne haul trucks through the kidney looping process, which works in a similar fashion to dialysis machines on nonfunctioning human kidneys. Victor mines operations no longer ship waste oil off site and De Beers reduced hydraulic fuel use by nearly 20% in 2013.

STATS 	  

India

Dec. $Mil. %Chng. YTD $Mil. %Chng.
Polished exports $1,100 16% $20,484 21%
Polished imports $380 -11% $6,864 29%
Net exports $720 37% $13,620 20%

Rough imports $1,652 -7% $16,304 8%
Rough exports $104 32% $1,785 17%
Net imports $1,548 -8% $14,519 8%

Net diamond account ($828) ($900)

Synthetic imports $7 100% $75 100%
Synthetic exports $6 -50% $83 62%

ECONWATCH 	  

Diamond Industry Stock Report

U.S., Europe and Hong Kong retail shares lower, except for Birks (+6%), Blue Nile (+3%) and Signet (+3%). Indian shares mainly higher, led by Classic Diamond (+15%). Mining shares mixed with ALROSA (+9%) and Firestone (+9%) leading gains and Peregrine (-14%) on the downside. View the extended stock report.
Jan. 23 Jan. 16 Chng.
$1 = Euro 0.730 0.734 -0.004
$1 = Rupee 61.94 61.49 0.4
$1 = Israel Shekel 3.48 3.49 -0.01
$1 = Rand 11.01 10.89 0.12
$1 = Canadian Dollar 1.11 1.09 0.02

Precious Metals
Gold $1,262.70 $1,242.70 $20.00
Platinum $1,453.00 $1,427.00 $26.00

Stock Indexes Chng.
BSE 21,373.66 21,265.18 108.48 0.5%
Dow Jones 16,197.35 16,417.01 -219.66 -1.3%
FTSE 6,773.28 6,815.42 -42.14 -0.6%
Hang Seng 22,733.90 22,986.40 -252.50 -1.1%
S&P 500 1,828.46 1,845.89 -17.43 -0.9%
Yahoo! Jewelry 933.80 932.20 1.60 0.2%

Rapaport Weekly Market Comment Jan. 31, 2014

Polished markets stable with very strong demand for 30 and 40 pointers and large inventories building up at GIA. Polished buyers resisting higher prices based on rough. Far East demand slow with dealers on vacation for Chinese New Year. De Beers $700M Jan. sight sold out, 2013 production +12% to 31.2M cts. ALROSA 2013 production +7% to 36.9M cts. Letšeng mine 4Q sales +57% to $76M, average price +49% to $2,533/ct. Asian Star 3Q sales +80% to $159M, profit +159% to $4M. Titan Company’s 3Q revenue -11% to $425M, profit -19% to $26M. Belgium’s Dec. polished exports +6% to $1.1B, rough imports +17% to $1.1B. GIA unveils synthetic diamond detector. The Rapaport Group wishes a Happy & Prosperous Chinese New Year to all our friends.
RapNet Data: Jan. 30

Diamonds 1,065,966
Value $6,588,388,628
Carats 1,157,711
Average Discount -26.99%
www.rapnet.com

QUOTE OF THE WEEK
Long-term, gold will always go up so long as we have a Federal Reserve printing money. But, on the short-term, the traders have a lot to say about this. A correction like we just had last year – one year out of 13 – thats not a big correction. That doesnt destroy a so-called bull market. The most important thing about gold is it restrains the temptation of those who think they know best in what interest rates should be and what the money supply should be.

Ron Paul | Former U.S. Congressman

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INDUSTRY 	  

De Beers Hikes Prices

The De Beers January sight closed with an estimated value of $700 million as the company raised prices by 5% on average. The price hike affected most categories, while the company also adjusted assortments in its boxes. Rough demand from the secondary market improved with solid premiums emerging on De Beers boxes. While there were requests for additional stones during the sight, De Beers did not have the goods to fulfill demand and there was little ex-plan provided.

Sightholders contended the price hike was slightly higher than expected with prices on small Z and small makeable boxes rising by more than 6%, while prices of the fine 2.5/4-carat box up about 4%. Traders were also at odds to explain how and why the rough market has suddenly become rather buoyant after a period of slow demand.

