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Rapaport TradeWire April 27, 2012

Apr 26, 2012 6:00 PM   By Rapaport
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Rapaport TradeWire
RAPAPORT NEWS SERVICE | April 27, 2012 |
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Rapaport Weekly Market Comment April 27, 2012

Rough market cautious ahead of next week’s DTC sight, which is expected to be moderate at around $500 million. Rough prices appear unsustainable at current levels as polished prices have not kept up with rough price increases. Diamond manufacturers continue to suffer from poor or negative profit margins. Polished trading remains stable with rising expectations for next week’s China May Day retail season. U.N. extends rough diamond ban on Cote d'Ivoire for a year.

RapNet Data: Apr. 25
Diamonds   869,602
Value $5,936,292,843
Carats   931,020
Average Discount -26.37%

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  [The Charles Taylor verdict shows] the days when tyrants and mass murderers could, even when they had been deposed, retire to a life of luxury in another land are over. And so they should be. Sierra Leoneans suffered so much during the terrible conflict that wracked their country for some 10 years, and so many vicious crimes were committed. The victims, and their families, will continue to need help from the current government and the international community for many years to come.

Navi Pillay | U.N. Commissioner for Human Rights

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Tiffany Celebrates 175th Anniversary

WATCH NOW: See how Tiffany & Co. is celebrating its 175th anniversary by resetting the company's icon—the 128.54-carat Tiffany Diamond—in a spectacular diamond and platinum necklace. The famed stone, which originated in the Kimberley mines, has only been reset four times before. Also in this broadcast, check the latest U.S. consumer confidence index for April. The Conference Board noted a softening of consumer optimism.

Consumer Demand Tepid on Akshaya Tritiya

Consumer demand for gold during Akshaya Tritiya was tepid due to high prices. While sales improved by value from 2011, they declined in terms of volume.  Gold prices have risen over 30% over the past year, with 10 grams of gold going for around $557, compared with $423 in 2011.  Gold exchange traded funds (ETFs), however, bucked the overall trend on the holiday as investors traded a record $116.8 million by value on the National Stock Exchange.  The number of gold ETFs units traded stood at 2.2 million as compared with 2 million in 2011.

Michael M Debuts its 'M. Collection'

Jewelry manufacturer Michael M. is debuting the ''M. Collection'' this month, featuring a line of 21 engagement rings and nine wedding bands. Each piece is manufactured Michael M.'s downtown Los Angeles workshop, using the finest quality of precious metals and diamonds. Price points for the settings start at $1,000 and are available at select U.S. retailers. The M. Collection, the tenth bridal line from Michael M., places the diamond solitaire silhouette as the focal point of each engagement ring design, while still blending signature elements from their most popular styles.

Diamonds Direct Sues BFJ for Trademark Infringement

Diamonds Direct USA filed suit against BFJ Holdings, doing business as Capri Jewelers, for trademark infringement unfair competition, false advertising and violating Virginia's consumer protection act. Diamonds Direct, which is based out of North Carolina, secured a new location in Richmond, Virginia and contracted-out to model the retail space. In January 2012, Diamonds Direct filed its corporate papers under the laws of the Commonwealth of Virginia in preparing to open the store, but even though it claimed to have kept plans confidential, an employee of a contracting service allegedly informed Capri Jewelers of the plaintiff's plans.

Diamonds Direct alleged that Capri Jewelers, upon obtaining the information that a would-be competitor was opening in Richmond, began an advertisement campaign using the phrase and signage ''Diamonds Direct.'' The plaintiff cited radio commercials, billboards and catch phrases promoted by Capri Jewelers as evidence, and Diamonds Direct also alleged that Capri Jewelers had never before used the term ''Diamonds Direct.''  Diamonds Direct seeks compensation for lost business and an injunction requiring Capri to cease using the phrase.

Pandora Celebrates Spring Color in New Collection

Pandora is celebrating colors found in nature with its new spring and summer  2012 collection, which began arriving at U.S. retailers this month. The new collection, Floral Nostalgia, features more than 100 new jewelry pieces that combine classic feminine details with contemporary designs and includes hand-finished rings, charms, pendants, earrings and watches. New additions to Pandora's  Moments collection also include sterling silver and 14-karat gold openwork charms in floral and ornamental designs, and the brand released the most popular charms in sterling silver to keep with the brand's offering of affordable jewelry.

