Rapaport Weekly Market Comment Feb. 14, 2014

Polished markets stable as prices firm but buyers are selective and waiting for Hong Kong show results. Far East sentiment improves after good Chinese New Year jewelry sales. Chow Tai Fook’s holiday revenue +32% with gem-set jewelry same-store sales +13%. Rough prices surging to unsustainable levels as Indian manufacturers make use of easy government supported bank credit that may end in April. Rio Tinto diamond revenue +15% to $852M, net earnings of $53M vs. loss of $25M in previous year. China’s 2013 gold consumption +41% to 1,176t., gold jewelry +43% to 716.5t. U.S. 2013 polished imports +16% to $22.9B, polished exports +15% to $19.1B, net diamond account +23% to $4B.

RapNet Data: Feb. 13

Diamonds 1,039,660
Value $7,006,426,001
Carats 1,139,089
Average Discount -26.92%

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QUOTE OF THE WEEK
We are experiencing some increase in rough diamond prices but are happy to note that the prices of polished diamonds have also started to rise in sync with the rough prices. We are also pleased to see the rise in demand in the U.S. market, as well as in the Middle East, India and China. While the rise in demand is marginally lower than last year, the trends are positive. The ongoing quarter is important for us and we are pleased with the way it is progressing so far.

Shreyas Doshi | Shrenuj & Co. Ltd.

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RETAIL & WHOLESALE 	  

U.S. Jewelry Store Sales +2%

U.S. jewelry store sales rose 1.6% year on year to $6.545 billion in December, the weakest sales increase of the year. Jewelry store sales surged 15.1% in October, followed by an equally strong increase of 11.1% in November. As reported earlier by Rapaport News, total U.S. jewelry and watch sales in December increased 6.4% year on year to $16.585 billion.

Despite the lackluster sales growth rate for the most important retailing month of the year, jewelry store sales increased 8% to $34.01 billion in 2013, while the consumer price index for jewelry was flat and it rose 2.8% for watches. Comparatively, preliminary sales for jewelry in 2013 rose 7.7% to $71.3 billion and watch sales improved 8.1% to $9.5 billion. Jewelry sales and store sales performed extremely well during the year when compared with department store chains, where sales declined 4.7% to $174.7 billion. Advanced estimates for department store sales in January continued to show weakness as revenue declined 3.9% year on year to $11.232 billion.

Sales Jump at Chow Tai Fook

Chow Tai Fook reported that group revenue grew 32% year on year during the Chinese New Year period, continuing the momentum of strong gold and gem-set jewelry sales that dominated the companys fourth quarter. Chow Tai Fook did not provide hard totals. During the period January 17 to February 3, revenue from Mainland China jumped 34%, while revenue from Hong Kong and Macau rose 28%. Same-store sales growth during the festival increased 15% with same-store sales growth up 18% in Mainland China and 11% for Hong Kong and Macau.

Shrenujs Profit -1%

Shrenuj & Company Ltd. reported that group sales fell 10.7% year on year to $205 million (INR 12.772 billion) for the third quarter that ended on December 31. Diamond revenue dropped 10.4% to $173 million and studded jewelry sales declined 12.3% to $35.2 million. Profit after minority interest slipped 1.4% to $3.4 million. Revenue for the first nine months of the companys fiscal year improved 15.8% to $552 million and profit after minority interest jumped 19.3% to $10.1 million.

Shrenuj & Company defined the third quarter as a fairly challenging period, with mixed demand and consumption patterns across the luxury segment; however, the company optioned not to sacrifice margins just to improve revenue.

TBZs Profit -23%

Tribhovandas Bhimji Zaveri (TBZ) Ltd. reported that its revenue fell 10.1% year on year to $83.3 million (INR 5.189 billion) for the third quarter that ended on December 31. Expenses dropped 10.8% to $76.7 million. Profit after taxes and minority interest dropped 22.9% to $3.1 million. Revenue came under pressure from difficult market conditions as demand softened and government restrictions limited the availability of gold, according to the firm.

Renaissances Profit Improves

Renaissance Jewellery Ltd. reported that revenue surged 41.9% year on year to $58.3 million (INR 3.63 billion) in the third quarter that ended on December 31. The manufacturing firms expenses jumped 37.9% to $55.1 million and profit grew to $2.4 million from $350,000 one year ago. Renaissance Jewellery manufactures and sells studded jewelry in gold, silver, platinum, polished diamonds and precious color stones.

Lypsas Profit -31%

Lypsa Gems and Jewellery Limited reported that revenue rose 56% to $20.4 million (INR 1.27 billion) in the third quarter that ended on December 31. Expenses declined by 17% to $19.9 million, however, profit fell 31% to $328,705. Lypsa Gems operates in Mumbai and Gujarat. The companys business activities include rough diamond preparation and polishing, manufacturing and trading.

Tara Jewels Profit -33%

Tara Jewels Limited reported that its revenue rose 0.4% year on year to $81.3 million (INR 5.05 billion) for the third fiscal quarter that ended on December 31. The companys profit fell 33% to $3.5 million. The company experienced 6% growth across its international business, which accounted for 85% of its revenue. Demand primarily stemmed from the U.S., China and Australia. Taras retail business in India was flat largely due to the challenging regulatory environment restricting gold imports.

Omni-Channel Benchmarks for 2014

Forrester and IBM collaborated on an insights webinar to help retailers prepare for the 2014 Christmas selling season. One key takeaway from the previous holiday was that more than half of online shoppers made self-purchases in November, prior to Thanksgiving Weekend, which presents an opportunity this year to tap into that consumer niche with personalized product promotions. Online shoppers switched to primarily gift purchases beginning CyberMonday and continuing through to when shipping offers expired before Christmas Eve.

A second trend confirmed by ShopperTrak was that more shoppers chose to avoid chaos and crowded stores during the 2013 holiday season. Forrester found that 80% of those who shopped online between Thanksgiving and Christmas did so just to avoid crowds. And they are increasingly tapping their tablet devices to make those gift purchases, while using mobile phones to search ahead of time.

Consumers can always find better prices online and mobile apps are becoming the most popular way for shoppers to track them down, according to IBM. The tech firm suggested that today’s excellent marketing and merchandising operations represent an omni-channel strategy that personalizes products and creates dynamic pricing along with offering delivery options. This is nearly impossible for a retailer that hasnt integrated its supply chain; however, smaller-scale enterprises could adopt a modular solution that can be expanded over time or an open solution that integrates into its existing backend to accommodate these trends. Two stellar mobile retail examples that retailers should study and emulate are provided by Uber and Dominos Pizza, according to IBM.

Free shipping is now expected by consumers, according to Forrester, and the group anticipates that shipping rates will increase this year, which will further pressure retail margins. Their advice to retailers is to build upon instore pickup or ship-to-store options as part of their omni-channel strategy to save on delivery costs. The group also warned retailers not to utilize upstart local delivery services due to widespread complaints.

Earrings for Girls, Watches for Boys

Overstock.com Inc. surveyed 800 consumers in the U.S. and found that this year, 45% of couples simply plan an old fashioned and simple Valentines Day date with their significant other. Additionally, 62% plan to express their Valentines Day wishes on a hand-written card, while 27% will text message their thoughts and 15% will use social media to convey their feelings.

Of those in the survey who did choose jewelry as a gift choice this year, 52% of women preferred earrings, about the same percentage as the survey revealed in 2013. Necklaces ran a close second place and bracelets were in third. Engagement rings did not make the top five jewelry choices. Sixty-seven percent of men who chose jewelry as a Valentines Day gift selected watches.

MINING 	  

Diamond Earnings Rise for Rio Tinto

Rio Tinto reported that revenue from its diamond unit rose 15% year on year to $853 million in 2013. The diamond division posted net earnings of $53 million compared with a loss of $25 million. The company noted that polished diamond prices were relatively stable throughout 2013 with slightly greater volatility experienced in rough diamond prices.

Production attributed to the company ‎rose 22% year on year to 16.027 million carats. Rio Tinto forecast diamond ‎production of 16 million carats in 2014.‎ The underground Argyle diamond mine in Australia commenced production and continues to ramp up to full capacity, which will extend its life through 2020.

Gem Uncovers Two Large Stones

Gem Diamonds recovered a 162.06-carat, type II diamond and a 161.74-carat, type I diamond from the Letšeng mine in Lesotho at the end of January. Both diamonds were mostly undamaged in the extraction process, which the company attributed to implementing technology to reduce diamond breakage.

Gem anticipates the two stones will achieve top prices this month through a tender sale.

Zimbabwe Holds a Second Rough Sale

Zimbabwes Mines and Mining Development Minister, Walter Chidhakwa, told Xinhua that Antwerp is hosting a second rough sale of Marange diamonds through February 21. Due to U.S. sanctions, these diamonds may not be traded, in rough or polished form, by companies operating in the states. Chidhakwa expressed hope that this second auction would achieve higher prices than Zimbabwes first sale in December, when 300,000 carats generated about $10.7 million.

The minister added that Zimbabwe also plans sales in China, the United Arab Emirates and Botswana. Discussions are also underway to create a Zimbabwe Diamond Exchange to hold sales in Harare.

NDTC Sales Contracts End in 2015 

Namibia Diamond Trading Co. (NDTC) anticipates assigning rough sales contracts next year at the end of its current sightholder period with 12 firms. The number of sightholders for the new contract period could change, depending upon market conditions and the availability of goods. The company offered about $850 million worth of rough diamonds in the current contract cycle.

Kimberley Preps E9 at Ellendale

Kimberley Diamonds will recommence mining at the E9 west pit of the Ellendale mine in Western Australia as soon as the wet season ends in order to access higher-grade ore. Mining at E9 was suspended in June 2013 as a result of slippage of the pit wall due to heavy rain. The company completed the construction of a buttress to allow safe access to the pit in November 2013.

Court Upholds Lucara

Lucara Diamond Corporation confirmed that Botswanas Court of Appeals upheld the High Courts dismissal of a royalty claim against the mining companys subsidiary African Diamonds Plc. Lucara was taken to court in August 2011 by two former directors of African Diamonds, alleging that they were entitled to a 3% royalty on production from the Karowe (AK6) diamond mine. The High Court dismissed the claim in June 2011, the plaintiffs appealed and the Court of Appeals heard the case on January 21.

STATS 	  

USA

Dec. $Mil. %Chng. 2013 $Mil. %Chng.
Polished imports $1,684 25% $22,850 16%
Polished exports $1,273 2% $19,098 15%
Net imports $411 $3,752 23%

Rough imports $81 -17% $551 0%
Rough exports $45 -17% $312 -11%
Net imports $36 -16% $239 11%

Net diamond account $447 $3,991 23%

ECONWATCH 	  

Diamond Industry Stock Report

U.S. shares mainly lower led by Blue Nile (-7%), while Hong Kong and Europe were higher led by Chow Sang Sang (+9%) and Richemont (+3%). Indian shares mainly flat, but positive and Suashish (+6%) led gains. Mining shares all higher with a blowout for Stornoway (+17%) in heavy trading, but ALROSA (-3%) was the exception. View the extended stock report.
Feb. 13 Feb. 6 Chng.
$1 = Euro 0.730 0.734 -0.004
$1 = Rupee 62.43 62.24 0.2
$1 = Israel Shekel 3.51 3.53 -0.02
$1 = Rand 10.97 11.03 -0.06
$1 = Canadian Dollar 1.09 1.11 -0.02

Precious Metals
Gold $1,301.90 $1,257.50 $44.40
Platinum $1,412.00 $1,373.00 $39.00

Stock Indexes Chng.
BSE 20,193.35 20,301.74 -108.39 -0.5%
Dow Jones 16,027.59 15,628.46 399.13 2.6%
FTSE 6,659.42 6,558.28 101.14 1.5%
Hang Seng 22,165.53 21,423.13 742.40 3.5%
S&P 500 1,829.82 1,773.43 56.39 3.2%
Yahoo! Jewelry 960.73 948.88 11.85 1.2%

Rapaport Weekly Market Comment Feb. 21, 2014

Far East demand improves with rising expectations for Hong Kong show. Polished trading stable with firm asking prices, shortages and selective demand. Rough markets very strong and speculative as Indians dominate market and dealers expect further price hikes at next week’s sight. De Beers 2013 revenue +5% to $6.4B, rough sales +5% to $5.8B, earnings +5% to $532M, average prices +5%. Petra Diamonds sells 29.62ct. blue rough diamond for $25.6M ($863K/ct.), 1H revenue +19% to $185M, profit of $28M vs. loss of $15M. Signet Jewelers to buy Zale Corp. for $1.4B. Gitanjali Gems 3Q revenue -37% to $447M, profit -71% to $8.2M. India’s Jan. polished exports -2% to $1.7B, rough imports +27% to $1.3B.

RapNet Data: Feb. 20

Diamonds 1,048,864
Value $6,956,706,010
Carats 1,148,116
Average Discount -26.92%

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QUOTE OF THE WEEK
Millennials will reject their parents materialistic status symbols in favor of celebrating achievements. Unitys research found that millennials are far more satisfied by earning a degree or completing an athletic event than they are by status symbols available for purchase. What will it mean when millennials are more interested in a $500 Ironman triathlon watch to mark an achievement rather than a $5,000 brand name piece?

Pam Danziger | Unity Marketing

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INDUSTRY 	  

Gold Jewelry Demand by Value Declines

Global gold demand by value plummeted 28% year on year to $170.4 billion in 2013, according to the World Gold Council. By volume, gold demand dropped 15% to 3,756 tonnes. However, gold jewelry demand by weight surged 17% year on year to 2,209.5 tonnes even though gold jewelry demand by value fell slightly to $100.25 billion compared with $101.75 billion in 2012. The World Gold Council noted that that average price of gold fell 27% during 2013 to $1,411.20 per ounce.

During the fourth quarter, gold jewelry demand by weight fell 2% year on year in India to 150.7 tonnes; however, demand jumped 10% to 160.5 tonnes in Greater China. Gold jewelry demand surged 21% in the U.S. to 48.4 tonnes and rose 8% in Europe to 24.1 tonnes. Demand from the Middle East fell 2% to 33.3 tonnes, primarily due to severe economic strife in Egypt.

By dollar value, jewelry demand fell across the board during the fourth quarter due to lower prices. Indias gold jewelry demand dropped 27% to $6.183 billion, Chinas demand fell 18% to $6.585 billion, the Middle East declined 4% to $496 million, while in the U.S., gold jewelry demand plunged 10% to $1.986 billion and in Europe demand plummeted 20% to $989 million.

Signet to Buy Zale, Law Firms Cry Foul

Once approved by shareholders and regulators, Signet Jewelers Limited intends to acquire long-time rival Zale Corporation for $21 per share, or approximately $1.4 billion in total. The deal was kept under wraps until being announced Wednesday and prompted numerous law firms, including Johnson & Weaver, Bernstein Leibhard, Farugi & Farugi, Pomerantz LLP and Levi & Korsinsky, to name a few, to charge that Zales board breached its fiduciary duties to shareholders by selling the company short and for not seeking alternative bids.

Jim Baker, the lead analyst for Johnson & Weaver, said that, “Signets’ offer appears to be inadequate and not in the best interest of Zale’s shareholders. Zale shareholders weathered a long turnaround and now when the company is back on track the company is being sold from underneath them.”

Nonetheless, Signets offer represents a premium of 41% over Zales closing price of $14.91 on February 18. Signet has also entered into a voting and support agreement with Golden Gate Capital, the beneficial owner of approximately 22% of Zales common stock. The transaction is expected to be high single-digit percentage accretive to earnings in the first full fiscal year after closing the deal.

Signet claimed the merger strengthens its omni-channel presence, product diversity and combined operations would ultimately create better choices for consumers in the U.S., Canada and the U.K. Prior to the announcement, financial services firm Stephens Inc. downgraded Zale due to unfavorable mall traffic trends in February and concerns about weak spending on Valentines Day. Stephens lowered Zales price target to $15 from $16.50 per share. Sterne Agee analyst Ike Boruchow wrote in a note to clients prior to this news that Signets rating was lowered to neutral, with a price target of $79.28, as the consumer environment for jewelry is growing increasingly choppy. Sterne Agee favored Tiffany & Co.s fundamentals.

De Beers Profit Improves

De Beers revenue rose 5% year on year to $6.4 billion in 2013, rough sales also rose 5% to $5.8 billion. De Beers rough diamond price index increased 2% with an average realized rough diamond price hike of 5% in 2013. De Beers noted that rough prices rose strongly during the first half of last year but this trend reversed during the second half. De Beers operating profit jumped to $1.003 billion from a revised $474 million in 2012. The diamond firms contributing share of Anglos profit nearly doubled to 15% from 8%.