De Beers 4Q Production +13%

De Beers production rose 13% year on year to 9.132 million carats in the fourth quarter of 2013 and full year production grew 12% to 31.159 million carats. In the fourth quarter, Debswanas production grew 17% to 6.357 million carats, while DBCMs production rose 28% to 1.728 million carats. De Beers Canada production increased 20% to 582,000 carats and Namdebs production rose 4% to 465,000 carats.

Annual production rose 12% to 22.207 million carats at Debswana, it grew 7% to 4.724 million carats at DBCM, increased 6% to 1.762 million carats at Namdeb and jumped 26% to 1.966 million carats at De Beers Canada.

ALROSAs 4Q Production +10%

ALROSA’s diamond production rose 10% year on year to 9.9 million carats in the fourth quarter that ended on December 31 and full year production grew 7% to 36.9 million carats. ALROSA sold 10.8 million carats during the quarter, including 6.7 million carats of gem-quality diamonds for an average price of $192 per carat and 4.1 million carats of industrial diamonds with an average price of $7 per carat.

ALROSA sold 38 million carats of diamonds in 2013. Sales included 26.7 million carats of gem-quality diamonds for an average price of $176 per carat and 11.3 million carats of industrial diamonds for an average price of $9 per carat. The company anticipates its 2013 revenue will grow around 10% year on year to $4.66 billion (RUB 165 billion).

RETAIL & WHOLESALE

Titans Profit -19%

Titan Company Limited, the parent company of Indias Tanishq brand, reported that sales of jewelry and watches, in addition to revenue from other business areas fell 11.3% year on year to $425.3 million (INR 26.76 billion) for the third quarter that ended on December 31. Operating expenses fell 11% to $388.8 million but profit after taxes fell 18.8% to $26.3 million. Jewelry sales, representing the majority of its revenue, fell 15.4% to $338 million, while watch sales rose 7.5% to $72.4 million.

Titan stated that jewelry sales during the festive season, in particular, were poor and that there was lower demand for gold jewelry for the duration of the quarter. The jewelry industry has been adversely impacted by regulatory measures that were implemented this year to restrict gold imports, according to the firm.

Asian Stars Profit Doubles

Asian Star Co. Ltd. reported that group sales rose 80% year on year to $159 million (INR 9.92 billion) during its third fiscal quarter that ended on December 31. Profit more than doubled to $4.3 million. Sales at the company’s cut and polished diamond segment jumped 85% to $141 million, while sales from its jewelry business, operating under the brand name of Shagun Jewels, rose 6% to $22 million. Operating profit from the companys diamond business more than doubled to $4.8 million, while jewelry segment profit rose 26% to $1.1 million.

Sothebys Approves Special Dividend

Sotheby’s approved a special dividend of $300 million, or approximately $4.34 per share, to be distributed on March 17, following the companys review of capital allocation and financial policy. Sotheby’s board also authorized a $150 million share repurchase program, primarily as part of a new policy to offset annual employee stock dilution, with approximately $25 million of shares being repurchased by the end of 2014.

The auction house is considering selling its York Avenue headquarters in Manhattan and New Bond Street property in London to unlock further value for shareholders. Sotheby’s is also going to establish a separate capital structure and financial policy for two primary businesses – Agency (auction and private sales) and Sotheby’s Financial Services. This structure will allow Sotheby’s to optimize funding and establish clear return thresholds for each business: 15% return on invested capital for the Agency business and 20% return on equity for Financial Services.

Comvest Fund Buys Robbins Brothers

Comvest Partners acquired Robbins Brothers Jewelry Inc. from Weston Presidio for an undisclosed sum. Comvest invested in the jewelry chain through Comvest Investment Partners IV LP, a $582 million fund, and capital commitments came from a diverse group of pension plans, insurance companies and global private equity funds. Robbins Brothers filed for bankruptcy protection in 2009, blaming weak consumer spending and emerged one year later in stable condition. It then sold 10 of its 16 stores to minority stakeholder Weston Presidio.