Gitanjali Sets Up Second Kiosk

Gitanjali Group partnered with the Siddhivinayak Trust to set up a Gitanjali Jewellery Vending Machine at Mumbai's most popular and significant temple for Lord Ganesha, the Shree Siddhivinayak temple. This event was planned for Akshaya Tritiya and marks the second location for Gitanjali's self-serve kiosk in Mumbai. The new vending machine, which acts as an ATM for gold and diamonds, gives worshipers at Shree Siddhivinayak  an opportunity to celebrate the season  with gold coins, bars and jewelry.

Diamond Circle Capital Reports Profit of $3M

Diamond Circle Capital, an investment fund dealing with high-quality diamonds, reported unrealized gains of $5.64 million for the year that ended on December 31, compared with a loss of $264,909 in 2010. Profits surged to $3.44 million compared with a loss of $2.3 million in 2010.  At the close of the financial period, Diamond Circle Capital reported holding diamonds worth $47.97 million, up from $44.74 million one year earlier. Total company assets rose 5.6% year on year to $53.49 million. According to the company's regulatory filing, the portfolio consisted of approximately 68% colorless diamonds and 32% was of colored diamonds.

LJ Interational Profit -22% to $10M

LJ International reported fiscal-year 2011 operating revenue of $182.2 million, a year-on-year increase of 30% for the period that ended on December 31. Cost of goods sold rose 13% to $92.7 million. Wholesale revenue  increased 12% to $69.4 million, but retail sales surged 44% to $112.8 million. Profit fell 22% to $10.1 million, however, net income attributable to shareholders plunged 72% to $3.7 million or 7 cents per share.

Court Rules Taylor is Guilty of War Crimes

The Special Court for Sierra Leone found former Liberia President Charles Taylor guilty of war crimes and for backing rebels who killed thousands of residents during Sierra Leone's civil war. He was cleared of ordering the crimes, but was found guilty of crimes against humanity, murder, rape, slavery and the use of child soldiers.  Sentencing will take place in coming weeks and most likely any jail term would be served in the U.K. Taylor is the first president from Africa who has ever been convicted by an international tribunal.

Antwerp Mourns Passing of Baruch Daum

The Antwerp diamond community mourns the passing of Baruch Daum, a well known, established diamond dealer. His charitable work and kindness was his trademark. He was loved by all who knew him and will be missed. Daum is survived by his wife, Andrea and his two daughters, Tamara and Aviva, and his son Raphael.

Dubai, Gujarat Sign Pact to Boost Diamond Trade

The Dubai Chamber of Commerce and Industry and the Southern Gujarat Chamber of Commerce and Industry (SGCCI) jointly agreed to promote bilateral trade, mainly in diamond and textile businesses. The agreement sets the framework for the development of joint ventures, technology transfers and investment, exchange of trade inquiries and delegations besides consolidating economic relations between Dubai and Surat. Dubai's cooperation with Surat in the area of diamonds is immensely important as the emirate becomes a major trading hub.

Couture Names Gannon Brousseau as Show Director

Gannon Brousseau has been named the Couture show director, joining Chris Casey and Lee Arevian in the expanded leadership team. Brousseau joins Couture after six years with Nielsen's merchandise group where his experience included heading the group's gift and jewelry departments. Couture has recently launched a series of new offerings in the market, which he'll help drive. These include The Couture Press Preview in July of this year as well as Couture India in January of 2013.

U.N. Extends Rough Diamond Ban on Cote d'Ivoire

The U.N. Security Council renewed a ban on rough diamonds leaving Cote d'Ivoire for another year, which now extends through April 30, 2013. The measure was largely expected, but the Security Council did adjust the arms embargo in light of the need for weapons and ammunition in order to train and equip the country’s security forces.

Peregrine Discovers a Third Kimberlite at Lac de Gras

Peregrine Diamonds discovered a third kimberlite during its winter drill program in the Lac de Gras region, Northwest Territories, Canada and named it LD-3. The new kimberlite is located on a claim that Peregrine Diamonds owns, approximately seven kilometers southwest of Peregrine's DO-27 kimberlite, which has an 18.2 million carat resource that is open at depth. LD-3 is a dark green to black volcaniclastic kimberlite with abundant coarse olivine, garnet and chrome diopside. Just this past week, Peregrine confirmed it had discovered its first two kimberlites at Lac de Gras this year, LD-1 and LD-2. Samples from all three kimberlites will be sent to the Saskatchewan Research Council Geoanalytical Laboratories for microdiamond testing by caustic fusion with results anticipated in the third quarter.