De Beers share of profit rose 5% to $532 million. Capital expenses during the year increased to $551 million from $161 million. As reported earlier, De Beers production increased by 12% to 31.2 million carats, driven by improvements from operations in all regions, but in particular, Botswana and Canada.

De Beers reported that Forevermark polished sales were strong in 2013, without citing hard totals, and the number of doors increased 39% due primarily to expanding the brand in the U.S., China, Japan and India. The brand is now available at more than 1,200 retail partners in 12 major markets. De Beers expects only a slight but steady improvement in growth for polished diamonds and diamond jewelry in 2014, with the U.S. and China being the main drivers.

RETAIL & WHOLESALE 	  

U.S. Jewelry Inflation -2%

The U.S. consumer price index (CPI) for jewelry declined 1.7% year on year to 173.78 points in January, the lowest index reading since July 2012. The CPI for watches was basically flat in January, down by just 0.3%, at 120 points or four points lower than the record high of 124.3 that was just set in July 2013.

Contributing to a slightly lower jewelry price index during the month was continued price pressures on commodities. The price for gold in January was about 18% lower year on year, while platinum was down 12%. The RapNet Diamond Index (RAPI), the global benchmark for polished diamond prices, fell 3.4% year on year for 1-carat diamonds, while RAPI for 3-carat diamonds dropped 3.5%. RAPI for 0.50-carat stones increased 1.7% and the index jumped 10.9% for 0.30-carat diamonds.

Meanwhile, the CPI for all product categories in January increased 1.6% year on year to set a new record high of 234.93 points.

Pandoras Profit +85%

Pandora Jewelry reported that revenue surged 35.4% year on year to $1.66 billion (DKK 9.01 billion) for fiscal year that ended on December 31. Cost of sales also rose 35.4% and reached $555 million, while sales, distribution and marketing expenses increased 15% to $441 million and administration expenses rose 5.9% to $170 million. Pandoras profit during 2013 jumped 84.7% to $409 million.

During the fourth quarter, which included the Christmas season, group revenue improved 29.8% year on year $520 million, led by strong growth in all regions. Sales in local currency jumped 20% for the Americas where same-store sales rose 5.1% and revenue improved 45.3% in Europe, with same-store sales jumping by 17.9%. Revenue surged 59.5% in the Asia Pacific and comparable-store sales increased 25.5%. Pandoras gross margin during the fourth quarter improved to 68% compared with 64.5% one year earlier. The average price per item sold dipped 4.5% to $23.21 (DKK 126) as the company changed the product mix.

Rajesh Exports Profit -30%

Rajesh Exports reported that its revenue fell 36% year on year to $808.7 million (INR 50.23 billion) in the third quarter that ended on December 31. The companys profit fell 30% to $14.8 million. The quarter was highly challenging in light of the various government restrictions on gold and gold jewelry businesses to contain Indias current account deficit. The company intends, however, to continue expanding its retail presence, which operates under the brand name SHUBH Jewellers.

Gitanjalis Profit -71%

Gitanjali Gems Ltd. reported that its revenue declined 37% year on year to $447 million (INR 27.59 billion) in the third quarter that ended on December 31. The companys profit fell 71% to $8.2 million. By segment, diamond sales fell 27% to $222 million, while jewelry sales declined by 37% to $262 million. During the first nine months of the fiscal year, revenue decreased 17% to $1.56 billion and profit plunged 79% to $20.6 million.

Winsome Anticipates a Loss

Winsome Diamonds & Jewellery Ltd. reported preliminary revenue from sales for the quarter that ended on December 31 dropped to $189,000 (INR 11.7 million) compared with $230 million one year earlier. Total revenue fell to $449,000 from $230.5 million. The company filed its preliminary quarterly details on the Bombay Stock Exchange (BSE), stating that manufacturing operations and normal revenue-generating activities have come to a standstill from lack of access to capital. Total expenses were $642,000, down from $226.4 million one year earlier. Finance costs jumped to $20.2 million from only $2.9 million, leading the company to report a loss of $20.2 million compared with profit of $2 million.

USPTO Assigns Cafe Au Lait Diamonds

The U. S. Patent & Trademark Office (USPTO) assigned the trademark Café Au Lait Diamonds on February 11 to Columbia Insurance Company of Omaha, Nebraska with the registration number 4482759. The company manages trademarks on behalf of its parent company Berkshire Hathaway, which owns Helzberg Diamonds, Ben Bridge Jeweler and Borsheims Jewelry. The trademark was requested on February 26, 2013 and first used in commerce in September that year. The Café Au Lait Diamonds trademark refers to jewelry, namely, rings, pendants and earrings.

MINING 	  

Petra Returns a Profit

Petra Diamonds Limited sold an exceptional 29.62-carat blue rough diamond recovered from the Cullinan mine in South Africa during a highly competitive bidding process. The diamond fetched $25,555,555 or $862,780 per carat. The diamond was bought for Cora International NY through the South African company Golden Yellow Diamonds.

In financial news, Petra Diamonds posted a net profit of $28.4 million during the fiscal half year that ended on December 31, which was up from a loss of $15.2 million one year earlier. Profit was driven by a significant increase in the companys revenue and production during the period. Petra reported that revenue grew 19% year on year to $185.5 million during the six months, while the volume of sales rose 33% to 1,140,479 million carats.

Petra’s production increased 31% to 1,635,716 million carats and it intends to produce 3 million carats for the whole of fiscal 2014. Petras diamond inventory was worth $49.4 million on December 31, compared with $45.4 million one year ago.

Lucaras Profit Tops $65M

Lucara Diamond Corp. reported fiscal year revenue of $180.5 million in 2013, up from only $41.8 million in 2012. Rough sales achieved an average price of $411 per carat, while operating expenses totaled only $100 per carat. With such a tremendous improvement in margins, naturally, the mining company reported a profit, which came in at $65.2 million compared with a loss of $7.5 million one year earlier. Lucara had a year-end cash balance of $49.4 million and management expects to use the existing resources to finance Karowes plant upgrade capital expenditure during 2014. Lucara remains debt free and has a $25 million Scotiabank credit facility available.

Trans Hex Tender Achieves $10M

Trans Hex reported that its February tender of rough production from its South African operations achieved $9.9 million, or an average price of $1,379 per carat from the sale of 7,124 carats. Five diamonds achieved over $10,000 per carat and included a pink diamond recovered at the Baken mine, which sold for $65,000 per carat. At the end of January, production at Trans Hexs South African operations amounted to 41,774 carats and included 21,849 carats recovered during the first six months of the financial year.

Diamcor Recovers Large Stone

Diamcor Mining Inc. recovered a gem-quality 43.90-carat diamond from its Krone-Endora at Venetia project in South Africa. The recovery of this high-quality rough diamond occurred during commissioning and testing exercises. The stone has been sent for evaluation and preparation for sale at an upcoming tender. For the first nine months of the companys fiscal year that ended on December 31, it sold 15,411.74 carats of rough diamonds for proceeds of $3.2 million, or $208.52 per carat. The total included a gem-quality, 91.72-carat octahedron diamond that sold for $8,917.58 per carat.

KD Acquires Smoke Creek

Kimberley Diamonds (KD) Limited acquired the Argyle Smoke Creek alluvial diamond project, which includes 22 prospecting licenses and is located in the Kimberley region of Western Australia. The company purchased the project from Venus Metals Corporation Limited for $250,000 in cash and it will issue 625,000 ordinary shares at $1.20 per share to Venus Metals for a 100% interest. The Smoke Creek diamond project also has one mining lease application covering 11 kilometers of unmined diamondiferous gravels located within the downstream portion of Smoke Creek, a tributary leading from Rio Tinto’s Argyle diamond mine.

Merlin Raises $2M

Merlin Diamonds raised $1.76 million (AUD 1.95 million) through the placement of 26 million ordinary shares at a price of 7.5 cents each with Singapore based Blumont group. Proceeds from the placement will be used to further develop the companys Merlin diamond mine in Australias Northern Territory. On completion of the settlement, which is scheduled to be finalized by the end of March 2014, Blumont will hold a 10.9% stake in Merlin.

ALROSA Recommends Andreyev

ALROSAs supervisory board recommended renewing Fyodor Andreyevs contract as company president for a second five-year term. The board acknowledged Andreyevs leadership since he first took over the role. Board chair, Ilya Yuzhanov, will notify federal state property fund Rosimuschestvo to reappoint Andreyev as ALROSAs president through July 14, 2019.

Firestone to Delist From Botswana

Firestone Diamonds will cease trading on the Botswana Stock Exchange on February 28, a move that was cited to be in line with the companys strategy to focus on developing its Liqhobong diamond mine in Lesotho. Firestones shares trade on the London Stock Exchanges Alternative Investment Market (AIM). Firestone owns the BK11 mine in Botswana but the mine ceased production one year ago and was placed on care and maintenance so that the company could focus on its Lesotho asset. The board is considering various strategic alternatives for its Botswana operation, including disposal or a joint venture, but it recognizes that extracting fair value from the asset in the current investor climate could be challenging.

STATS 	  

India 

$Mil. Jan. YOY %Chng.
Polished exports $1,650 -2%
Polished imports $512 -15%
Net exports $1,138 4%

Rough import $1,257 27%
Rough exports $124 -28%
Net imports $1,133 39%

Net diamond account $5 -98%

Synthetic exports $9 148%
Synthetic imports $18 42%

ECONWATCH

Diamond Industry Stock Report

U.S. shares mainly lower led by Charles & Colvard (-8%); however, hedge funds and private investors snapped up shares of of Signet (+19%) and Zale (+43%) following the merger announcement. Hong Kong and Europe mixed with Chow Sang Sang (-5%) leading declines and Damiani (+5%) out ahead. Indian shares lower except for C. Mahendra (+14%), Titan (+2%) and Classic (+1%). Mining shares mainly higher led by Shore and Petra (+11%). View the extended stock report.
Feb. 20 Feb. 13 Chng.
$1 = Euro 0.728 0.730 -0.002
$1 = Rupee 62.11 62.43 -0.3
$1 = Israel Shekel 3.51 3.51 0.00
$1 = Rand 11.01 10.97 0.04
$1 = Canadian Dollar 1.11 1.09 0.02

Precious Metals
Gold $1,322.90 $1,301.90 $21.00
Platinum $1,410.00 $1,412.00 -$2.00

Stock Indexes Chng.
BSE 20,536.64 20,193.35 343.29 1.7%
Dow Jones 16,133.23 16,027.59 105.64 0.7%
FTSE 6,812.99 6,659.42 153.57 2.3%
Hang Seng 22,394.08 22,165.53 228.55 1.0%
S&P 500 1,839.78 1,829.82 9.96 0.5%
Yahoo! Jewelry 1,014.78 960.73 54.05 5.6%

Rapaport Weekly Market Comment Feb. 28, 2014

Polished markets optimistic with high expectations for important Hong Kong show. Suppliers hope polished prices will catch up to rough prices, enabling a return of profits to the diamond manufacturing sector as De Beers acts responsibly by keeping rough prices stable. De Beers Feb. sight estimated at $650M. Liquidity improves as inventory levels decline but GIA backlog causing shortages. Zale’s 2Q revenue -2% to $656M, profit +23% to $51M. Sarine 4Q revenue +18% to $17M, profit +25% to $5M. Belgium’s Jan. polished exports +10% to $976M, rough imports +21% to $1.4B. Israel to lower polished import duty from 0.135% to 0.1%. Rapaport to offer 60,000cts. of polished at HK show.

RapNet Data: Feb. 27

Diamonds 1,036,519
Value $6,933,096,631
Carats 1,143,221
Average Discount -26.69%

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Feb-Mar
25-7
Tue-Fri
Rapaport Melee Auction

New York & Hong Kong

View details.

March
3-7
Mon-Fri

Rapaport at HK Intl. Diamond, Gem & Pearl Show 

Exhibiting at the Hong Kong March show? Upload your show diamonds here for display on RapNets show listing page.

Visit Rapaport in Hall 2, Booth F09

March
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
Zimbabwe is a clear case of a tragic failure in leadership. Theres massive potential for revenue from the diamond fields to do a lot of good. But a lack of transparency has compounded the massive corruption scandal that has already rocked the mining industry and speaks a lot of the wider corruption problem...Embracing the World Banks principles on best practices for the extractive sector will allow the mining companies and the government to do a number of things, like disclose revenue and also allow Zimbabweans to know how much the government is generating from the sector.

Jeffrey Smith | RFK Center for Justice & Human Rights

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 	  

Swiss Watch Exports +6%

Swiss Watch exports rose 5.6% year on year to $1.76 billion (CHF 1.56 billion) in January, according to the Federation of the Swiss ‎Watch Industry.‎ The rise in exports was due to an increase in exports of steel watches and watches from other metals coupled with strong demand from the United Arab Emirates, U.S. and Japan. Wristwatch exports rose 4.6% to $1.656 billion, while the number of units shipped increased by 2.5% to 2.181 million. The value of other products grew by 13% to $47.7 m
Israel to Lower Import Duty

Israel will lower the import duty on polished diamonds from 0.135% to 0.1% following approval from The Knessets Finance Committee. The decrease in duty was negotiated with members of the local diamond industry, the Israel Diamond Institute (IDI) and diamond controller Shmuel Mordechai.

RETAIL & WHOLESALE 	  

Zales Turnaround Takes Shape

Zale Corporations revenue slid 2.1% year on year to $656.4 million for the second fiscal quarter that included Christmas and ended on January 31. Same-store sales were basically flat in terms of dollar denomination, but improved 1.9% at constant-exchange-rates. Zale reduced its cost of sales 6.7% to $308.8 million and gross margin improved to 53% from 50.6% one year ago. Profit jumped 23.3% to $50.8 million.

On February 19, Signet Jewelers Limited and Zale entered into a definitive agreement for Signet to acquire all of the issued and outstanding stock of Zale for $21 per share in cash consideration. The transaction is subject to Zale stockholder and regulatory approvals and it is anticipated the deal will close by the end of the year. Sterne Agee analyst Ike Boruchow believes that Zales turnaround is clearly underway and continues to see an opportunity for margins to move much higher over the next few years.

Zales gross margin expanded 240 basis points in the second quarter driven by improved sourcing, more moderate promotional activity and commodity cost benefits. Unlike most jewelers, Zale noted a very strong Valentines Day weekend, and constant-currency comps are expected to be 3.5% or better in February. Zales operating performance is still significantly below Signets but Boruchow believes the larger jeweler can accelerate the pace of Zales turnaround due to its expertise in marketing, sourcing, branded merchandise and consumer credit. As a result, Sterne Agee estimates mid- to high-single-digit comps for Zale this year with operating margins eventually reaching 10% or higher.

Sterne Agee anticipates that Signets earnings per share will approach $6.35, independent of the merger, and expects Zale to contribute about $3 per share by 2017. After accounting for $1.60 to $1.70 in synergies from the merger, Sterne Agee projects pro-forma earnings per share of $10 to $11 for the combined company in 2017. Boruchows price target on Signet is $120
Sears Ahead of the Troubled Retail Curve

Sears Holdings reported that sales declined 13.6% year on year to $10.6 billion for the fourth quarter that ended on February 1 and included the Christmas period. Gross margin dropped to 23.4% from 25.8%. The retail giant reported a loss, attributable to shareholders, of $358 million or $3.37 per share, which was an improvement from the loss of $489 million or $4.61 per share one year ago. Fiscal year revenue slid 9.2% to $36.2 billion, gross margin fell to 25.9% from 26.7% and the retailers net loss attributable to shareholders rose to $1.37 billion or $12.87 per share from $8.78 per share in 2013.

In a note to shareholders, Sears chairman and CEO, Edward S. Lampert, stated that the financial year marked a transformation from a traditional, store-based retailer to a membership company that serves shoppers across an integrated platform. Lampert said that Sears Holdings should begin to demonstrate financial advantages of this transformation in 2014 and that he believes the entire U.S. retail industry is catching up to where Sears is at now. As for his critics, who called for Sears to invest millions of dollars on, essentially, store facelifts, Lampert reiterated the companys mission is succeeding to transform itself into an integrated platform that builds long-term relationships with its members.

To that end, Sears Shop Your Way program is helping its members live better and sales accounted for 72% of full-line Sears stores in the fourth quarter, up from 58% one year ago. Sears may spin off Lands End and it is evaluating alternatives for Sears Auto Centers, among other efforts, which Lampert said would raise in excess of $1 billion this year to further fund its ongoing transformation. Sears generated $2 billion of liquidity in 2013 from real estate sales and by reducing inventory and fixed expenses

Macys FY Profit +11%

Macys Inc. revenue fell 1.6% year on year to $9.2 billion in the fourth quarter that ended on February 1 and included the Christmas season. However, Macys maintained a gross margin of 40.6% and lowered its administrative expenses slightly, helping to improve profit to $811 million from $730 million one year earlier. For the fiscal year, Macys reported that revenue barely improved, rising 0.9% year on year to $27.9 billion; however, profit jumped 11% to $1.5 billion. Comparable-store sales for the fourth quarter increase 1.4%, while they rose 1.9% for the fiscal year. The company maintained that its long term investment in creating the best-in-class omnichannel strategy has proven successful in serving and attracting customers.