Corvex Buys Into Signet

Hedge fund Corvex Management revealed that its stake in Signet Jewelers rose to 7.8% of outstanding shares, stating that it believed Signet to be undervalued. Corvexs senior leaders met with Signets board this month calling those proceedings constructive and added it may again engage the retailers management to discuss leveraging Signets credit receivables and offshore structure, optimizing capital and/or accelerating mergers and acquisitions. Signets board added that Corvex shared its views on Signets balance sheet and capital structure.
Chow Tai Fook Plans 600 New Stores

Chow Tai Fook Jewelry Group Ltd. is planning to add 600 stores and expand its online sales network in Mainland China over the next three years. Most of the new stores will be located in Chinas third-tier and fourth-tier cities as those economies are on the fast-path to development. The company has more than 2,000 outlets worldwide, mostly in Mainland China. The demand for jewelry in China jumped 30% during the first three quarters of 2013, according to the National Bureau of Statistics.

David Yurman Opens in Canoga Park

David Yurman opened its newest boutique at the Westfield Topanga Center in Canoga Park, California. The retail jeweler hired the architectural firm of Gabellini Sheppard Associates to design the concept of its new stores. The Westfield Topanga boutique features 1,403 square feet of retail space, and design features follow classically modern architecture.

GJEPC Says Declare Detection

The Gem & Jewellery Export Promotion Council (GJEPC) contended that while it has put efficient synthetic detection methods in place, members must request a declaration on invoices, similar to the declaration used in rough diamond transactions, when purchasing diamonds in the country. GJEPC said follow the World Federation of Diamond Bourses (WFDB) guidelines of January 6, when using declarations and stressed traders to monitor the guidelines for updates and changes

DiamondCheck Debuts in New York

The Gemological Institute of America (GIA) developed DiamondCheck, a machine that detects differences between natural diamonds and man-made stones and debuted this technology in New York. DiamondCheck runs on GIA software and uses 3D imaging to label the diamond as “natural” or “non-diamond” or a third option, "further lab testing," when the initial finding is unclear.

While the machine can only test one stone at a time, it only takes about 10 seconds for the software to determine the result. The device can examine diamonds from 1 point to 10 carats and is 100% accurate, according to the lab. While DiamondCheck retails for $23,900, the GIA installed it at the Diamond Dealers Club in New York and will at the major bourses in Israel, South Africa, Dubai, Hong Kong, Shanghai and Tokyo.

Angola to Develop Finished Goods Sector

Angola plans to resume cutting and polishing in March with an objective of expanding to eventually produce jewelry as part of the National Development Programme. Currently, the diamond polishing plant includes a small jewelry operation to produce rings, earrings and necklaces. The nation expects to attract investment from the jewelry supply chain to enhance the value of its natural resources.

Panama Gem Center to Open

The Panama Gem & Jewelry Center in Panama is scheduled to open soon with a special gathering of government officials and industry players in Panama City on March 17 and 18. It will be the first dedicated facility for the diamond, jewelry and colored stones trades in the region that includes South and Central America, Mexico and the Caribbean. Anchoring the new center will be the Panama Diamond Exchange (PDE), which was established as the first and only diamond bourse in all of Latin America.

Faberge Hunt Hits New York

Fabergé will host The Fabergé Big Egg Hunt in New York from April 1 to 26 in collaboration with 200 artists and designers in order to raise funds for Elephant Family, founded by Mark Shand and Studio in a School, founded by Agnes Gund. The hunt begins April 1, all eggs will be collected from their hiding places and nested together in one location beginning April 18 and the eggs will be auctioned two days after Easter Sunday, on April 22, by Sothebys. The public may continue to view the eggs on display together until April 26.

About 200 designers will create 300 giant egg sculptures that are about 2.5 feet in height and all of which will be blended into their surroundings across various locations and businesses in Manhattan and the boroughs. Artists receive 15% of the egg sculptures final auction price along with open license to use The Faberge Big Egg Hunt logo, advertising and marketing activity. Faberge held a similar hunt in London in 2012, where it attracted 1 million participants and raised $1.5 million for charity.

Weil Dies at 87

Raymond Weil, the founder and honorary president of RAYMOND WEIL Genève, maker of Swiss luxury timepieces, passed away peacefully at age 87, on January 26. Weil was regarded as a pioneer and entrepreneur in the watchmaking industry. In 1976, in the middle of the most severe watch industry crisis, Weil found his own company and turned his idea of what Swiss watchmaking should be into actual timepieces that would bring a new dimension to the industry. He was active in professional organizations, and Weil’s great loves of life were his family, painting, aviation and music.