ALROSA Board Approves $254M for Dividends

ALROSA's supervisory board recommended dividends of $253.6 million (RUB 7,438,615,000) based upon 2011 net earnings of $1 billion (RUB 29,519,001,000). The dividend payment would be at RUB 1.01 per one outstanding ordinary, registered share of 50 kopecks par value. The board also announced its annual general meeting will be held on June 30, in Mirny, Yakutia.

Lucara Recovers 5,300 Carats from Karowe

Lucara Diamond produced its first diamonds from the Karowe mine in Botswana. More than 5,300 carats of diamonds were recovered and included four special-size stones larger than 10.8 carats, the three largest of which were 25.88 carats, 16.55 carats and 14.56 carats. Lucara intends to have its first sale of diamonds recovered from the Karowe  during the first two weeks of June 2012. Lucara Diamond also signed a definitive agreement with The Bank of Nova Scotia for a $25 million revolving-term credit facility with a maturity date of March 16, 2014, which may be extended. Up to $15 million is available immediately with the balance available following delivery of security over the company's Karowe assets, which is expected during the second quarter of this year.

Stornoway Raises $5M in Private Placement

Stornoway Diamond closed a private placement with the explorer's largest shareholder, Diaquem Inc., an indirect wholly-owned subsidiary of Investissement Quebec, for aggregate gross proceeds of $5,097,950. The placement  was completed as a result of Diaquem exercising its pre-emptive right, and upon the same terms as the units issued by Stornoway pursuant to a public offering, which closed on March 28, 2012. As a result, Diaquem now holds 25% of Stornoway's issued and outstanding common shares.

Illegal Panning Dries Up Rivers in Zimbabwe

Poor Zimbabweans who have turned to illegal panning for gold and diamonds in order to survive, are contributing to mass destruction and siltation of local rivers. Illegal gold mining is common along rivers that run close to the Great Dyke, while diamond panning is associated primarily with the Chiadzwa District of Manicaland.  As gold panners mix mercury to concentrate their yields, there is also growing concern of mercury poisoning across the ecosystem. The panning activities have also destroyed river banks, caused massive siltation, which kills fish and makes the water unusable for drinking, and indirectly there are now higher rates of evaporation so rivers run dry and cannot supply local farmers with irrigation.

Diamond Industry Stock Report

U.S. and European retailers pulled ahead this week as shares gained much needed traction, the exceptions were Walmart (-5%) and Zale (-2%). Indian firms, however, were mostly lower with only Goenka Diamonds (+9%) ending the week ahead. In mining stocks, Lucara Diamonds (+11%) performed best, while Gem Diamonds (-7%), Namakwa Diamonds (-8%), and Stellar Diamonds (-7%) were lower. Read the extended industry stock report for this past week.
  Apr. 27 Apr. 20 Chng.  
$1 = Euro 0.750 0.760 -0.010  
$1 = Rupee 52.48 52.07 0.4  
$1 = Israel Shekel 3.75 3.76 -0.01  
$1 = Rand 7.76 7.85 -0.09  
$1 = Canadian Dollar 0.98 1.00 -0.02  
Precious Metals        
Gold $1,656.90 $1,642.40 $14.50  
Platinum $1,566.00 $1,577.00 -$11.00  
Stock Indexes       Chng.
BSE 17,130.67 17,503.71 -373.04 -2.1%
Dow Jones 13,204.62 12,964.10 240.52 1.9%
FTSE 5,748.72 5,744.55 4.17 0.1%
Hang Seng 20,809.71 20,995.01 -185.30 -0.9%
S&P 500 1,399.98 1,376.92 23.06 1.7%
Yahoo! Jewelry 952.99 958.03 -5.04 -0.5%

Polished and rough trading activity

Polished trading is slow and liquidity remains very tight. Rough trading is weaker as summer vacation begins and the dollar strengthens. Read the full report.


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