JCPenneys FY Loss Jumps to $1.4B

J.C. Penney Company Inc. reported that revenue fell 2.6% year on year to $3.78 billion for the fourth quarter that included the Christmas season and ended on February 1. However, JCPenneys cost of goods sold fell 8.5% to $2.7 billion and total operating expenses were reduced 27.4% to $1.2 billion. The retailer reported a profit of $35 million compared with a loss of $552 million one year earlier. For the companys fiscal year, revenue fell 8.7% to $11.9 billion, cost of goods sold dropped 6.2% to $8.4 billion and operating expenses declined 8.6% to $4.9 billion. JCPenneys loss for the year climbed to $1.4 billion from a loss of $985 million in 2013.

Investors were pleased with results as shares rose following results; however, JCPenneys shares are down 73% from one year ago. Myron Ullman, III, the CEO of JCPenney, said, the most challenging and expensive portion of its turnaround program is now behind and the focus will be on improving gross margin, managing expense and steadily growing sales in 2014.
Loeb Sets Up Battle With Sothebys

Activist investor Daniel S. Loeb, the chairman of Third Point LLC, is seeking three seats on Sothebys board of directors, a move that Sothebys stated was disappointing following extensive, behind the scenes negotiations. Third Point is Sothebys largest shareholder with a 9.53% stake. Third Point added that it was convinced the current board of Sothebys will benefit greatly from new perspectives and different expertise to move the company forward.

With that, Third Point nominated its founder, Loeb, Harry J. Wilson, who is the CEO of corporate turnaround firm MAEVA Group LLC and Olivier Reza, a the lead designer and head of the House of Alexandre Reza. Sothebys faces a challenged operational structure, cultural malaise and lack of experience in corporate restructuring, Third Point contended and it will file a proxy statement with the Securities and Exchange Commission (SEC) to solicit stockholders.

Sothebys reported that its fiscal year revenue rose 11.1% year on year to $853.7 million for the period that ended on December 31. Profit surged 20% to $130 million or $1.90 per sha

Tiffany & Co. Selects O&M

Tiffany & Co. selected global advertising firm Ogilvy & Mather Worldwide as its marketing communications partner to complement internal marketing capabilities. The selection process involved screening a number of professional firms during a four-month period. Ogilvy & Mather plans to provide brand positioning and advertising support for Tiffany & Co. globally with creative and strategic hubs in New York and Paris. The scope of the assignment will cover print, digital, video and out-of-home.

U.S., India Issue Trademarks

The U.S. Patent & Trademark Office (USPTO) approved the trademark term Shes Got Dreams, Be Ready! on February 18 to Ashi Diamonds LLC of New York with the registration number 4486116. Ashi Diamond applied for trademark on October 24, 2012, first used the term in May 2013 and it applies to alloys of precious metals and jewelry.

The USPTO also approved the trademark Basch Jewelers on February 18 with the registration number 4486553 for Don Basch Jewelers Inc. of Macedonia, Ohio. The term refers to jewelry goods and services and it was originally filed for trademark protection on February 26, 2013.

Indias Office of The Trade Marks Registry approved the trademark GIA Knowledge, Integrity, Excellence on February 17 for the Gemological Institute of America (GIA) of Carlsbad, California, with the registration number 2426423. GIA filed for the trademark on November 9, 2012 under the Class 41 Trademark classificat
F.D. Worldwide Achieves Certification

F.D. Worldwide Merchandise Group Inc. of New York achieved Responsible Jewellery Council (RJC) certification by meeting the highest ethical, social and environmental standards established by the organization. F.D. Worldwide Merchandise Group is also the first RJC member to use their audit to verify Provenance Claims, in this case to provide assurance to their customers on the source of their gold.

The RJC’s updated code of practices includes a new provision that enables members to have Provenance Claims audited as part of their RJC certification. A Provenance Claims Bolt-on module has been developed for members who wish to implement the Provenance Claims provision in conjunction with certification. F.D. Worldwide Merchandise Group’s audited claim states that they will only accept gold traceable to refiners on the current London Bullion Market Association good delivery list and is in compliance with the Signet Responsible Sourcing Protocol for gol
U.S. Consumer Confidence Improves

U.S. consumer confidence in February rose to 78.1 points (1985=100) compared with 69.6 points one year ago, according to The Conference Board Consumer Confidence Index®. The Present Situation Index jumped to 81.7 points from 63.3 points and The Expectations Index improved slightly to 75.7 points from 73.8 points. While the indexes posted healthy gains year-on-year, The Conference Board observed that Februarys readings were softer compared with January as the short-term outlook for business, jobs and earnings deteriora
Nordstrom, Kohls Top Satisfaction Rates

U.S. consumer satisfaction with customer service from the retail sector overall in 2013 improved 1.7% year on year to 77.9 points, according to the American Customer Satisfaction Index (ACSI). However, the department store segment remained unchanged at 77 points and the Internet retailer score fell 4.9% to 78 points. With more shoppers choosing to purchase online, customer service may have hit a rough patch for web retailers during the Christmas season, the group concluded.

While the ACSI benchmark for department stores was unchanged, Nordstrom, which recorded the best customer satisfaction score of all, fell 1% to 83 points, while Kohls was unchanged at 81 points. Dillards score increased 3% to 81 points, but JCPenneys score fell 2% to 79 points. Targets score dropped 5% to 77 points, in part due to the highly publicized security breach; Sears score increased 3% to 77 points, but Macys declined 3% to 76 points and Walmart was unchanged at 71 points, the lowest satisfaction rating in the category.

Specialty retailers, which included wholesale clubs and office supply stores, experienced a 2.6% overall improvement in the satisfaction rating to a score of 80 points. The two retailers on the list that sell diamond jewelry included Costco, which rated highest overall at 84 points -- up 1% year on year -- and Sams Club, which was unchanged at 80 points. Specialty retailers earned strong ratings for staff courtesy and for store layout, cleanliness and the ability to provide name-brand merchandise, compared with department stores, according to ACSI. Customer satisfaction with Internet retailers fell to its lowest rating since 2001 and suffered in part due to unsatisfactory service on smaller retailer websites, according to the survey. Pure-play Internet retailer Amazon.com scored best, up 4% to 88, but eBay fell 4% to 80 points and all others plunged 9% to 75 points

Rio Tinto Appoints Dallow

Rio Tinto Diamonds appointed Brandee J. Dallow to manage its U.S. representative office in New York. Dallow will take up her new post on March 1. Dallows career spans marketing and brand management from over 15 years in the diamond industry. She previously held the position of vice president of global communications at the Julius Klein Gr

MINING 	  

ALROSA, Endiama Sign Agreement

ALROSA and Angolas national diamond company, Endiama, established an exploration joint venture in Angola on February 26. The companies initially agreed to cooperate on joint projects in June. The agreement sets out a timeline to acquire the Cassango area for exploration work, which requires an investment of about $16 million. Production will be equally divided.
Gemfields Tender Tops $36M

Gemfields sold 840,000 carats of high-quality emeralds and beryl from its Kagem mine in Zambia for $36.5 million, or an average of $59.31 per carat. The auction set a company record for the highest aggregate revenue and the highest average per carat price achieved to date. The auction, which was held in Lusaka, was 88% sold by lot and 86% sold by value, with 34 companies participating. Gemfields reported that market conditions for higher quality stones remain robust, yielding solid increases in per carat prices.
Lucara Approves Dividend Policy

Lucara Diamond Corporation plans to hold its first exceptional rough diamond tender, including 20 individual diamonds for a combined weight of 1,191.71 carats, on April 10. Diamond viewing will take place in Gaborone from March 25 to 28 and in Antwerp from April 2 to 10. The largest stone is a 167.08-carat diamond (lot 401) and the smallest is 16.32-carats (lot 415), according to the sale brochure.

Additionally, Lucaras board approved a dividend policy providing for the payment of semi-annual dividends. The policy also covers a special dividend based on revenue generated from these exceptional stone tenders, subject to the companys overall financial position. Lucara intends to declare its first semi-annual dividend of 2 cents per share in May for payment in June. This proposed dividend payment and the payment of any cash dividend under the policy is subject to the boards determination.

CH-6 Valuation Returns $213 Per Ct.

Peregrine Diamonds Ltd. released diamond valuation results for a 1,013.5 carat parcel of commercial-size diamonds that were recovered from its CH-6 kimberlite pipe at the Chidliak diamond project on Baffin Island in Canada. The average price was $213 per carat with the modeled price range from a minimum of $162 per carat to a high of $236 per carat with a base case modeled price of $188 per carat.

Within the parcel there were four larger stones; an 8.87-carat diamond was valued at $4,076 per carat, a 5.83-carat diamond was valued at $3,455 per carat, a 4.62-carat diamond was valued at $2,900 per carat and a 4.11-carat diamond had a market value of $2,633 per carat, according to WWW International Diamond Consultants.

Lucapa to Tender Parcel From Lulo

The Lucapa Diamond Company plans to sell a second parcel of rough diamonds that were recovered from its Lulo diamond concession in Angola. This sale will offer 371.35 carats of diamonds, which were valued by Jaguar Consultants Ltd. at $3.2 million. The parcel also includes a 95.45-carat and a 32.20-carat, type IIa diamond that were recovered from Lulo in January as well as a 4.40-carat rough pink diamond that the company valued at $10,250 per carat. Once the date is determined for the sale, the tender will be conducted by Angolas diamond sales division, SODIAM
Stellar Raises $525K

Stellar Diamonds raised $525,016 (GBP 314,914) after two shareholders, Foradex Invest SRL and Hottinger, exercised 28,628,545 warrants at a price of 1.1 pence each. The funds will be used to further progress being made at the companys Tongo dyke-1 diamond exploration project in Sierra Leone, which is currently undergoing a definitive feasibility stu
Brazil Minerals Sells Polished Parcel

Brazil Minerals Inc. sold the first round of cut and polished diamonds from its Duas Barras processing plant in Brazil to an unnamed jewelry chain, according to a regulatory filing. The mining firm added that the retail chain purchased the diamonds without requiring Gemological Institute of America (GIA) certificates. The amount of the sale was not provided. Brazil Minerals mines diamonds and recently took up cutting and polishing some of its inventory for sale. The mining firm also produces gold, titanium, vanadium and iron ore.

KDL to Reopen Ellendale E4

Kimberley Diamonds Limited plans to recommence diamond mining at its Ellendale E4 mine this year and anticipates producing 200,000 carats of diamonds from the parcel in 2015. The company currently produces 120,000 carats from E9. Ellendales E4 operation was placed on care and maintenance in February 2009 by Gem Diamonds Limited, which operated the mine until Kimberley Diamonds acquired the property.

JORC-compliant E4 indicated resource was measured at 6.1 million tonnes of ore and 6.66 carats per hundred tonnes (cpht), while inferred resources registered 50 million tonnes of ore at 3.92 cpht for a total of 2.37 million carats.

Kimberley Diamonds completed the acquisition of Mantle Diamonds Limited, which included the Lerala diamond mine in Botswana. Leralas operations will target a production rate of approximately 400,000 carats per year once the asset is brought out of care and maintenance. The Lerala project provides the junior explorer with a foothold in Botswana. Kimberley Diamonds estimated that Lerala contains probable reserves of 8.38 million tonnes of ore with an average grade of 29.68 cpht.

Paragon Lease Approved

Meso Diamonds, a subsidiary of Paragon Diamonds Limited, finalized the terms and conditions of its 10-year mining lease agreement with the government of Lesotho for the Lemphane kimberlite pipe concession. The agreement allows the company to initiate preparations for, and commence, stage 1 production at Lemphane, targeting 500,000 tonnes of ore per year with estimated recovery of 10,000 carats per year at a minimum average value of $750 per carat. The company now expects to conclude advanced stage negotiations on financing stage 1.

Sierra Leone Values Stone at $6M

Sierra Leone announced the recovery of a 153.44-carat rough diamond this past week and valued it at $6.2 million. The diamond originated in the eastern district of Kono and is significantly larger than a 125-carat diamond that was produced in the area in 2013. It was graded as D+ and cleavage in shape.

STATS 	  

Belgium

Jan. $Mil. %Chng.
Polished exports $976 10%
Polished imports $1,291 14%
Net exports ($315)

Rough imports $1,349 21%
Rough exports $1,245 18%
Net imports $104 82%

Net diamond account ($419) 39%

ECONWATCH 	  

Diamond Industry Stock Report

Investors drove U.S. retail shares higher, except for Birks (-4%), as quarterly results showed expense and inventory restraint during a difficult 4Q. European and Indian shares mixed although Damiani (+10%) and Suashish (+11%) pulled far ahead. Mining shares mainly lower except for Lucara (+6%), ALROSA (+3%) and Gemfields (+2%). View the extended stock report.
Feb. 27 Feb. 20 Chng.
$1 = Euro 0.729 0.728 0.001
$1 = Rupee 62.03 62.11 -0.1
$1 = Israel Shekel 3.50 3.51 -0.01
$1 = Rand 10.69 11.01 -0.32
$1 = Canadian Dollar 1.11 1.11 0.00

Precious Metals
Gold $1,331.70 $1,322.90 $8.80
Platinum $1,447.00 $1,410.00 $37.00

Stock Indexes Chng.
BSE 20,986.99 20,536.64 450.35 2.2%
Dow Jones 16,272.65 16,133.23 139.42 0.9%
FTSE 6,810.27 6,812.99 -2.72 0.0%
Hang Seng 22,828.18 22,394.08 434.10 1.9%
S&P 500 1,854.29 1,839.78 14.51 0.8%
Yahoo! Jewelry 1,022.18 1,014.78 7.40 0.7%

Rapaport Weekly Market Comment Mar. 7, 2014

Hong Kong show meets expectations with steady Chinese and Far East demand for VS-SI diamonds and larger stones. Suppliers complain they cannot replace polished at current rough prices, with many buying polished instead of rough. Polished prices firm with Feb. RapNet Diamond Index (RAPI) for 1ct. +0.3%. Liquidity improves but bank credit tightening and cutters concerned steady HK show will signal further unsustainable rough price hikes. Gem Diamonds sells 162.06ct. diamond for $11M ($69K/ct.). Marange Antwerp auction sells 959,931cts. for $70M ($73/ct.). Sotheby’s 4Q revenue +17% to $339M, profit +37% to $91M; buyer defaults on $83M oval, 59.60ct., IF, fancy vivid pink diamond.

RapNet Data: Mar. 6

Diamonds 1,051,754
Value $6,962,795,257
Carats 1,140,511
Average Discount -26.34%

www.rapnet.com

Get Current Price List | Subscribe to Rapaport | Join RapNet

RAPAPORT ANNOUNCEMENTS
March
5-12
Wed-Wed
Rapaport Single Stone Auction

New York & Israel

www.rapaportauctions.com
March
10-13
Mon-Thu

Rapaport Melee Auction

New York

View details.

March
27-31
Thu-Mon

The Diamond Show

Markthalle Building, Basel, Switzerland

QUOTE OF THE WEEK
The Hong Kong show last September had half the number of buyers. This time, there were lots of buyers, new people and new connections.

Leah Kraitenberg | Olympic Diamond

Careers@Rapaport 	  
 

The Rapaport Group is growing rapidly. If you wish to work with the best and brightest, join us. We have great opportunities for trading managers, gemologists, sales assistants and entry-level positions for our offices in New York, Antwerp, Mumbai, Dubai and Shanghai. View jobs now.

INDUSTRY 	  

Polished Prices Move Higher

Diamond market sentiment improved in February as polished diamond prices rose, while rough diamond prices remained stable. Polished trading was driven by U.S. and Chinese demand as jewelers began to replenish inventory sold during the Christmas and Chinese New Year shopping seasons.

In February, the RapNet Diamond Index (RAPI™) for 1-carat certified polished diamonds increased 0.3%, while RAPI for 0.30-carat jumped 2.9%, RAPI for 0.50-carat rose 2.2% and RAPI for 3-carat improved 0.6%. There is strong demand for 0.30-carat to 0.50-carat, GIA dossiers with large inventory building up at the Gemological Institute of America (GIA) due to delays.

HK Trade Show Improves

Trading during the Hong Kong International Diamond, Gem & Pearl Show at AsiaWorld-Expo met expectations and many noted that buyers came prepared to buy specific goods. Dealers indicated that the shortage of goods helped to boost demand as well. Popular goods included 0.10-carat to 0.50-carat and 1-carat to 3-carat rounds, fancy yellow diamonds in cushion- and emerald-cut, certified rubies, untreated sapphires and fine-quality colored gemstones.