MINING 	  

Gem Diamonds Sales Rise

Gem Diamonds reported that rough diamond sales from the Letšeng mine in Lesotho jumped 57% year on year to $75.6 million in the fourth quarter of 2013. The average price of the goods rose 49% to $2,533 per carat, while production fell 10% to 27,227 carats. Gem Diamonds noted that its final tender of 2013 achieved an average price of over $3,000 per carat, with firmer rough prices expected to continue into 2014.

Lucapa Unearths 95Ct. Stone

Lucapa Diamond Company recovered a 95.45-carat, type IIa diamond from its Lulo diamond concession in Angola. The diamond has an irregular equant shape and is the second-largest diamond recovered at Lulo, compared to a 131.40-carat, type IIa diamond recovered in 2012. Lucapa is still in the process of cleaning and retesting the diamond to resolve its color classification. The diamond is currently classified as D/E but has also has been described as brown.

Dominion Stages B2B Offering

Dominion Diamond plans to revitalize its CanadaMark certification and trademark in part through a complex business-to-business (B2B) platform, which has now entered the planning phase. Dominion Diamond has long discussed the possibility of selling diamonds directly online. The mining company expects the B2B model to initially handle rough sales and then lead into polished goods featuring the CanadaMark certification. In addition, selling polished diamonds direct would again allow the company to monitor prices and demand, insight it lost with the sale of retail arm Harry Winston Inc.

Rio Tinto Eyes Korba Hills

Rio Tinto will shift diamond exploration plans to the Korba Hills in India, citing security concerns against the Maoists in Bastar, according to the Indian Express. The companys application was based on aerial surveys which indicated there are diamond bearing deposits in the region. The Bastar region is geologically one of Indias three oldest zones, the other two being the Deccan Plateau and the Bundelkhand region.

Gahcho Kue Operators Sign Tlicho Pact

De Beers Canada Inc. and Mountain Province Diamonds, joint partners in the Gahcho Kué diamond project, entered into an impact benefit agreement with the Tlicho Government, the body representing First Nations people of the Northwest Territories of Canada. The agreement has been in the works for the past few months and it creates a framework for De Beers and the Tlicho Government to work together over the life of the mine, enabling participation by the Tlicho people in the opportunities that the mine provides.

The agreement builds on the relationship De Beers already established for the Snap Lake mine and confirms a commitment to work together for the benefit of the Tlicho people at Gahcho Kué.

North Arrow Approves Budget, Program

North Arrow Minerals Inc. approved its 2014 exploration program and budget of $3.7 million to complete a bulk sampling program at the Qilalugaq diamond project, which is near the hamlet of Repulse Bay, Nunavut, Canada. The purpose of the program is to recover a diamond parcel of approximately 500 carats for the purpose of determining an initial value estimate for the diamonds in the Q1-4 kimberlite. North Arrow is funding the bulk sampling program as part of an option agreement with Stornoway Diamond Corporation.

STATS

Belgium 

$Mil. Dec. %Chng. $Mil. 2013 %Chng.
Polished exports $1,059 6% $13,882 5%
Polished imports $877 13% $13,299 3%
Net exports $182 -19% $583 90%

Rough imports $1,084 17% $13,288 8%
Rough exports $1,334 4% $14,626 8%
Net imports ($250) ($1,338)

Net diamond account $432 -37% $1,921 22%

ECONWATCH 	  

Diamond Industry Stock Report 

Negative week for the U.S., Europe and India as industry shares tumbled except for Birks (+9%), Signet (+7%) and Suashish (+2%). Mining shares mixed with double-digit gains for Shore, Peregrine and Stellar. View the extended stock report.
Jan. 30 Jan. 23 Chng.
$1 = Euro 0.738 0.730 0.008
$1 = Rupee 62.58 61.94 0.6
$1 = Israel Shekel 3.49 3.48 0.01
$1 = Rand 11.21 11.01 0.20
$1 = Canadian Dollar 1.12 1.11 0.01

Precious Metals
Gold $1,243.00 $1,262.70 -$19.70
Platinum $1,379.00 $1,453.00 -$74.00

Stock Indexes Chng.
BSE 20,498.25 21,373.66 -875.41 -4.1%
Dow Jones 15,848.61 16,197.35 -348.74 -2.2%
FTSE 6,538.45 6,773.28 -234.83 -3.5%
Hang Seng 22,035.42 22,733.90 -698.48 -3.1%
S&P 500 1,794.19 1,828.46 -34.27 -1.9%
Yahoo! Jewelry 922.99 933.80 -10.81 -1.2%

Rapaport Weekly Market Comment Feb. 7, 2014

Chinese New Year increases sales of affordable jewelry but luxury demand slows. Strong demand for 0.30-0.40ct. GIA dossiers. Large volume of polished goods expected to enter market with 50-day backlog at GIA and Indian cutters increasing manufacturing. January RapNet Diamond Index (RAPI) for 1ct. +1.2%, 0.30ct. +1.6%, 0.50ct. +2.3%. Rough trading steady as Indian cutters increase purchases before banks reduce credit in April. LVMH 2013 jewelry/watch sales -2% to $3.8B. Swatch 2013 profit +20% to $2.1B boosted by $500M Tiffany lawsuit. Blue Nile 4Q sales +7% to $146, profit flat at $4.9M. U.S. 2013 jewelry sales +8% to estimated $71.3B.

RapNet Data: Feb. 6

Diamonds 1,068,174
Value $6,662,161,342
Carats 1,157,752
Average Discount -26.89%

www.rapnet.com

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RAPAPORT ANNOUNCEMENTS

February
4-12
Tue-Wed

Rapaport Melee Auction

New York & Belgium

View details.

February
5-12
Wed-Wed
Rapaport Single Stone Auction

New York & Israel

www.rapaportauctions.com

March
27-31
Thu-Mon

The Diamond Show

Markthalle Building, Basel, Switzerland

Visit - Exhibit - Learn More:
www.thediamondshow.net

QUOTE OF THE WEEK
We disassociate ourselves from the (FATF, Egmont Group diamond industry money laundering) report. As the member nations of the FATF were asked to approve the report, mistakenly thinking that it had been prepared in cooperation with the WFDB, we reserve our right to present our positions directly to the members of the FATF plenary and to take any other steps to protect the legitimate, ethics-bound interests of the international diamond industry.

Ernie Blom | World Federation of Diamond Bourses

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INDUSTRY 	  

RAPI +1% in January 

Diamond markets improved in January but manufacturers were concerned that higher rough prices were cutting their profit margins. Polished demand improved due to a solid U.S. market, while Far East demand was cautious and slowed as jewelers completed their Chinese New Year purchases.

In January, the RapNet Diamond Index (RAPI™) for certified 1-carat polished diamonds rose 1.2% during the month, while RAPI for 0.30-carat improved 1.6% and 0.50-carat jumped 2.3%. RAPI for 3-carat diamonds was up 0.2%. RAPI for 1-carat stones is down 3.4% year on year and RAPI for 3-carat is down 3.5%. RAPI for 0.50-carat is up 1.7% year on year, while RAPI for 0.30-carat jumped 10.9%.

Polished inventories were low throughout the pipeline, which influenced demand to rise during January. Cutters’ profit margins also improved as prices rose on polished diamonds that were manufactured from rough bought at reduced prices a few months ago. Simultaneously, polished suppliers were cautious not to raise prices too much as their program buyers demanded stability.

Jewelry Sales Rise in China

Preliminary consumer spending during Chinas New Year festival rose 13.3% year on year to $101 billion (CNY 610.7 billion), according to the Ministry of Commerce.

Xinhua news reported that horse-themed jewelry sold briskly, helping to drive jewelry sales up more than 30%. Sales of luxury goods, however, fell sharply during the holiday as the government continues to cracks down on gift-giving to officials and the consumer mood, in general, adopts a more frugal atmosphere.

The sale of expensive spirits and spending at luxurious restaurants experienced double-digit declines during New Year festivities.

U.S. Jewelry Sales +8%

U.S. jewelry and watch sales closed the year 2013 with solid growth, capping a period of relatively benign consumer price inflation (CPI) for the sector, which helped to maintain strong performance. Combined jewelry and watch sales in December rose 6.4% year on year to almost $17 billion, according to preliminary government figures. Sales growth for November was revised seven percentage points lower to 8.4% and $7.4 billion.