De Beers Sight at $650M

De Beers kept its prices basically stable as the February sight closed with an estimated value of $650 million. Sightholders expressed relief and observed a more positive mood across the pipeline. Rough trading on the secondary market was strong before the sight, which prompted expectations for a price increase.

De Beers contended that it is taking a cautious approach to raising prices as rough premiums had run ahead of the polished market. De Beers boxes were trading at low single-digit premiums on average with the strongest boxes yielded premiums of up to 10%. There is good demand for rough that yields polished below 1-carat and SI and lower clarity diamonds.

RETAIL & WHOLESALE
HK Jewelry Sales +15%

Hong Kongs retail sales rose 14.5% year on year to $7 billion (HKD 54.599 billion) in January, according to the Census & Statistics Department. The volume of sales also rose 14.5%. The government noted that retail sales tend to exhibit volatile movement in January and February due to the timing of the Lunar New Year festival. The value of jewelry, watches, clocks and other luxury goods surged 10.8% year on year to $1.5 billion in January. The volume of sales rose 18.5%. The value of jewelry, watches and other luxury items that sold just in department stores jumped 38.3% to $41 million.

U.S. Jewelry Sales +1%

U.S. jewelry and watch sales were off to a weak start this year as preliminary sales for the sector increased only 1.2% year on year to about $4.7 billion. Jewelry sales increased 1.2% to $4.163 billion, while watch sales improved 1.3% to $557 million. One year ago, jewelry sales jumped 9%.

Furthermore, government figures were revised lower for jewelry and watch sales in both December and November 2013. The rate of sales growth for jewelry and watches in December was cut to 2.5% from a preliminary increase of 6% and sector revenue of $15.696 billion. The rate of growth for November was revised to 6.9% from 9.8% with sales of $7.255 billion. The impact on jewelry and watch sales growth for 2013 was slightly weaker, although still strong, as U.S. jewelry sales increased 6.7% year on year to $70.651 billion, while watch sales improved 7.6% to $9.464 billion.

U.S. Chain-Store Sales +3%

U.S. chain-store sales rose 2.7% year on year for the month of February, according to the International Council of Shopping Centers (ICSC). The group initially anticipated that same-store sales would grow by between 3% and 3.5%, but ICSC narrowed their projections to 3% on Tuesday. ICSC research forecasts that comparable-store sales will increase by about 3% in March.

EFG-Hermes Sells Damas Stake

EFG-Hermes sold its 19% stake in Damas to Qatari Mannai Corporation for $150 million, nearly doubling its initial investment. Qatari Mannai now holds 100% stake in Damas, which operates more than 300 outlets in The United Arab Emirates, Bahrain, Qatar, Kuwait, Oman and Saudi Arabia. Since going private, Damas has doubled its annual profit and increased operating earnings nearly 10 times, according to its parting investor.

Berkshires Retail Sales +15%

Berkshire Hathaway reported that revenue from its retail division grew 15% year on year to $4.29 billion in 2013. Pre-tax earnings for the division, which includes Ben Bridge Jeweler, Borsheims Fine Jewelry, Helzberg Diamonds, Richline Group and non-jewelry brands, climbed 23%, which amounted to an increase of $70 million. The company did not disclose the actual total.

Berkshire explained that revenue and operating profit at its jewelry business rose during the year, however, real growth at its retail division was driven by its acquisition of party and school supplies retailer Oriental Trading Company at the end of 2012. The retail division is also comprised of four home furnishing companies and See’s Candies.

Forevermark Expands Reach

Forevermark stated that sales growth was driven predominantly by continued consumer demand in core markets such as China, U.S., India and Japan. The brand has a presence in over 1,300 retail outlets across 12 major markets, representing tremendous expansion since launching in 2008. Forevermark’s licensee program also saw launches in Australia, Brunei and Kuwait, and producer country Namibia in 2013. Since 2009, grading and inscription numbers have increased by 666% and 426% respectively. More than 870,000 diamonds have now been inscribed with a Forevermark unique inscription number and icon.

Razny Opens Breitling Shop-in-Shop

Chicago-area Razny Jewelers expanded its offerings of Swiss watch manufacturer Breitlings collection with a shop-in-a-shop concept. The jeweler will showcase a complete assortment of more than 125 Breitling timepieces, including exclusive products such as the Breitling for Bentley series. The Breitling shop evoked positive feedback from customers, according to the store.

Chow Tai Fook to Offer Aaron Shum Jewels

Chow Tai Fook Jewellery Group entered into an exclusive distribution agreement with Aaron Shum Jewelry, a Hong Kong-based jewelry designer. Under the agreement, Chow Tai Fook will launch a new diamond collection in Mainland China, Hong Kong, Taiwan and Macau using Aaron Shum’s patented Coronet design. Chow Tai Fook expects the Coronet Solitaire to spur growth for its product portfolio. The Coronet Solitaire design is comprised of seven diamonds set without prongs holding the center diamond.

Titan, Montblanc Enter Partnership

The Titan Company Ltd. entered into a joint-venture agreement with Montblanc Services B.V., Netherlands, on February 26 for the purpose of establishing Montblanc as a single brand retailer in India. According to the attorneys who completed the deal, Montblanc could operate in India on its own, however, the agreement with Titan helps it to avoid a mandatory 30 percent sourcing requirement. The Economic Laws Practice (ELP) advised Titan and AZB & Partners assisted Montblanc in the deal.

U.S., India Approve Trademarks

The U.S. Patent & Trademark Office (USPTO) approved the trademark Americas Leading Online Jewelry Store for Gold & Diamond Source Inc. of Clearwater, Florida, with the registration number 4489716 on February 25. In addition, the USPTO issued the patent number 8,659,389 on February 25 to The Jewellery Store of Dubai for a secure inventory control system that tracks high-value goods.

Indias Office of The Trade Marks Registry reapproved the trademark Le Vian for diamond brand Le Vian Corporation of New York on February 27, with the serial number 2324512 under Class 14 trademark classification.

GENERAL 	  

IDE Pilots New Security System

The Israel Diamond Exchange (IDE) is pilot testing an advanced security system to identify exchange members by their facial features, body language and behavior. The system has been installed at the Diamond Tower buildings entrance to the rough diamond trading hall. The pilot project will be followed by an expanded trial during the U.S./International Diamond Week this April. For the expanded trial the system will be installed at all three entrances to the trading hall and will identify visitors and foreign buyers in addition to exchange members.

DDE Appoints Mhlanga

The Dubai Diamond Exchange (DDE) appointed Robert Mhlanga, the chairman of Mbada Diamonds, to its board. This new appointment follows two additional appointees in 2013 when the DDE added Francis Pedzana Gudyanga, Zimbabwes permanent secretary of Mines and Mining Development, and Levy Rapoo, the CEO of the South African Diamond and Precious Metals Regulator (SADPMR) to its board.

Peter Meeus, the chairman of DDEs board, said, “The prominence of high profile industry executives on the DDE’s board of directors reflects our truly global status in the diamond trade.”

Forbes Names Worlds Richest

A number of diamond and jewelry industry players made Forbes annual list of billionaires again in 2014. Overall the list grew to 1,645 names from 1,426 one year ago and its aggregate net worth surged to $6.4 trillion, up from only $5.4 trillion in 2013. The richest person in the world was Bill Gates with a net worth of $76 billion. The richest retail family was Walmarts Waltons, occupying numbers 9, 10, 13, 14, 305 and 367 on the list and representing a combined net worth of $150 billion.

Rank Change Name Company Net $Bil.
No. 4 0 Warren Buffett Berkshire $58.2
No. 15 -5 Bernard Arnault LVMH $33.5
No. 18 1 Jeff Bezos Amazon $32.0
No. 58 -5 Francois Pinault Kering $15.5
No. 173 2 Johann Rupert Richemont $7.6
No. 205 -30 Nicky Oppenheimer Private $6.7
No. 234 -59 Patrizio Bertelli Prada $6.0
No. 305 -6 Laurence Graff Graff $4.8
No. 367 -51 Beny Steinmetz Steinmetz $4.1
No. 551 -184 Edward Lampert Sears $3.0
No. 1,270 0 Mark Vadon Blue Nile $1.4
No. 1,284 -310 Lev Leviev Leviev $1.3
No. 1,372 -30 Nirav Modi Firestar $1.2
No. 1,565 -223 T.S. Kalyanaraman Kalyan $1.0

MINING 	  

Gem Sells Two Large Stones 

Gem Diamonds sold a 162.06-carat, type II diamond for $11.1 million, or $68,687 per carat, during its recent tender in February. The company also sold a 161.74-carat, type I diamond for $2.4 million, or $14,636 per carat. Both diamonds were recovered in January at the Letšeng mine in Lesotho. Gem Diamonds noted that the diamonds achieved top prices in line with their respective color, clarity and expected polished yield.

Gemfields Profit -70%

Gemfields plc reported that its revenue soared 137% year on year to $65.7 million during the six months that ended on December 31. The company attributed the rise to strong demand at its three emerald and beryl auctions that were held over the period, coupled with revenue from its jewelry business Fabergé, the direct sale of low-quality beryl and the sale of cut and polished gemstones.

However, profit fell 70% to $1.4 million. The company had $14.8 million cash in hand, while its inventory at the end of the period was valued at $69.3 million. During the period, emerald production at the companys Kagem mine in Zambia fell 28% to 10.4 million carats as a result of higher production costs.

Firestones Loss at $8M

Firestone Diamonds reported that revenue fell 49% year on year to $4.3 million (GBP 2.6 million) during the six months that ended on December 31. The company reported a loss of $8.2 million, in line with the loss of one year ago. Firestones costs dropped 19% to $12 million. The company sold 58,086 carats from its Liqhobong mine, 27% less compared with one year ago. The average price fell 32% to $69 per carat.

Greenland Approves Mining License

True North Gems Inc. was awarded an exclusive 30-year mining license for the Aappaluttoq ruby deposit in southwestern Greenland. The Aappaluttoq ruby deposit will be an open-pit development with an initial life expectancy of nine years. True North expects the mine to produce 80 new jobs in Greenland with roles from its mining operations on through to gemstone grading in the Nuuk Processing Facility. The project will also act as a stimulus for other investment in both secondary and supporting industries, the company surmised.

Marange Diamond Sale Achieves $70M

Zimbabwe generated $70 million from the sale of 959,931 carats of rough diamonds at an Antwerp auction. The first auction, in December, generated $10.5 million from the sale of 279,723 carats. Zimbabwes minister of mines contended that stronger prices were realized in part because the goods were cleaned and better organized.

Six mining companies contributed to the goods offered, including Marange Resources, Mbada Diamonds and the Zimbabwe Mining Development Corporation, which means companies in the U.S. may not deal with these stones due to OFAC sanctions.

ECONWATCH 	  

Diamond Industry Stock Report 

U.S. shares were little changed, except for JCP (+16%) and funds place bets the retailer will offer stronger returns. Europe and India mainly lower led by LVMH (-3%) and Suashish (-5%). Mining shares mixed as True North, Rockwell and Peregrine post double-digit increases against broader declines for their competitors. View the extended stock report.
Mar. 6 Feb. 27 Chng.
$1 = Euro 0.720 0.729 -0.009
$1 = Rupee 61.11 62.03 -0.9
$1 = Israel Shekel 3.45 3.50 -0.05
$1 = Rand 10.61 10.69 -0.08
$1 = Canadian Dollar 1.10 1.11 -0.01

Precious Metals
Gold $1,350.30 $1,331.70 $18.60
Platinum $1,477.00 $1,447.00 $30.00

Stock Indexes Chng.
BSE 21,513.87 20,986.99 526.88 2.5%
Dow Jones 16,421.89 16,272.65 149.24 0.9%
FTSE 6,788.49 6,810.27 -21.78 -0.3%
Hang Seng 22,702.97 22,828.18 -125.21 -0.5%
S&P 500 1,877.03 1,854.29 22.74 1.2%
Yahoo! Jewelry 1,027.13 1,022.18 4.95 0.5%

Rapaport Weekly Market Comment Mar. 14, 2014

Positive sentiment spreads to trading centers after Hong Kong show demonstrates strong Chinese demand for under the carat certs. Smaller size 0.25-0.50ct., H-L, VS-SI certs very strong as Far East shifts to lower colors, with non-certs selling due to GIA delays. Strong Israeli demand for large rough at International Rough Diamond Week. Antwerp chases Zimbabwean rough supply, strengthens ties with Russia. U.S. Jan. jewelry store sales +7% to $2.1B. U.S. Jan. polished imports +13% to $1.9B, polished exports -12% to $1.3B.

RapNet Data: Mar. 13

Diamonds 1,054,273
Value $6,955,451,593
Carats 1,149,179
Average Discount -26.39%

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RAPAPORT ANNOUNCEMENTS
March
27-31
Thu-Mon

The Diamond Show

Markthalle Building, Basel, Switzerland

Learn More:
www.thediamondshow.net
April
6-10
Sun-Thu

Rapaport  Polished Diamond Auction 

Takes Place During U.S. &
International Diamond Week in Israel

View Detailed Information
QUOTE OF THE WEEK
I have strong reservations about (selling diamonds in) Antwerp because they are Zimbabwes yesteryear enemies. We have actually reeled under sanctions, thanks to Brussels, and for us now because they have claimed to have lifted sanctions -- we run to them.

Robert Mhlanga | Mbada Diamonds

Careers@Rapaport 	  

The Rapaport Group is growing rapidly. If you wish to work with the best and brightest, join us. We have great opportunities for trading managers, gemologists, sales assistants and entry-level positions for our offices in New York, Antwerp, Mumbai, Dubai and Shanghai. View jobs

INDUSTRY 	  

U.S. Jewelry Store Sales +7%

U.S. jewelry store sales rose 6.9% year on year to $2.113 billion in January, according to government data. The increase was further strengthened by a 1.7% decline in the consumer price index (CPI) for jewelry. Jewelry store sales also performed stronger than the jewelry and watch sector as a whole, given that preliminary data revealed January sales increased only 1.2% to $4.72 billion, as Rapaport News reported on March 3.

Meanwhile, advanced sales estimates for U.S. department stores fell 5.2% year on year to $11.787 billion in February. However, U.S. retail and food services sales increased 1.5% to $427.2 billion, retail trade sales improved 1.3% and nonstore retailers experienced sales growth of 6.3%.

Israel Week Boosts Rough Trade

Rough dealers observed strong interest in their goods during Israels International Rough Diamond Week. Diamonds offered were primarily run-of-mine production; however, there were some notably large and exceptional single stones up for sale, as well as high-value fancy colored stones. Buyers appeared to be shopping for specific and immediate orders in their respective niche markets. ALROSA, De Beers and Rio Tinto each hosted sales during the week and their spokespeople agreed that Israel is an important target market for marketing rough goods right now.

Israeli French auction house Tzoffeys 1818 offered two very large rough stones, a 600-carat and a 1,000-carat, among its 300 lots available. The results of the large stone tender will be announced next week.

RETAIL & WHOLESALE 	  

Zale Shareholder Chances Legal Advice

Within 24 hours of the proposed $1.4 billion merger between Zale Corporation and long time rival Signet Jewelers on February 19, at least dozen law firms informed the world that they were standing by to take legal action on behalf of Zales shareholders, claiming that the Signet bid was -- just too low at $21 a share.

On March 7, Mary Smart, who stated that she is a Zale shareholder, filed two claims against the retailer for breaching its fiduciary duty and undervaluing the company at a meager 41% premium to the price of its shares on February 18. Additionally, the class action suit seeks to unravel how top executive personnel contracts unfairly excluded competing and, ideally, better offers.

Smart is represented by Rigrodsky & Long, a firm that called for an investigation into whether Zale’s board of directors failed to adequately shop for the best possible value, and Kahn Swick & Foti. The case is expected to be first reviewed in the Court of Chancery of the State of Delaware, where Zale is incorporated. Zales headquarters are in the Dallas suburb of Irving, Texas.

CIRCA Acquires Portero

Pre-owned jewelry trading firm CIRCA acquired pre-owned luxury goods retailer Portero for an undisclosed sum. CIRCA stated that adding Portero.com to its portfolio, as a strategic selling platform, very much complemented existing buying services and addressed ways to meet demand from its client base. The partnership pairs the knowledge of jewelry from CIRCA with Porteros buying and selling experience that guarantees authenticity and integrity.

CIRCA is based in New York and has 14 locations worldwide. Portero will relocate its offices to CIRCAs headquarters. Both brands will re-launch websites within the next couple of months with an enhanced, cross-functional shopping experience.