Preliminary sales totals for 2013 found that jewelry sales rose 7.7% to $71.3 billion, while watch sales improved 8.1% to $9.5 billion. The CPI for jewelry, meanwhile, was basically flat in 2013, or down just 0.4% to 177.6 points. However, the CPI for watches increased 2.8% to 121.3 points and reached a record 124.3 points in July.

During the year, jewelry sales growth was strongest in April, when the sector recorded its only double-digit increase at 11.1% to $4.94 billion. While sales growth reached its second-highest level in November, jewelry sales also improved better than 9% in January, March, June and October. The watch sector was given a boost from higher consumer prices and recorded the strongest sales increase in October at 12.2% to $688 million, but double-digit increases were also recorded in January, March, April and July.

RETAIL & WHOLESALE

Blue Niles Profit Flat 

Blue Nile Inc.s revenue rose 7.2% year on year to $145.96 million in the fourth quarter that ended on December 29. The cost of sales increased 7.5% to $118.74 million. Blue Niles profit for the quarter was flat at $4.93 million or 38 cents per share. Gross profit as a percent of net sales fell slightly to 18.6% compared with 18.8% one year earlier.

U.S. engagement-related sales in the fourth quarter, which included Christmastime, improved 6.9% year on year $78.7 million, while jewelry category sales improved 8% to $45.9 million. Blue Niles international sales improved 6.8% year on year to $21.4 million in the fourth quarter; however, the company recorded a 4.1% negative impact from foreign-exchange movement.

In other news, Blue Nile announced that its president of international sales and general manager, Vijay Talwar, is no longer with the company.

LVMH Jewelry sales -2%

LVMH reported that revenue rose 2.4% year on year to $11.3 billion (EUR 8.4 billion) in the fourth quarter that ended on December 31 and full year sales increased 4% to $39.4 billion. While annual profit from recurring operations improved 2% to $8.1 billion, the groups share of net profit was flat in 2013 at $4.6 billion.

LVMHs watch and jewelry division sales for the full year fell 1.8% year on year to $3.8 billion, following small declines in each fiscal quarter. During the fourth quarter, which included the Christmas season, jewelry and watch sales slipped 0.7% to $1.1 billion, while sales fell 1.9% in the third quarter to $914 million. The sectors sales dropped 3.8% in the second quarter to $926 million after a 1 percent decline in the first quarter at $842 million. Organic sales during the year, however, increased 4%, combining same-store sales at comparable exchange-rates. LVMH plans to propose a dividend of EUR 3.10 ($4.19) per share for the full year, an increase of 7% from 2012.

Swatch Profit +20%

The Swatch Groups profit rose 20.2% year on year to $2.1 billion (CHF 1.928 billion) in 2013. The companys gross margin improved to 22.8% from 20.6% one year earlier. Both figures were positively impacted by three margin points from a $500 million cash settlement with Tiffany & Co. As reported earlier, Swatchs annual group sales increased 8.3% to $9.8 billion and included a full year of revenue from its watch brand, nine months of sales from Harry Winston jewelry boutiques and two months of revenue from Rivoli Investment. The board proposed an 11.1% increase in Swatch dividends to CHF 7.50 ($8.30) for bearer share.

Pure Golds Festival Sales Rise

Pure Gold Jewellers reported a 25% year on year increase in gold jewelry sales during the important Dubai Shopping Festival (DSF) this year. The company also reported an 8% surge in diamond jewelry sales during the same period; however, hard totals were not provided. Karim Merchant, the CEO of Pure Gold Jewellers, observed that strong festival promotions, holiday packages and an increase in tourists from India all helped to boost sales.

JCP Posts Small Sales Increase

J. C. Penney Company Inc., which has experienced a 71% year on year decline in its share price, provided a preliminary sales recap for the fourth quarter. Same-store sales for the months of November and December combined rose 3.1% year on year and they increased 2% for entire fourth quarter that ended on January 31. Online sales at jcp.com rose 26.3%. Strong sales categories for the Christmas period included Sephora, activewear, sweaters, outerwear, dresses, boots, mens clothing and luggage.

Jewelry Spending Predictions Vary

The National Retail Federation (NRF) concluded that U.S. consumers are not ready to splurge as much on jewelry for Valentines Day 2014 as they had one year ago. The NRF estimated that total Valentines spending on gifts would reach $17.3 billion, with an average budget of $133.91 for those who celebrate the festival. However, only 19% of those intending to shop plan to purchase jewelry this year, down from 19.7% in 2013, and the NRF estimated that jewelry sales would approach $3.9 billion this year compared with $4.4 billion one year ago.

The gift choices that top jewelry this year include candy, flowers greeting cards and dining out.

In a separate study, which included affluent households, American Express concluded that Valentines spending would reach $37 billion, on an average gift budget of $213, down from $239 in 2012; and that 24% of men would chose jewelry gifts this year, down from 25% in 2012. The study also reported that six million love birds expect a Valentines engagement this year and the average price tag for an engagement ring should be $2,311, down from $2,410 in 2012. Thirty-eight percent of couples defined an appropriate price tag for an engagement ring to be less than $1,000, while 16% chose the highest option at a price of $5,000 or more.

Meanwhile, IBISWorld determined that the average gift spending budget would increase 82 cents to $135.10 and that jewelry gift spending would increase 4% to $1.7 billion out of a holiday total of $21.6 billion. Top gifts for Valentines Day by the amount of spending were: dining out, candy, romantic getaways, flowers, jewelry, clothing and greeting cards.

Raymond Weil Debuts Toccata

Raymond Weil presented its new toccata collection with entry-level price points meant to appeal to a wider audience. Raymond Weil pays homage to the source of its inspiration right from the beginning, by celebrating the one who is behind every great musical work – the composer. Toccata embodies the brand’s boldness and creativity. The dials display a simple but precise musical score under the baton of the orchestra’s conductor, which sweeps back and forth incessantly over the indexes or Roman numerals.

U.S. Credit Cards are Antiquated 

Following the highly publicized cyber attacks on consumer credit data at two major U.S. retailers, the Retail Industry Leaders Association (RILA) told a Senate hearing that retailers, together with banks and credit card firms, must advance technology and collaborate to prevent security breaches in order to safeguard consumers’ financial data.

RILA recently establishment a trusted forum through which retailers can share threat information and advance effective security solutions and collaborate with other stakeholders in the payments system. But retailers have no influence over third parties and need cooperation from the banks and credit card companies. Retailers have long held the belief that U.S. credit card technology is antiquated, which invites criminal behavior.

GENERAL 	  

Trade Group Condemns Gem Ban 

The Peshawar-based All Pakistan Commercial Exporters Association (APCEA) called a recent gemstone export ban unfair because it resulted in 3,000 gem and jewelry exporters losing their business. Pakistan exports ruby, emerald, sapphire, lapis, quartz, tourmaline, aquamarine and peridot, and all shipments since January 23 have been held by the Pakistan Customs authority at the Peshawar airport. The government ordered the export ban in an attempt to discourage smuggling gold into India. However, Pakistans Ministry of Commerce told Plus News that exporters simply needed to register and pay a fee of $285 (PKR 30,000). APCEA vowed to protest the ban and new registration measures.

DMCC Expands Responsible Sourcing

The Dubai Multi Commodities Centre (DMCC) launched its responsible sourcing market deliverable brand (MDB) accreditation to certify gold and silver refineries. The certification evaluates responsible sourcing of gold bars in accordance with the DMCC Guidance and Review Protocol. The measure provides industry participants with the assurance that they can trade with confidence, knowing that upcoming refineries in the UAE comply with international trade and responsible sourcing, according to the DMCC.

De Beers Adds to Its Executive Board 

De Beers Group appointed the following three men to its executive committee: Paul Rowley, the executive vice president of global sightholder sales, Neil Ventura, the executive vice president of auction sales and Balisi Bonyongo, the CEO of Debswana.de beers Rowley joined De Beers in 1983, Ventura joined the firm in 1989 and Bonyongo started his career with Debsw

MINING 	  

Dominion Updates Mine Plans 

Diamond production from reserves at the Diavik mine in Canada is expected to decline about 7% to 5.97 million carats in 2014, Dominion Diamond Corporation reported. An updated mine plan also anticipates the companys operating costs will decline 16% to about $400 million (CAD 408 million) in 2014 as Dominion mines an increased amount of ore. The expected reduction in operating costs is mainly as a result of completion of the underground development in 2013, with no additional capital requirements. In 2014, operating costs will include mainly mine maintenance, human resources and fuel costs for power and equipment. Based on the mine plan, Diaviks reserve base will support mining up to 2023.