Investments of Passion Highlight Jewelry

Jewelry is the top investment of passion for the worlds wealthy this year, according to Knight Frank Researchs The Wealth Report 2014. Art ranks second followed by watches, wine, diamonds, classic cars, photography, furniture, musical instruments, coins, stamps and ceramics. However, there are regional nuances to the rankings.

Jewelry is the most collected investment of passion asset for the wealthy in Africa, Asia, Latin America, the Middle East and Russia, whereas jewelry ranks third in the Australasia region, behind art and classic cars and it ranks fourth in Europe behind wine, art and watches. In North America, jewelry as an investment of passion ranks third behind art and watches. Watches as an investment of passion fell into either second or third place for all regions except Australasia where it ranked sixth.

Diamonds as an investment of passion ranked fifth globally, placing third in Asia, taking fourth place for the wealthy investors in Africa, the Middle East and Russia, fifth place in Australasia and Latin America and sixth place for Europe and North America. Knight Frank Research found that 36% of wealthy investors globally expect to increase their spending on luxury goods this year, with the great increase anticipated from the wealthy in Africa. Fifty-seven percent of wealthy will spend the same as they had in 2013. Only 7% anticipate spending less on luxury with the greatest decline coming out of Latin America.

The Knight Frank Luxury Investment Index (KFLII), which measured performance of collectable luxury asset classes noted that jewelry improved 2% year on year in 2013. However, the investment performance for the past five years has increased 46% and for the past decade it has increased 156%, according to the index. Watches gained 4% in 2013, supporting a five year increase of 32% and a 10 year jump of 82%.

Kingold Jewelry Enters Kuwait

Kingold Jewelry Inc. signed a joint-venture agreement with Kuwait Support Services Company in Kuwait to form a group that would source and finance gold, and develop, market and distribute gold products, including coins, bullion, jewelry and other items. Kingold Jewelry anticipates the partnership will market products initially to customers in Kuwait and then expand offerings to customers in Bahrain, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

Kingold Jewelry is located in Wuhan City, China where it designs and manufactures 24-karat gold jewelry, ornaments and investment-oriented products.

Attract Young Affluents

The affluent consumer segment in the U.S. has remained fairly resilient in the past several years, but Unity Marketing warned luxury goods marketers of a bumpy road ahead, especially if they fail to play into the sensibilities of a generous spending pattern observed by wealthy, young shoppers. Furthermore, Unity Marketing found that luxury marketers must now confront a dilemma as the Luxury Market Trends for 2014 report revealed higher prices at top luxury brands are pressuring affluent consumers to trade down to less expensive brands.

Pam Danziger, the president of Unity Marketing, found that affluents overall demand for luxury goods, including jewelry and watches, rose at the end of 2013, but spending collapsed 31% from one year ago. This trend signaled that shoppers hit sales and discounters and bypassed prestigious brands.

Marketers need to build connections with the young affluents, ages 24 to 44, with incomes of $100,000 or more, and who are more willing than their seniors to trade up to luxury brands. Knowing that a prospective customer has enough money to pay is not enough. Focus on the customers that offer the best prospects for growth both now and into the future, and that is the younger generation of consumers on the road to affluence, according to Danziger.

"Demand for high-end luxury goods and services is greater across the board among young affluents than matures, 45 years and older. Whats more, young affluents consistently spend about 50% more than mature affluents on luxury. Understanding this young consumer and what they value is critical to find growth in 2014 and in coming years," Danziger said.

Antwerp, Moscow Strengthen Ties

Industry executives from Antwerp met with representatives of the Gokhran, ALROSA and others in Moscow where leaders signed a memorandum of understanding, outlining ways to exchange market data, knowledge and technology and agreeing to collaborate on strengthening the reputation of natural diamonds.

The deal was set into motion by the Antwerp World Diamond Centre (AWDC), which has been working on ways to form strategic partnerships between its membership and Russia. ALROSA recently signed a new cooperation agreement with the AWDC that formalized rough and polished trade initiatives for the upcoming three years.
U.S. Expands Ivory Ban

The Jewelers Vigilance Committee (JVC) informed the trade of new comprehensive rules banning ivory to further protect African elephants. The U.S. bans all commercial imports of African elephant ivory, including antiques; prohibits all commercial exports, except for bona fide antiques, certain noncommercial items, and in exceptional circumstances permitted under the Endangered Species Act and bans all sales of ivory across state lines and within a state, unless the seller can demonstrate an item was lawfully imported prior to 1990 for African elephants and 1975 for Asian elephants.

The U.S. defines an antique as item that must be more than 100 years old and meet other requirements under the Endangered Species Act. The burden of proof is on the importer, exporter or seller to demonstrate that an item meets these critera. Individuals are limited to importing two African elephant sport-hunter trophies per year, whereas previously the number was unlimited. The current rules for Asian ivory remain in place.

MINING 	  

Mining Execs. Rank Best Locations

The most attractive jurisdictions for mining and exploration investment include one diamond-producing region but several others did score in the top 50 in the annual survey of mining companies, which was conducted by The Fraser Institute.

Overall, mining firms rated 112 jurisdictions and concluded that the 10 least attractive regions were Kyrgyzstan, Venezuela, Philippines, Argentina—La Rioja, Angola, Argentina—Mendoza, Zimbabwe, Cote dIvoire, Indonesia and Madagascar. The Fraser Institute suggested that nations with vast mineral wealth would benefit from following best practices that are deployed by Sweden and Finland, for example, by enacting sound environmental protections and transparent taxation and legal processes.

While mining executives gave Sweden the top score, diamond-producer Westerns Australia ranked sixth place. According to the Fraser Institute, other diamond producers ranked as follows:
Region Rank Index = 100
Botswana 25 74.1
Ontario 28 73.1
Namibia 34 68.3
Nunavut 44 60.4
NWT 47 57.5
Zambia 57 48.0
Tanzania 62 43.0
India 63 40.0
South Africa 64 39.8
Brazil 65 39.1
Liberia 66 38.2
Myanmar 67 37.9
Mozambique 76 29.9
DR Congo 85 23.9
Russia 91 19.4
Sierra Leone 96 17.2
Cote dIvoire 105 14.9
Zimbabwe 106 14.6
Angola 108 10.7
Venezuela 111 6.5

KDL Auction Achieves $4M

Kimberley Diamonds Ltd. sold 18,903 carats of rough diamonds from its Ellendale project through an online trading system this week to achieve $3.92 million or $207 per carat.

The company stated that these gem-quality rough diamonds were outside of its off-take agreement with Tiffany & Co.s cutting and polishing firm Laurelton.

Diamcor Placement Oversubscribed

Diamcor Mining Inc. closed its previously announced private placement of 2,142,858 units at a price of $1.40 per unit for gross proceeds of $3 million, with an oversubscription of 5,000 units for a final closing amount of $3.007 million. Each unit consists of one common share and one-half of one common share purchase warrant whereas each warrant entitles the holder to purchase one share at an exercise price of $1.80 until March 11, 2017.

In addition, Diamcor Mining issued an aggregate of 114,471 non-transferable warrants to its agents (Roth Capital Partners and Euro Pacific Canada), representing 6% of the number of units sold to subscribers.

STATS 	  

U.S.A.

Jan. $Mil. %Chng.
Polished imports $1,887 13%
Polished exports $1,335 -12%
Net imports $552 237%

Rough imports $53 36%
Rough exports $57 128%
Net imports $(4)

Net diamond account $548 209%

ECONWATCH 	  

Diamond Industry Stock Report

Broad selloff across retail and mining resulted in share price declines this week except for Birks (+9%), Movado (+1%), Damiani (+2%), Lyspa Gems (+4%), Titan (+2%), Michael Hill (+3%) and Gemfields (+3%). View the extended stock report.
Mar. 13 Mar. 6 Chng.
$1 = Euro 0.720 0.720 0.000
$1 = Rupee 61.19 61.11 0.1
$1 = Israel Shekel 3.47 3.45 0.02
$1 = Rand 10.80 10.61 0.19
$1 = Canadian Dollar 1.11 1.10 0.01

Precious Metals
Gold $1,372.40 $1,350.30 $22.10
Platinum $1,473.00 $1,477.00 -$4.00

Stock Indexes Chng.
BSE 21,774.62 21,513.87 260.75 1.2%
Dow Jones 16,108.89 16,421.89 -313.00 -1.9%
FTSE 6,553.78 6,788.49 -234.71 -3.5%
Hang Seng 21,756.08 22,702.97 -946.89 -4.2%
S&P 500 1,846.34 1,877.03 -30.69 -1.6%
Yahoo! Jewelry 1,003.09 1,027.13 -24.04 -2.3%

Rapaport Weekly Market Comment Mar. 21, 2014

Polished markets stable with strong demand for GIA dossiers. Dealers shifting to diamond parcels, non-certs. and 0.25ct. sizes due to 0.30ct. shortages caused by GIA delays. Large stone market speculative ahead of Basel shows. Gem Diamonds 2013 revenue +5% to $213M, profit of $38M vs. loss of $77M a year ago. Belgium’s Feb. polished exports +33% to $1.6B, rough imports +18% to $1.4B. India’s Feb. polished exports +16% to $2.2B, rough imports +12% to $1.5B. Panama Gem & Jewelry Center launched. De Beers to select 5 new sightholders: D. Navinchandra Exports, Diambel, J.B. And Brothers, Star Rays, Vallabhbhai Dhanjibhai & Co. The Diamond Show to open March 27 at Markthalle in Basel.

RapNet Data: Mar. 20

Diamonds 1,042,355
Value $6,993,957,260
Carats 1,147,795
Average Discount -26.41%

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RAPAPORT ANNOUNCEMENTS
March
27-31
Thu-Mon

The Diamond Show

Markthalle Building, Basel, Switzerland

Learn More:
www.thediamondshow.net
April
1-9
Tue-Wed
Rapaport Melee Auction

New York & Dubai

View Details.
April
2-10
Wed-Thu

Rapaport  Single Stone Auction 

New York & Israel

www.rapaportauctions.com
QUOTE OF THE WEEK
We are confident that pure type IaAB synthetics cannot be produced. This confidence comes from many years of extensive research targeted at producing such material to test our detection methodologies.

Dr. Simon Lawson | De Beers Group

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The Rapaport Group is growing rapidly. If you wish to work with the best and brightest, join us. We have great opportunities for trading managers, gemologists, sales assistants and entry-level positions for our offices in New York, Antwerp, Mumbai, Dubai and Shanghai. View jobs now.

INDUSTRY 	  

De Beers Adds Five Sightholders

De Beers preapproved five new sightholders for the remainder of the 2012 to 2015 supplier of choice (SOC) contract period. The companies will be formally appointed before sight number four in May and include Vallabhbhai Dhanjibhai & Co., Star Rays, J.B. And Brothers | Yaelstar, D. Navinchandra Exports and Diambel, according to Rapaport sources.

De Beers modified its SOC replanning process to enable non-sightholder businesses that have demonstrated strong demand through auction sales. Sightholder ITO re-planning process underway also provides opportunities to qualify for new rough diamond allocations, subject to forecast availability. The 2014 to 2015 ITO period is the last in the current contract period. A new De Beers sightholder contract will start on March 31, 2015 and the application process will open in the third quarter of 2014. De Beers stated that the new contract will involve a simplified allocation process but include more rigorous financial compliance criteria.

All Synthetics are Detectable

De Beers asserts that all synthetic diamonds can be detected. The company has dismissed claims by EGL Asia-Diamond services that its DiamondView instrument failed to detect a type IaAB “synthetic” stone, passing it as natural. De Beers stressed that it is not possible for a type IaAB diamond to be synthetic. Consistent, reliable detection of synthetics is vital to preserve the integrity of the diamond industry.

Read the full story and analysis.

U.S. Jewelry Inflation -3%

The U.S. consumer price index (CPI) for jewelry declined 2.6% year on year to 172.11 points in February, the lowest index reading to be posted since March 2011. The highest CPI for jewelry was 183.5 points in January 2012. The CPI for watches was basically flat in February, up by just 0.6%, at 122.5 points or two points lower than the record high of 124.3 that was set in July 2013.

Continued price pressures on industry commodities contributed to a lower jewelry price index during the month. The price for gold in February was about 16% lower year on year, while platinum was down 8%. The RapNet Diamond Index (RAPI), the global benchmark for polished diamond prices, fell 3.3% year on year for 1-carat diamonds, while RAPI for 3-carat diamonds dropped 2.7%. RAPI for 0.50-carat stones increased 3.2% and the index jumped 11.1% for 0.30-carat diamonds. By comparison, the CPI for all product categories in February increased 1.1% year on year to set a new record high of 235.17 points.

RETAIL & WHOLESALE 	  

Wartski IDs Third Imperial Easter Egg

The Third Imperial Easter Egg, made by Faberge in 1887 and now estimated to be worth $33 million, will be briefly on display at Wartski in London from April 14 to 17. The rare find was set to be melted for scrap in the U.S. until its former owner, who purchased it for $14,000, discovered an old news clipping describing the egg online.

The Faberge piece supports a 3.2-inch egg on an elaborate gold stand supported by lion paw feet. Three sapphires suspend golden garlands and a central diamond is used to release the top and reveal a Vacheron Constantin watch. The man contacted Wartski, a Faberge specialist, the egg was authenticated and sold to a private buyer for an undisclosed sum. Wartski believes that at least two other Faberge eggs may still be in circulation but they remain unaccounted for.

LG, Google Power Up Watch Tech

LG Electronics is collaborating with Google on the LG G Watch, powered by Android Wear™, which extends the Android platform to wearables. LG expects to introduce the watch in the second quarter. LG G Watch will be compatible with a wide range of Android smartphones and will present information to users as they need it or whenever they speak "OK Google." The electronics firm explained that the LG G Watch presents a low barrier to entry for developers, too. The watch represents LGs fourth device that was developed in close collaboration with Google, following the Nexus 4, Nexus 5 and the LG G Pad 8.3 Google Play Edition.

Develop Smart Omnichannel Integration

Consumers are in control of the retail experience now and their expectations for a superior, personal and seamless shopping experience is only increasing by the week, in large part due to mobile devices. IBM conducted a webinar this week to share five best practices that retailers should consider as they develop an omnichannel strategy, which unifies the brands channel marketing across a single experience.

Collect
Gather customer profiles, web analytics, shopping cart information and social media to build a lifetime of data that measures behaviors, preferences, interests and demographics.

Analyze
Data will provide actionable insights to identify the lifecycle of your customer experience so that the retailer can benchmark touch points of interaction. From this mapping, retailers create a deeper understanding of their audience and therefore can produce best practices for engagement.

Decide
While an omnichannel strategy is certainly scalable to any budget, data mapping enables the retailer to prioritize resource allocation. Nonetheless, whether funding affords the retailer to sync the customer experience across all digital channels or just a single platform to start, IBM said to plan message consistency across all phases.

Manage
Customer interaction a one-on-one experience. Omnichannel integration personalizes the shopping event by identifying real-time triggers in order to immediately interact with the customer. Personalization enables retailers to dynamically serve content based upon the shoppers profile, coupled with immediate choices and alternatives when he views product videos without making a purchase, modifies an order or abandons a shopping cart all together.

Optimize
Do customers navigate the path to a purchase that you desire? Measure customer deviations and capture their reactions in order to improve upon the user experience. In addition, measure your campaign performance against a comparable retailer or the industry as a whole. Providers that cater to the jewelry industry collect comparative benchmarks as part of their omnichannel solution offerings.

PDE Names Board, Founders

The Panama Diamond Exchange (PDE) named its directors and board members this week as: Eli Izhakoff, founding chairman, Erez Akerman, PDEs president, Ernest Blom, the World Federation of Diamond Bourses president, Gaetano Cavalieri, CIBJOs president, and Avi Paz, the World Diamond Councils president. Founding PDE members include Maxim Shkadov, Jeffrey H. Fischer, Reuven Kaufman, Ronnie Vanderlinden, Alex Popov and Mehul Shah. The PDE is the first and only diamond bourse in all of Latin America and it will be the anchor organization for the new Panama Gem & Jewelry Center, which currently is under construction.

Group Names GIA as Ethical

The Ethisphere Institute named the Gemological Institute of America (GIA) as a 2014 World’s Most Ethical Company for a second consecutive year. The designation recognizes continued efforts to build and maintain a superior ethics and compliance to ensure the public trust in gems and jewelry through research discoveries, education, laboratory services and instrument development. Some well-known companies on the list included UPS, Starbucks, eBay, LOreal, PepsiCo and Visa.

MINING 	  

Gem Diamonds Reports Profit 

Gem Diamonds reported that its revenue rose 5% year on year to $213 million in the fiscal year that ended on December 31. The increase resulted from improved rough diamond prices and higher polished sales. The group posted a profit of $38.2 million for the year compared with a loss of $77 million one year ago.

Top prices were achieved for Letšengs production, particularly high-quality, large diamonds. The company sold 97,294 carats of diamonds from Letšeng for an average ‎‎$2,043 per carat, up from $1,932 per carat the previous year. Revenue was given quite a boost from the sale of a rare 12.47-carat blue diamond, which sold in October for $7.5 million, setting a Letšeng record of $603,047 per carat.

Severalmaz Triples Production Target

Severalmaz, a subsidiary of ALROSA, launched operations at its №2 plant at the Lomonosov mining and processing division in the Arkhangelsk region of Russia. The companys first operating plant has been providing annual production of about 500,000 carats and now the mining firm anticipates that two processing operations will nearly triple carat capacity. The project hosts six kimberlite pipes with mineral reserves estimated at 197 million carats. Mining is currently taking place at the Arkhangelskaya pipe, where the launch of this second processing plant allows greater enough volume of ore for Severalmaz to target producing 1.7 million carats of diamonds this year.

Dominion Updates Targets

The Diavik diamond mine in Canada will produce 6.1 million carats this year and based on historical recovery rates, Dominion Diamond anticipates nearly 1 million carats from the recovery of reprocessed plant rejects. The updated mine plan for Diavik anticipates that the companys operating costs will reach $155 million this year, leading cost of sales to reach $280 million.

Dominion also expects to produce 1 million carats from the Ekati mine. Dominion expects to spend $100 million to continue development at the Misery Pipe and $55 million to develop the Pigeon pipe. Overall operating costs for Ekati are expected to reach $195 million during the year.

Anjin Downsizes Workforce

Anjin released numerous workers from its Marange operation, with conflicting reports regarding the motive, according to NewsDay. Workers claimed the company faces viability problems and is set to close, but management claims operations are normal and the workers were simply laid off as part of a general labor restructuring program. The news report suggested that most of the workers placed on leave were drillers from the exploration department, machinery operators as well as general labor.

STATS 	  

India

Feb. $Mil. %Chng. YTD $Mil. %Chng.
Polished exports $2,160 16% $3,225 -9%
Polished imports $564 20% $1,076 0%
Net exports $1,596 15% $2,149 -13%

Rough imports $1,490 12% $2,747 17%
Rough exports $113 34% $237 -31%
Net imports $1,377 18% $2,510 28%

Net diamond account $219 -3% ($361)

Synthetic imports $11 112% $18 -1%
Synthetic exports $11 100% $20 166%

Belgium

Feb. $Mil. %Chng. YTD $Mil. %Chng.
Polished exports $1,630 33% $2,607 23%
Polished imports $905 11% $2,195 13%
Net exports $725 78% $412 320%

Rough imports $1,361 18% $2,710 19%
Rough exports $1,421 29% $2,666 24%
Net imports ($61) $44 -62%

Net diamond account $786 116% $369 650%

ECONWATCH 	  

Diamond Industry Stock Report

U.S. shares mixed with Charles & Colvard (+6%) pulling ahead and JCP (-5%) losing some ground. Indian shares all lower except Renaissance Jewellery and Titan, which were flat on the week. Mining shares mainly lower led by Rockwell (-9%) and ALROSA (-5%). View the extended stock report.
Mar. 20 Mar. 13 Chng.
$1 = Euro 0.725 0.720 0.005
$1 = Rupee 61.33 61.19 0.1
$1 = Israel Shekel 3.48 3.47 0.01
$1 = Rand 10.90 10.80 0.10
$1 = Canadian Dollar 1.12 1.11 0.01

Precious Metals
Gold $1,328.70 $1,372.40 -$43.70
Platinum $1,425.00 $1,473.00 -$48.00

Stock Indexes Chng.
BSE 21,740.09 21,774.62 -34.53 -0.2%
Dow Jones 16,331.05 16,108.89 222.16 1.4%
FTSE 6,535.24 6,553.78 -18.54 -0.3%
Hang Seng 21,182.16 21,756.08 -573.92 -2.6%
S&P 500 1,872.01 1,846.34 25.67 1.4%
Yahoo! Jewelry 1,008.99 1,003.09 5.90 0.6%

Rapaport Weekly Market Comment Mar. 28, 2014

Polished markets optimistic but liquidity under pressure due to tight bank credit and high rough prices. Demand for large diamonds robust as Basel shows begin. Rough trading stable ahead of next week’s De Beers sight. Tiffany & Co. 4Q sales +5% to $1.3B, loss of $104M vs. profit of $180M a year ago due to $480M Swatch arbitration. Signet Jewelers 4Q revenue +3% to $1.6B, profit +2% to $175M. Chow Sang Sang 2013 revenue +38% to $3.2B, profit +24% to $158M. The Diamond Show opens March 27 at Markthalle in Basel.

RapNet Data: Mar. 27

Diamonds 1,052,044
Value $7,131,314,020
Carats 1,167,209
Average Discount -26.44%

www.rapnet.com

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RAPAPORT ANNOUNCEMENTS
March
27-31
Thu-Mon

The Diamond Show

Markthalle Building, Basel, Switzerland

Learn More:
www.thediamondshow.net
April
1-9
Tue-Wed

Rapaport Melee Auction

New York & Dubai

View Details.
April
2-10
Wed-Thu
Rapaport Single Stone Auction

New York & Israel

www.rapaportauctions.com

QUOTE OF THE WEEK
Namibia’s diamonds fetch $450 to $700 per carat because they are of high-quality, spotless and they don’t disintegrate. That compares with about $150 per carat for Botswana, less than $100 for Angola and below $50 for Zimbabwe. Ninety-eight percent of Namibias stones are of gem-quality.

Kennedy Hamutenya | Namibia Diamond Commissioner

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 	  

Signet Lands Top Pick at Sterne Agee

Signet Jewelers revenue rose 3.4% year on year to $1.56 billion during the fourth quarter that ended on February 1. Comparable-store sales increased 4.3% and cost of sales rose 4.4% $915 million. Signets profit improved 1.7% to $175 million or $2.18 per diluted share. Fiscal year sales rose 5.7% to $4.21 billion, cost of sales jumped 9.9% to $2.63 billion and net income improved 2.2% to $368 million or $4.56 per diluted share.

U.S. division sales improved 3.5% to $1.29 billion in the fourth quarter, while same-store sales rose 5%. The strongest performance came from bridal, colored diamonds, fashion jewelry, beads and watches. The average merchandise transaction value increased at Kay, but it declined at Jared. Signets ecommerce sales in the U.S. surged 10.9% to $61.9 million.

In the U.K., sales as reported in dollars improved 1.4% to $272.2 million, but same-store sales jumped 5.7% in the fourth quarter. Sales performance was driven by bridal and fashion diamond jewelry, fashion and prestige watches, exclusive of Rolex. The average merchandise transaction value remained consistent year to year at H.Samuel, however, the average value fell slightly at Ernest Jones. Online sales in the U.K. surged 32.6% to $17.1 million.

Signets board declared an increased quarterly dividend of 18 cents per share, payable on May 28.

Sterne Agee analyst Ike Boruchow raised the price target $5 for Signet to $125 per share, maintained a rating of Buy and increased fiscal 2015 earnings per share (EPS) to between $5.12 and $5.70 from $5.10 and $5.55. Gross margin pressure was alleviated somewhat amid solid top-line trends, Boruchow wrote. After taking into account the significant accretion potential from the pending Zale merger, Signet remains a most compelling story and a top pick for Sterne Agee.

Signets U.K. performance was the best in five years, in local currency, and continues to benefit from branded/exclusive merchandise, which grew 23% for the year, Boruchow said. Signet should receive a greater benefits from lower gold costs this year, partially offset by some hedge losses, a headwind from lower recovery value of trade-in merchandise and increased bad debt expense from the credit portfolio, Boruchow wrote. The bad debt ratio continues to increase modestly due to customers carrying higher balances, but this is more than offset by increased interest income.

Lastly, wed note that although the company was somewhat more promotional than expected in quarter-four, management does not expect to be meaningfully more promotional going forward, he said. Sterne Agee believes Signet can achieve 2017 EPS of about $6.50, independent of the Zale merger, and Zale can contribute about $2.75 more, once its operations are synergized. While management has identified $100 million in clear synergy opportunities, this does not include $22 million of cost savings when Zale changes credit providers in late 2015 - and management commented on the call today that they believe they can identify further synergies once the deal closes, Boruchow wrote.

Chow Sang Sang Profit +24%

Chow Sang Sang Holdings International reported that its revenue rose 38% year on year to $3.24 billion (HKD 25.14 billion) in the fiscal year that ended on December 31. Sales were driven by strong consumer purchasing power in Hong Kong and Macau, which accounted for 79% of the groups total sales. However, the group observed that sales in Mainland China were weaker due to a slower economy, credit tightening and the anti-corruption drive ordered by the new administration in Beijing, which impacted the luxury market. Company profit increased 24% year on year to $157.7 million.

During the year, Chow Sang Sang continued to expand its sales network of jewelry shops in Mainland China, Hong Kong, Macau and Taiwan. The groups precious metal wholesale operation as well as its securities and futures brokerage each made small contributions to overall profit. Chow Sang Sang’s jewelry retail sales rose 34% to $2.57 billion.

Tiffany & Co.s Profit -56%

Tiffany & Co.s worldwide sales rose 5% year on year to $1.298 billion and same-store sales improved 2% for the fourth quarter that ended on January 31. The retailers cost of sales increased 1.6% to $513 million; however, Tiffany & Co. recorded an arbitration expense of $480 million with Swatch, which led to reporting a quarterly loss of $104 million compared with earnings of $180 million one year ago. For the retailers fiscal year, revenue increased 6.2% year on year to $4.031 billion, comparable-store sales increased 3%, cost of sales rose 3.7% to $1.691 billion and profit slipped 56.4% to $181 million or $1.41 per share.

During the fourth quarter, which included the all-important Christmas season, comparable-store sales on a constant exchange-rate-basis and by region were strongest in Japan, where they improved 8%, followed by an increase of 7% in the Americas, 4% in Asia-Pacific and 2% in Europe.

Movados Profit -11%

Movado Groups net sales increased 7% year on year to $132.3 million for the fourth quarter that ended on January 31, as measured by generally accepted accounting principles (GAAP). Cost of sales rose 3.4% to $63 million. Net income attributed to the Movado Group fell 9.2% year on year to $7.2 million or 28 cents per share. Movado recorded a pre-tax charge of $8.3 million, or 20 cents per diluted share, in connection with reducing the presence of ESQ Movado, while expanding the namesake brand in certain retail doors.

For the full fiscal year, on a GAAP basis, net sales improved 12.8% to $570.3 million, while cost of sales increased 16.4% to $265 million. Net income for the group fell 10.9% to $50.9 million or $1.97 per share. Looking ahead, Movado anticipates fiscal 2015 net sales to increase almost 11% to $640 million on a non-GAAP basis, with gross margin percent unchanged and net income of approximately $64 million or $2.44 per diluted share.

Charles & Colvard Reports a Loss

Charles & Colvard reported that its revenue improved 26.9% year on year to $28.49 million for the fiscal year that ended on December 31. Total costs and expenses jumped 35.5% to $30.07 million, leading to a net loss of $1.29 million compared with profit of $4.38 million one year earlier. During the year, loose jewel sales increased 23% to $18.5 million and finished jewelry sales increased 34% to $10 million. The company’s wholesale business increased 23% to $25.6 million, while its direct-to-consumer businesses jumped 78% to $2.9 million. International sales rose 40% to $7.8 million.

Christies NY Jewels Sale Targets $50M

Christie’s New York will hold its spring sale of magnificent jewels on April 16, offering more than 250 jewels in a two-session sale at Rockefeller Center. The auction house expects to achieve a sale total of more than $50 million. Christies will offer important colorless and colored diamonds, including a pair (22.60-carat and 22.31-carat) of circular-cut D, internally flawless diamond ear pendants with a presale estimate of $7 million to $10 million.

A 40.43-carat, D, potentially flawless oval-cut diamond ring, with a presale estimate of $5.8 million to $7.8 million, and a 50.05-carat, D, flawless Briolette-cut diamond, with a presale estimate of $5.5 million to $7.5 million, round out the top lots. Christie’s will also present more than 60 signed jewels by Suzanne Belperron, René Boivin, Bulgari, Cartier, Tiffany & Co., Van Cleef & Arpels, David Webb and Harry Winston, among others.

Blue Nile Debuts Designer Collective

Blue Nile launched a new measure, the Blue Nile Designer Collective, to showcase jewelry from established designers and emerging talent. The assortment of fine jewelry includes earrings, pendants and bracelets in the price range of $55 to $6,000. The Designer Collective offers shoppers a more bespoke product assortment. The designers include Anne Sportun, Bree Richey, Denise James and Robert Leser. Additionally, Designer Collective is an extension of Blue Niles partnership with designers already on board, such as Monique Lhuillier Fine Jewelry, a curated collection of engagement rings and wedding bands.

Alex & Anis Online Sales Surge

Omnichannel solutions provider, eBay Enterprise®, a subsidiary of eBay Inc., said it drove sales much higher for Alex and Ani through Facebook ads, achieving $1.6 million just during the Thanksgiving Day through CyberMonday period in 2013. When comparing the performance of Facebook ads for the previous six months, before and after launching, Alex and Ani recorded an 80% return on investment with eBay Enterprise, while revenue surged 4,388%. In addition, the average order value jumped 434% to more than $75, according to eBay Enterprise.

To achieve these rates, eBay Enterprise partnered with Kenshoo Social, an advanced technology platform, to optimize Alex and Ani’s targeted social marketing campaign in addition to leveraging several eBay commerce solutions already in place. Alex and Ani had deployed Magento Enterprise Edition to customize and extend its ecommerce efforts, such as Marketing Solutions programs Affiliate, Search and Paid Social to reach its revenue targets.

De Beers, Meierotto Receive Trademarks

The U.S. Patent & Trademark Office (USPTOP) assigned the trademark Imaginary Nature to De Beers Diamond Jewellers Ltd. of the U.K. on March 11 with the registration number 4496968. De Beers requested the trademark on January 7, 2013. Imaginary Nature applies to retail and wholesale store services, advertising and marketing services, jewelry, precious and semi-precious stones, and horological and chronometric instruments.

Separately, the USPTO reissued the trademark Meierotto Midwest Jewelers to Meierottos Jewelry LP of Kansas City, Missouri on March 18 with the registration number 4497364. The trademark applies to retail jewelry stores and was first used in commerce in May 2009.

MINING 	  

Gahcho Kue Production Target 3Q16

The first diamond production from the Gahcho Kue mine in northern Canada is anticipated in the third quarter of 2016, according to Mountain Province Diamonds and its joint-venture partner, De Beers Canada. Regulatory restrictions imposed this year limited material that can be trucked to the site over the annual winter ice road. In particular, shipments of cement and steel have been delayed but the partners are exploring opportunities to mitigate the impact on the project schedule.

The winter ice road enables trucking in earnest for about two months every year, allowing mining companies who operate in the area to bring in necessary supplies that will supply them throughout the year.

Fieldwork Continues at PL 117

Botswana Diamonds completed its initial fieldwork at the prospecting license PL 117/2011 in the Orapa region of Botswana and which it shares with joint venture partner ALROSA. The license is a small, 2.9-square-kilometer area of ground that was identified as a priority target under the partnership agreement. A team of senior geologists and geophysicists from both companies embarked on a rapid and intensive work program designed to identify drill targets on the license. Tasks completed on the ground included magnetic, electromagnetic and geochemical surveys. The geochemical samples are now being shipped to ALROSAs laboratory in St. Petersburg, Russia for mineralogical analysis. Simultaneously the interpretation and modeling of the geophysical fieldwork is ongoing.

Stornoway Draws $10M

Stornoway Diamond Corporation has drawn $10 million on the second tranche of its unsecured non-revolving bridge credit facility of up to $20 million with Diaquem Inc. in connection with the development of the Renard diamond project and for general corporate purposes, including costs relating to Stornoways ongoing project financing activities. The facility is now fully drawn. In addition, Diaquem has agreed to extend the maturity date of the facility from March 28 to June 27.