Dominion also owns an 80% stake in the Ekati mine, which is projected to produce 1.22 million carats in 2014 from the Fox, Misery, Pigeon and Lynx open pits and the Koala and Koala North underground operations. Ekatis operating costs in 2014 are anticipated to reach about $310 million and include development for the Misery pipe, Pigeon and Lynx. Production at Ekati is forecast to run through to fiscal 2020.

Winter Ice Road in Full Operation

The Diavik diamond mine in Canada’s Northwest Territories began its annual mine resupply program and expects to transport approximately 2,700 loads of fuel, cement and other operating supplies using the winter ice road. The Tibbitt to Contwoyto Winter Ice Road opened on January 30 with an ice thickness of 28 inches, in line with previous years. The first deliveries were dispatched from Yellowknife and had gross vehicle weights of up to 32,000 kilograms or about half the maximum capacity.

The Diavik, Ekati and Snap Lake diamond mines and other smaller exploration companies, expect to transport approximately 7,000 loads on the winter ice road. This year is expected to be the busiest year for the ice road since 2007 and prolonged frigid weather has helped support building the road. The Tibbitt to Contwoyto Winter Road is the world’s longest heavy haul ice road and extends 600 kilometers, when built into Nunavut. The vast majority of the road is constructed over frozen lakes that are connected by 60 land portages. Weather permitting, the ice road is open for approximately 10 weeks each winter and is a joint venture managed by the owners of Diavik, Dominion Diamond Corporation and De Beers Canada.

Lace Underground is Ahead of Budget 

DiamondCorp reported that underground development at its Lace mine in the Free State province of South Africa continues on schedule and within budget. As of December 31, Laces underground tunnel development was 15% complete and at 94% of planned budget. The company plans to hire two additional mining crews to complete the project by the end of March. The company anticipates holding a rough sale in February from Lace tailing and has scheduled nine additional sales this year.

Rio Tinto Funds Hospital Expansion

Rio Tinto donated $50,000 to fund a new ward in the Chhatarpur district hospital in Madhya Pradesh, home to the mining giants Bunder diamond project. The contribution will fully fund the construction of a 215-square-meter ward, providing much needed hospital beds in this under resourced region. Rio Tinto’s initiatives have also included, providing free health clinics and mobile medical camps, mother and child nutrition programs in the local villages to address high rates of child malnutrition and efforts to eradicate communicable diseases such as HIV/AIDS and tuberculosis.

Rockwell Introduces BEE Partner

Rockwell Diamonds Inc. formally announced that its new black economic empowerment (BEE) partner is African Renaissance Holdings Limited of South Africa, a company that agreed to acquire 30% equity interest in the mining companys Middle Orange operations. Rockwell has been vetting its new BEE partner since December and confirmed that African Renaissance fulfilled most of the conditions required. African Renaissance Holdings was established early in 1994 and it pursues investment opportunities in both listed and unlisted entities in sectors such as telecommunications, mining, diamonds and related services.

ECONWATCH 	  

Diamond Industry Stock Report

Investor worries prevailed in the U.S. for a second week as Blue Nile (-18%) disappointed the market with weaker than expected results, in the face of its brick-and-mortar competitors gaining steam with their own ecommerce channels. Only Charles & Colvard (+4%), Kohls (+1%), Sothebys (+4%) and Tiffany (+3%) posted gains. European shares were all higher, led by LVMH (+9%). Indian shares were mostly higher as Suashish (+14%) led the way and Goenka (-6%) led declines. Mining shares were mostly lower with biggest declines from Peregrine (-15%), Rockwell (-11%) and Shore (-14%). View the extended stock report.
Feb. 6 Jan. 30 Chng.
$1 = Euro 0.734 0.738 -0.004
$1 = Rupee 62.24 62.58 -0.3
$1 = Israel Shekel 3.53 3.49 0.04
$1 = Rand 11.03 11.21 -0.18
$1 = Canadian Dollar 1.11 1.12 -0.01

Precious Metals
Gold $1,257.50 $1,243.00 $14.50
Platinum $1,373.00 $1,379.00 -$6.00

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Yahoo! Jewelry 948.88 922.99 25.89 2