ECONWATCH 	  

Diamond Industry Stock Report

U.S. and Hong Kong shares were mainly lower, led by Charles & Colvard (-22%) and Chow Sang Sang (-9%). European shares were all higher except for Swatch (-1%). Indian shares were mixed with Classic Diamonds (-20%) and Rajesh Exports (+12%) defining the spread. Mining companies were slightly higher led by Lucara (+7%). View the extended stock report.
Mar. 27 Mar. 20 Chng.
$1 = Euro 0.727 0.725 0.002
$1 = Rupee 60.33 61.33 -1.0
$1 = Israel Shekel 3.50 3.48 0.02
$1 = Rand 10.58 10.90 -0.32
$1 = Canadian Dollar 1.10 1.12 -0.02

Precious Metals
Gold $1,293.10 $1,328.70 -$35.60
Platinum $1,394.00 $1,425.00 -$31.00

Stock Indexes Chng.
BSE 22,214.37 21,740.09 474.28 2.2%
Dow Jones 16,264.23 16,331.05 -66.82 -0.4%
FTSE 6,588.32 6,535.24 53.08 0.8%
Hang Seng 21,834.45 21,182.16 652.29 3.1%
S&P 500 1,849.04 1,872.01 -22.97 -1.2%
Yahoo! Jewelry 1,016.82 1,008.99 7.83 0.8%

Rapaport Weekly Market Comment Apr. 4, 2014

Basel shows signal strong demand for top quality large diamonds. De Beers raises prices 3%-4% at April sight, reducing dealer demand on secondary market. Polished market stable but dealers expect slowdown as higher rough prices creating liquidity crisis. March RapNet Diamond Index (RAPI™) for 1ct. +0.8%. Dominion Diamond Corp. FY sales +118% to $752M, loss of $23M vs. profit of $22M. Swiss Feb. watch exports +7% to $1.9B. U.S. Feb. polished imports +6% to $1.6B, polished exports +20% to $1.8B. Japan’s 2013 polished diamond imports -3% to $874M. Reserve Bank of India removes restrictions on advance payment for rough diamonds to foreign mining companies.

RapNet Data: Apr. 3

Diamonds 1,045,344
Value $7,036,806,754
Carats 1,155,779
Average Discount -26.29%

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

RAPAPORT ANNOUNCEMENTS

April
1-9
Tue-Wed
Rapaport Melee Auction

New York & Dubai

View Details.
April
2-10
Wed-Thu

Rapaport  Single Stone Auction 

New York & Israel

www.rapaportauctions.com
QUOTE OF THE WEEK
People are buying diamonds in the high-end because they recognize that it’s an asset that holds value. There are not a lot of these goods around, but many of them were in Basel.

Jose Batista | Rio Diamond MFG Corp.

Careers@Rapaport 	  

The Rapaport Group is growing rapidly. If you wish to work with the best and brightest, join us. We have great opportunities for trading managers, gemologists, sales assistants and entry-level positions for our offices in New York, Antwerp, Mumbai, Dubai and Shanghai. View jobs now.

INDUSTRY 	  

Basel Shows Signal Solid Trading

The Basel shows signaled robust demand for high-end pieces, even though visitor traffic was slightly lower than last year. Serious buyers were shopping for goods and even though the general market is slow, trading is healthy. At Rapaport Groups The Diamond Show, large European brands and watch manufacturers were actively looking for goods.

Diamond suppliers observed the following trends in the marketplace:

Strong demand for GIA dossiers, particularly for 0.30ct. to 0.70ct. • Shortages for 0.30ct. to 0.40ct. • Good demand for 2ct. to 3ct., SI • Sizes above 5cts. in strong demand, but could be speculative • Good demand for intense, fancy colored diamonds, overall demand up for colored stones • Steady demand for pears, cushions, ovals and emeralds but princess-cuts weak.

U.S. Jewelry Sales +6%

U.S. jewelry and watch sales improved in February, according to preliminary statistics, and they were revised slightly higher for January. Sales of jewelry and watches combined increased 6.4% year on year in February as measured across all retail segments and the rate of growth was similar to the increase one year ago. Government figures reflected sector growth of 3.6% in January, following a preliminary increase of 1.3%.

Jewelry sales in February increased 6% year on year to $5.852 billion, while watch sales improved 8.9% to $783 million. Meanwhile, the U.S. consumer price index (CPI) for jewelry February declined 2.6%, the lowest index reading to be posted since March 2011. The CPI for watches was basically flat, up by just 0.6% during February.

Swiss Watch Exports +7%

Swiss watch exports rose 7.2% year on year to $1.93 billion (CHF 1.7 billion) in February, according to the Federation of the Swiss Watch Industry. By volume, Swiss watch exports increased 5.2 percent to 2,131,200 units. Performance in February exceeded that of January when Swiss watch exports rose 5% by value. Asian markets experienced the strongest growth in demand as exports to Hong Kong jumped 18.7% in February to $396 million. Exports to Japan surged 44.6% to $121 million as consumer spending in February and March, especially for watches and jewelry, has been spurred by the April 1 sales tax increase. Meanwhile, exports to China slipped 0.7% to $114 million. Swiss watch exports to the U.S. rose 4.4% to $204 million; however, exports declined 7.6% to Germany to $105 million.

RETAIL & WHOLESALE 	  

RBI Eases Payment Restrictions

The Reserve Bank of India (RBI) liberalized rough diamond imports by scrapping restrictions on advance payment for rough stones by dealers to foreign mining and distribution companies. Indian banks may now rely solely on their due diligence in financing dealer transactions with mining companies. The RBI will not notify the names of overseas mining companies from whom an importer may import rough diamonds into India, by way of advance payments, without any limit or bank guarantee or stand-by letter of credit, according to the banks statement.

RBI cautioned that the mining companies approved by banks should be recognized rough diamond producers with a good track record and have recommendations from GJEPC and importers. Additionally, the RBI said that advance payment should be transferred directly to the account of the company concerned.

De Beers Updates Sightholder Directory

De Beers updated its sightholder directory to include the five new sightholder businesses that will receive supply via an intention to offer (ITO) for the remainder of the 2012 to 2015 supplier of choice contract period. The new De Beers sightholders are: D. Navinchandra Gems BVBA, Diambel NV, M/S. Vallabhbhai Dhanjibhai & Co., Yaelstar BVBA and Star Rays. The five new qualifying sightholders demonstrated strong demand at De Beers auctions. De Beers is pleased to congratulate and welcome its newest sightholders. Details can be found in the sightholder directory.

Kingolds Profit -14%

Kingold Jewelry Inc. reported that its revenue increased 29.9% year on year to $1.2 billion for the fiscal year that ended on December 31. Gross margin fell to 4.3% of sales compared with 5.6% one year earlier. Profit declined 13.5% to $28.3 million. During 2013, Kingold Jewelry processed 51.1 metric tons of 24-karat gold products, an increase of 35.2% compared with 2012. Kingold anticipates processing between 60 and 70 metric tons of 24-karat gold products in 2014.

Kingold is expanding its international presence in 2014, beginning with a recently announced joint venture agreement to enter the Kuwait market. Kingold currently has approximately 300 jewelry business clients across 25 provinces in China. Kingolds investment gold products primarily include gold bars and coins and other customized products specifically designed for use by commercial banks.

DGSEs Loss Increases

DGSE Companies Inc. reported that its revenue fell 15% year on year to $108.5 million for the fiscal year that ended on December 31. Gross profit margin dropped to 18.2% from 19%. DGSE recorded a net loss of $2.7 million, or 22 cents per share, compared with a net loss of $2.3 million, or 19 cents per share, in 2012. DGSE called the consumer market challenging, but it is focused on building its ecommerce function and allocating resources toward revenue streams with the highest profit potential such as high-end jewelry, diamonds and watches.

Dramatically lower gold prices had a negative impact on DGSEs bullion and scrap categories in the fourth quarter; however, jewelry sales increased as the company drove its marketing efforts higher during the Christmas season.

Joyalukkas Opens in Malaysia

Joyalukkas opened a jewelry showroom in Malaysia, located on Jalan Masjid India, Kuala Lumpur. The mega store was inaugurated by Malaysias Minister of Domestic Trade, Cooperative and Consumerism, Dato Hasan Bin Malek, and renowned Indian celebrity and film star R. Madhavan. The Malaysia jewelry showroom was designed in line with the groups signature Joyalukkas style and offers over one million designs, including gold, diamond, precious stone, pearls, platinum and silver jewelry.

Leo Hamel to Carry Mühle Glashütte

Leo Hamel Fine Jewelers partnered with German watch brand Mühle Glashütte to become the first authorized dealer for the company in San Diego, California. The company is one of only 20 exclusive retailers for the Mühle Glashütte line in the U.S. Leo Hamel will offer all Mühle Glashütte wristwatch models including sport, classical, and nautical timepieces, such as the popular S.A.R. Rescue-Timer, originally developed for the German Maritime Search and Rescue Service.

Helzberg Wins Merchant Award

MarketLive selected winners of its annual MarketLive Merchant Awards in honor of the top performing ecommerce websites across the companys customer base. MarketLive recognized winners in three key categories: The Ken Burke Award of Excellence; the Intelligent Selling Awards and the MarketLive Performance Index Top Performer Awards. Helzberg Diamonds won The Ken Burke Award of Excellence, which honors a single website whose strong performance and deployment of best practices set it apart from all others during the past year. Helzbergs ecommerce website distinguished itself with a rich cross-channel experience, integrated content and excellent merchandising features, according to MarketLive.

The winners of Intelligent Selling Awards, were given to Design Within Reach for best customer experience and OReilly Media for best website on the rise.

Kendra Scott Expands to Louisiana

Jewelry retailer Kendra Scott will open its first location in Louisiana on April 7 in Baton Rouge at Perkins Rowe, an upscale open-air shopping mall. The Perkins Rowe location marks Kendra Scotts 11th storefront. The new store will showcase the designers handcrafted jewelry, an interactive Kendra Scott Color Bar™ and space for special events. The Kendra Scott Color Bar allows shoppers to customize one-of-a-kind jewelry with a kaleidoscope of 26 gemstones and 23 jewelry silhouettes in both gold and rhodium silver settings.

CIRCA Opens in New Jersey

CIRCA opened a private office in Short Hills, New Jersey at 51 JFK Parkway. The new location will operate in partnership with the brands New York City office to accommodate demand for services. The Short Hills office will be led by CIRCAs co-founder, Jeffrey Singer, a jewelry expert with more than 30 years of experience in the luxury jewelry industry.

Wearable Technology Gains in Popularity

Consumers are increasingly interested in wearable technology that can be attached to their existing jewelry, as well as new styles that come with technology, according to a recent study by the Jewelry Consumer Opinion Council (JCOC). The group found that durability, convenience and ease-of-use were the most important components for any wearable technology. When given the choice, respondents preferred a more traditional jewelry look in the tech piece than something that appeared more modern. High-tech watches were the most preferred wearable technology, with 55% of participants saying they would buy the device, followed by bracelets and wristbands with a 27% share.

MINING 	  

Dominions Sales Reach $752M

Dominion Diamond Corporation reported that sales rose 118% year on year to $751.9 million, while cost of sales surged 143% to $650.8 million for the fiscal year that ended on January 31. Gross margin as a percentage of sales fell to 13.4% from 22.5% one year earlier. Financing expenses jumped to $27.4 million from $9.1 million and exploration costs rose to $14.6 million from just $1.8 million.

Dominion Diamond recorded a profit of $471.2 million, or $5.64 per share, compared with profit of $35.2 million, or 41 cents per share, one year earlier, as a result of a $502.9 million gain from the sale of Harry Winston Inc. The company recorded a consolidated net loss from continuing operations attributable to shareholders of $23 million or 27 cents per share compared with profit of $22.3 million or 26 cents per share one year earlier.

For the period from April 10, 2013 to January 31, sales from the Ekati mine totaled $399.6 million and it incurred cash costs of production of $303.9 million. Total cost of sales for Ekati for the period was $392.9 million. Diavik recorded sales of $352.3 million for the entire fiscal year and incurred cash costs of production of $162.6 million. Total cost of sales for Diavik in the fiscal year totaled $257.9 million.

Diamonds Add $93M to Namibias Income

Namibias Mines and Energy Minister, Isak Katali, said diamonds contributed $81.7 million in federal revenue and another $11.3 million from local sales of diamonds by the Namibia Diamond Trading Company (NDTC) for the fiscal year that ended on March 31. Namdeb Holdings contributed $74 million in dividends, the largest amount of any firm. Katali told Parliament that as prices of rough diamonds have remained flat, manufacturing margins have diminished significantly, leading to some bankruptcies.

Botswana Diamonds Loss Narrows

Botswana Diamonds plc reported a comprehensive loss of $370,000 (GBP 222,000) for the six months that ended on December 31, down from a loss of $470,000 one year earlier. Meanwhile, the explorers assets rose 3.7% year on year to $11.1 million and its total equity increased 4.1% to $10.5 million. The focus of operations is firmly fixed on the Orapa area of Botswana where licenses indicate high potential for diamondiferous kimberlites.

Rockwells Sales +69%

Rockwell Diamonds Inc. reported that diamond sales, excluding beneficiation, rose 69% year on year to $12.1 million in the fourth fiscal quarter that ended on February 28. By volume, sales increased 81% to 9,596 carats. Rockwell’s rough diamonds received an average price of $1,264 per carat, down 7% from one year ago. Diamond production at the company’s three operating mines in South Africa grew 39% to 2,676 carats, while total production rose 74% to 6,717 carats in part due to royalty agreements with contract miners.

Mountain Province Closes Placement

Mountain Province Diamonds Inc. closed a bought-deal private placement of common shares for gross proceeds of $16.2 million (CAD 17.9 million). BMO Capital Markets, on behalf of a syndicate including RBC Dominion Securities Inc. (the underwriters), sold 3.5 million common shares of Mountain Province for $5.10 per share, by way of a bought-deal private placement. The underwriters received a cash commission of 5% of the gross proceeds.

In addition, Mountain Province closed a concurrent non-brokered private placement of common shares for proceeds of $10.4 million. The common shares issued in the bought-deal and non-brokered private placements are subject to a four month hold period, expiring July 29, 2014. Proceeds will be used for the continued development of the companys Gahcho Kué project and for general corporate purposes.

DiamondCorp Raises $3.5M

DiamondCorp raised $3.5 million (GBP 2.1 million) through the placement of 41,525,000 ordinary shares at 5 pence each with new and existing institutional and private investors in the U.K. and South Africa. The proceeds will be used to fund corporate overhead during the next two years and for general working capital purposes. Development of its flagship underground mine, which is managed by DiamondCorps subsidiary Lace Diamond Mines Ltd., is fully financed. Underground mining at Lace remains within budget and is on track to ramp-up for commercial production in the second half of 2015.

Diamcor Tender Tops $1M

Diamcor achieved $1.33 million from the sale of 4,395 carats during two rough diamond tenders held during the companys fourth quarter that ended on March 31. Proceeds included the sale of a 43.90-carat diamond that was recovered during the period and it sold for $317,924 or an average price of $7,242 per carat. As of March 31, the company had 1,000 carats of rough diamonds in inventory and those stones will be tendered during the next quarter. To date, Diamcor has sold 19,807.25 carats for $4.5 million or an average $229.43 per carat.

STATS 	   

Russia

2013 data 000s cts. %Chng.
Rough production 37,884 8.5%
Rough exports 35,363 18.6%
Diamond imports 4.82mil
Japan

Dec. $Mil. %Chng. YTD $Mil. %Chng.
Polished imports $70 3% $874
USA

Feb. $Mil. %Chng. YTD $Mil. %Chng.
Polished imports $1,595 6% $3,482 10%
Polished exports $1,755 20% $3,090 4%
Net imports ($160) $392 89%

Rough imports $74 155% $127 87%
Rough exports $30 36% $87 85%
Net imports $44 $39 95%

Net diamond account ($116) $4

ECONWATCH 	  

Diamond Industry Stock Report

U.S. and European shares slightly higher except for Charles & Colvard (-9%), JCP (-2%) and Movado (-2%). Indian shares advanced by mid-single digits except for Classic (-2%), Lyspa (-3%) and Ren. Jewellery (-2%). Mining shares were mostly higher as ALROSA (+11%) and Shore Gold (+21%) advanced the most. View the extended stock report.
Apr. 4 Mar. 27 Chng.
$1 = Euro 0.729 0.727 0.002
$1 = Rupee 60.19 60.33 -0.1
$1 = Israel Shekel 3.47 3.50 -0.03
$1 = Rand 10.64 10.58 0.06
$1 = Canadian Dollar 1.10 1.10 0.00

Precious Metals
Gold $1,286.70 $1,293.10 -$6.40
Platinum $1,438.00 $1,394.00 $44.00

Stock Indexes Chng.
BSE 22,509.07 22,214.37 294.70 1.3%
Dow Jones 16,572.42 16,264.23 308.19 1.9%
FTSE 6,649.14 6,588.32 60.82 0.9%
Hang Seng 22,565.08 21,834.45 730.63 3.3%
S&P 500 1,888.76 1,849.04 39.72 2.1%
Yahoo! Jewelry 1,046.76 1,016.82 29.94 2.9%

Rapaport Weekly Market Comment Apr. 11, 2014

Polished markets stable but buyers are increasingly price sensitive as cutters try to raise prices due to expensive rough. Cutting center liquidity tightening due to high rough prices and GIA backlogs. Rough trading slows with premiums reduced on the secondary market. Zimbabwe plans UAE diamond embassy as Dubai sells $29M ($76/ct.) at inaugural Marange rough tender. Sotheby’s HK sells $107M (82% by lot) with brilliant-cut, 30.57ct., D, FL diamond selling for $6.5M ($214K/ct.). Hong Kong’s 2013 polished imports +9% to $18B, polished exports +6% to $12.2B. THE RAPAPORT PRICE LIST WILL NOT BE PUBLISHED ON APRIL 18 DUE TO THE JEWISH HOLIDAY OF PASSOVER.

RapNet Data: Apr. 10

Diamonds 1,059,263
Value $7,062,048,002
Carats 1,168,183
Average Discount -26.42%

www.rapnet.com

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RAPAPORT ANNOUNCEMENTS

Apr-May
29-7
Tue-Wed

Rapaport Melee Auction

New York & Dubai

View Details.

May
7-14
Wed-Wed

Rapaport  Single Stone Auction 

New York & Israel

www.rapaportauctions.com

QUOTE OF THE WEEK
It is encouraging to see how Dubai has developed tailor-made strategies to an industry which was new to them only 12 ago. We have been overwhelmed by the enthusiasm and conviction in which policies have been pursued and businesses successfully attracted. We are happy to be part of this success story and look forward to continue a mutual beneficial relationship with Dubai in the future exploration and exploitation of our diamond business.

President Robert Mugabe | Zimbabwe

Careers@Rapaport 	  

The Rapaport Group is growing rapidly. If you wish to work with the best and brightest, join us. We have great opportunities for trading managers, gemologists, sales assistants and entry-level positions for our offices in New York, Antwerp, Mumbai, Dubai and Shanghai. View jobs now.

INDUSTRY 	  

Polished Prices +1%

Diamond markets were positive in March after the Hong Kong show demonstrated steady Chinese demand for commercial-quality diamonds. The recent Basel shows signaled robust demand for top-quality large diamonds, fancy colored diamonds and fine-cut fancy shape diamonds.

The RapNet Diamond Index (RAPI™) for 1-carat diamonds increased 0.8% during the month, while RAPI for 0.30-carat diamonds grew 3.8% and RAPI for 0.50-carat diamonds rose 2%. RAPI for 3-carat diamonds increased 1.4%. Prices firmed in all categories during the first three months of 2014 and the trade enjoyed its strongest quarter since early 2011.

The market is expected to slow in the second quarter as wholesale and retail jewelers have replenished their inventories and may restrain their buying at current higher polished price points. Liquidity has tightened as rough prices rose toward the end of March and banks are increasingly conservative in lending to the industry. While sentiment remains positive, diamond market growth is projected to stabilize in the coming months.

De Beers Sight Value at $700M

De Beers April sight closed with an estimated value of $700 million after the mining company raised its rough diamond prices by 3% to 4%. Box assortments were relatively unchanged and some ex-plan was offered. Trading on the secondary market subsequently slowed and premiums declined.

One sight participant claimed that the market for second-hand boxes is dead as the price increase made boxes very expensive. Rapaport estimates that rough prices have increased by approximately 7% to 10% since the beginning of 2014. Guy Harari, the CEO of Bluedax, observed that the market has slowed for better-quality, clean diamonds, while high-premiums remain only on low-end goods.

Other observations from the trade indicated that there are a lot of goods in the pipeline, liquidity is tight and turnaround times from the GIA are slow. Sightholders said they weren’t surprised by price increases since De Beers maintained prices at its previous February sight and premiums on boxes steady on the secondary market during March. They also noted continued strong demand for dossiers but argued that trends in other goods didn’t warrant a rough price increase that affected most boxes and categories.

RETAIL & WHOLESALE 	  

LVMH Jewelry Division Sales Flat

LVMHs jewelry and watch division reported revenue of $841 million (EUR 607 million) for the first quarter that ended on March 31, basically the same as one year ago. However, comparable-store sales for the division rose 5%.

Overall LVMH group revenue rose 4% year on year to $9.9 billion in the first quarter. At constant-exchange-rates, comparable-stores sales rose 6%. The group noted continued growth in the U.S. and Asia, with strong growth specifically in Japan during the quarter. LVMH stated that the market in Europe demonstrated resilience despite a still challenging economic environment.

Sothebys Jewels Sale at $107M

Sothebys Hong Kong sale of magnificent jewels and jadeite achieved $106,615,865 and was 82.2% sold by lot. The top lot was the Hutton-Mdivani necklace, a highly important jadeite bead, ruby and diamond necklace singed Cartier, circa 1933, which sold for $27,441,026 to The Cartier Collection. Sothebys confirmed the sales price was a world record for any Cartier jewel.

The Red Emperor, a Burmese ruby and diamond necklace that was set with 60 pigeons blood rubies totaling 104.51 carats sold for $9,923,077, setting a record for any ruby and diamond necklace, according to Sothebys. The sale also set a world record price for a 29.62-carat, oval Burmese ruby and diamond ring, mounted by Cartier, which sold for $7,338,462. The sale also featured a 30.57-carat, D, flawless unmounted brilliant-cut stone that sold for $6,548,718 and a 102.61-carat, cushion-shaped royal blue sapphire and diamond necklace that sold for $4,179,487.

Next month, three exceptional diamonds will highlight Sothebys Geneva sale of magnificent jewels and noble jewels on May 13. Sothebys will auction the historic Victory Diamond, which was named in honor of the allied victory in World War II. The original rough diamond weighed 770 carats and it was discovered in 1945 in the African Woyie River. Thirty diamonds were cut from that stone, the largest of which was the 31.34-carat, D, potentially flawless, type IIa step-cut Victory Diamond. Sothebys priced this lot to sell for between $5 million and $8 million.

The Graff Vivid Yellow diamond also highlights the Geneva sale. This 100.09-carat diamond ring is described as "daffodil yellow" in color with exceptional beauty and extraordinary fire and brilliance, and it has a presale estimate of $15 million to $25 million. A third diamond, also by Graff, is a 103.46-carat, brilliant-cut diamond ring with a presale estimate of $3.5 million to $5 mill

Chow Tai Fooks Sales +22%

Chow Tai Fook reported unaudited group revenue grew 22% year on year, without citing hard totals, for the fourth fiscal quarter that ended on March 31. The retailer cited strong retail sales of mass luxury jewelry products especially gem-set jewels and steady recovery in wholesale revenue in Mainland China. The company noted that sales at new stores in Mainland China and Hong Kong and Macau made a meaningful contribution to group revenue. Group sales in Mainland China jumped 44%, while sales in Hong Kong and Macau fell by 3%. Group same-store sales during the quarter increased 4% year on year.

Independents: Who needs them?

Watch Now: Martin Rapaport, the chairman of the Rapaport Group, shares key measurements of success for the independent jeweler during a special presentation at the Centurion Show. Topics touch upon prices and trends, relationships with customers, merchandising and branding, and the way forward in a changing consumer environment.

Xcel Acquires Judith Ripka

Xcel Brands Inc. acquired the Judith Ripka brand and its intellectual property for approximately $22.5 million of which $14 million was paid in cash along with $6 million in interest-free promissory notes and 571,500 shares of common stock. In addition, Xcel will provide for up to an additional $5 million in contingent future payments, payable in cash or stock, based upon the achieving certain net royalties generated by the Judith Ripka brand during annual periods from October 2015 through September 2018.

The acquisition is expected to be accretive to Xcels 2014 earnings. The Judith Ripka brand embodies Xcels core mission of delivering products of uncompromising quality, according to the firm. Ripka will serve as chief designer under the new ownership.

Pandora Opens New Concept Stores

Pandora Jewelry opened two concept stores, one in the Baltimore and another in Washington, D.C., to serve visitors and communities at the Baltimore Washington International Airport (BWI) and the Georgetown shopping areas. The new store locations in Concourse B at BWI and Georgetown join the companys three existing owned and operated outlet stores in Hilton Head Island, South Carolina; Potomac in Woodbridge, Virginia and Rehoboth Beach, Delawa

Jostens Unveils Red Sox Rings

During opening day festivities at Fenway Park, the Boston Red Sox presented players and uniformed personnel and staff with their 2013 World Series Championship Rings that were created by Jostens. The rings were crafted in 14-karat white gold, featured 126 diamonds, 16 custom-cut sapphires and nine custom-cut rubies. The left side of the ring pays homage to Boston, while the right side of the ring features the individual persons name and number. It is also customized to highlight the number of World Series titles the individual has won with the Red Sox by portraying either multiple trophy images or the Fenway Park façade. The inside further memorializes the season with a Bearded Brothers image and 10-30-13, the date that the Red Sox brought the World Championship back to Fenway Park.

Israel Adopts Natural Is Real

Israels diamond industry is branding itself as the worlds prime center for trading natural diamonds, according to Shmuel Schnitzer, the president of Israel Diamond Exchange (IDE). "By adopting the slogan Natural Is Real, we are sending a clear message to the market that Israels diamond trade is all about natural diamonds," he said during the U.S. & International Diamond Week in Ramat Gan. IDEs board banned trading of synthetic diamonds from the house floor.

Foreign Traffic Light at Diamond Week

The U.S. & International Diamond Week in Israel ended with "good" diamond trading opportunity, but nothing stellar with only a limited number of foreign buyers. Two reasons for light foreign traffic were heard on the trading floor: trade show fatigue and visitor visa issues. The industry just came off three tradeshows in Basel, and the Israel Foreign Ministry strike prevented many foreign buyers from receiving visas in time to attend diamond week. Nonetheless, attendees emphasized that goods were moving, especially for specialty diamond firms.

CIBJO, CIFA Sign Agreement

CIBJO and the Council of Independent Financial Advisors (CIFA) signed a cooperation agreement, the "Global Partnership for Development," which calls for the creation of a joint program to educate their respective members about the UNs post-2015 development agenda. The signing ceremony took place at UN headquarters. The partnership will focus on society, where the groups aim not only to eliminate negative elements from their industries, but ensure that the jewelry and gemstone industry delivers a peace dividend, according to Gaetano Cavalieri, CIBJOs president. "We are committed to the well-being of all our stakeholders. Nobody should be left behind," Cavalieri said.

In addition, CIBJO published a new report this week, prepared by the CIBJO Diamond Commission, which addresses the challenge posed by the influx of synthetic diamonds into the pipeline. There will be a special conference on this topic on the first afternoon of CIBJOs Moscow Congress, on May 19.

Roberto Coin Obtains New Trademark

The U.S. Patent & Trademark Office (USPTO) issued the trademark "The Perfect Diamond Hoop" to Roberto Coin Inc. of New York on April 1 with the registration number 4508353. The trademark refers to earrings and it was originally filed on April 16, 2013 at which time it was also first used in commerce.

The USPTO also assigned the trademark "TCC" on April 8 to Hong Kong Galaxy Jewelry Limited for goods and services including boxes of precious metals, bracelets, charms, diamond jewelry, gemstones, gold thread and precious metals.

MINING 	  

ALROSA, DDE, GJEPC Sign Agreements

ALROSA signed cooperative agreements with both the Dubai Diamond Exchange (DDE) and Indias Gem & Jewellery Export Promotion Council. ALROSA and DDE will further strengthen their relationship by jointly contributing to the development of a competitive rough and polished diamond market in Russia. ALROSA and the DDE will also frequently exchange expertise and information regarding the implementation of the Kimberley Process Certification Scheme and responsible sourcing of diamonds. Furthermore, both parties will participate at global industry events and seminars, to share market intelligence and identify new trends and technologies.

ALROSA and GJEPC agreed to exchange information on how to engage their sectors, share diamond trade statistics and market research, address Kimberley Process issues and jointly work to ensure separate sales of natural diamonds, diamond jewelry and synthetics.

Lucara Tender Achieves $50M

Lucara Diamond Corp. sold 1,191 carats of rough diamonds from its Karowe mine during an exceptional stone tender on April 10 and generated $50.47 million or $42,347 per carat. The company offered 20 single stone lots and all were sold. The highest value stones sold were a 167.10-carat and an 86.80-carat diamond that achieved $75,821 per carat and $58,627 per carat, respectively. Lucara held two regular diamond tenders during the first quarter of 2014 and the year to date total from the three sales was $84.06 million.

Marange Diamond Tender Totals $29M

The Dubai Diamond Exchange (DDE) reported that its inaugural Zimbabwe diamond tender, which was held from March 23 to 30, achieved a sales total of $29.2 million at an average price of $76 per carat. The highest price per carat reached $5,000, according to the DDE. The rough diamond tender was facilitated by Global Diamond Tenders in cooperation with the Dubai Multi-Commodities Centre (DMCC) and included diamonds from Anjin, Jinan, DTZ-Ozgeo, Diamond Mining Company (DMC), Marange Resources, Mbada Diamonds and Kusena.

Zimbabwes Mines Minister, Walter Chidhakwa said the tender earned $4.3 million for the government through royalties. The Minerals Marketing Corporation of Zimbabwe (MMCZ), Zimbabwe Mining Development Corporation (ZMDC), Marange Resources and Mbada Diamonds are listed on the U.S. Office of Foreign Assets Control (OFAC), which means that U.S. residents and businesses may not trade or purchase diamonds in any form from these firms.
Lucapa Raises $6M

Lucapa Diamond Company raised $5.5 million, less costs, through a share placement to advance its Lulo diamond concession in Angola. The placement is subject to the clearance of funds and involved issuing approximately 917 million new ordinary shares, together with approximately 458 million listed options at no further consideration on the basis of one option for every two placement shares. The options, which are to be listed and exercisable at 1 cent each on or before August 29, 2015, remains subject to shareholder approval.

Debmarines Production +5%

Debmarine Namibia, a seabed diamond miner, reported diamond production rose by 5% year on year to 1.16 million carats in 2013. The company anticipates a similar volume this year. Debmarine generated revenue of $479 million from rough diamond sales. Debmarine plans to purchase a second seabed crawler for one of its five mining vessels at a cost of $9.6 million.

Stornoway Secures Funding Agreement

Stornoway Diamond Corporation entered into a financing agreement to raise $866.9 million (CAD 944 million) for construction at its Renard diamond project in Quebec. The agreement includes $360 million from private equity group Orion Finance, $202 million from Ressources Québec, a wholly-owned subsidiary of Investissement Québec and $96.4 million from Caisse de depot et placement du Quebec, a large institutional fund manager in the province.

The agreement also includes a public share offering and an equipment financing facility with Caterpillar Financial. Each element of the financing transaction is conditional on the completion of the others and the successful completion of the marketed subscription receipt offering. Construction at Renard is slated to begin in June this year with commercial production expected to commence in the third quarter of 2016.

North Arrow Begin Survey Program

North Arrow Minerals Inc. began its program of ground geophysical surveys for the Redemption diamond project in the Northwest Territories of Canada. The property is located 32 kilometers southwest of, and 47 kilometers west of the Ekati and Diavik diamond mines. Twenty-one grids are planned for the program, covering approximately 40 individual targets and North Arrow expects to complete the program in approximately 28 days. Survey results will be used to select targets for follow up exploration, including drilling.

STATS 	  

Hong Kong

2013 $Mil. YOY %Chng.
Polished imports $18,015 9%
Polished exports $12,154 6%
Net imports $5,861 16%

Rough imports $1,932 14%
Rough exports $2,546 35%
Net imports ($614)

Net diamond account $5,8%

ECONWATCH 	  

Diamond Industry Stock Report

Weak consumer spending sent U.S. retail shares lower, except for Zale, which was unchanged. European shares were mixed with LVMH (+6%) and Swatch (-2%) defining the spread. Indian shares higher except for Goldiam (-1%) and Titan (-2%). Mining stocks were largely unchanged except for Gemfields (+12%). View the extended stock report.
Apr. 10 Apr. 4 Chng.
$1 = Euro 0.720 0.729 -0.009
$1 = Rupee 60.09 60.19 -0.1
$1 = Israel Shekel 3.46 3.47 -0.01
$1 = Rand 10.47 10.64 -0.17
$1 = Canadian Dollar 1.09 1.10 -0.01

Precious Metals
Gold $1,318.10 $1,286.70 $31.40
Platinum $1,449.00 $1,438.00 $11.00

Stock Indexes Chng.
BSE 22,715.33 22,509.07 206.26 0.9%
Dow Jones 16,170.22 16,572.42 -402.20 -2.4%
FTSE 6,641.97 6,649.14 -7.17 -0.1%
Hang Seng 23,186.96 22,565.08 621.88 2.8%
S&P 500 1,833.08 1,888.76 -55.68 -2.9%
Yahoo! Jewelry 1,034.56 1,046.76 -12.20 -1.2%

grofik napsal/a:

Polished markets stable...

No to jsem si oddechl, uff...🙄