DIAMOND

EXCLUSIVE EXPOSÉ 30 May 2012 | Vol.27 No.710 INTELLIGENCE By Chaim Even-Zohar

Exposing the Fraudulent Undisclosed Synthetic Diamond Trail A photograph of the undisclosed synthetic diamonds submitted to the IGI in Antwerp. BRIEFS

A Confidential Service for Executives in the Diamond and Diamond 7299 4 CORNERS OF THE GLOBE  7302 DIGGING THE DIRT Jewelry 7306 BRIEFLY NOTED  7307 OFF THE SHELF Business EDITORIAL

elling synthetic diamonds as if they were naturally mined Pure Synthetic Gemesis Parcel goods is, perhaps, the gravest crime one can commit Reacting to last week’s story, the IGI advised that the parcel within the trust-based diamond community. The (by of hundreds of synthetic stones was not “mixed” but made up now) notorious undisclosed synthetic polished diamond entirely of synthetic stones. The buyer of the goods intimated Sparcel submitted to the International Gemological Institute (IGI) that he made a selection from a larger assortment –maybe four laboratory in Antwerp - that Diamond Intelligence Briefs first or five times larger; he simply took “a cut.” One is talking about revealed last week - has catapulted to the top of the industry’s thousands of synthetic stones worth tens of millions of dollars if concerns – and perhaps its fears. sold as naturally mined goods. Among the industry’s leadership in the major centers one We believed last week that the parcel was composed of can sense an intense feeling of betrayal. Calls are being made Gemesis-created materials. However, in order to allow any of the for emergency meetings to contemplate what to do next. There parties to come forward, we wrote in our editorial that Gemesis seems a resolve that “someone has to pay for this dearly, has was the “most probable source.” to be held accountable, has to be removed from this industry Then, we watched how Gemesis President and CEO Stephen forever – or maybe even more infinitely….” Lux sprang into action. A responsible, concerned, realistic and But it is not just anger reverberating through the international humble manager would have responded along the lines of: diamond centers – there is a genuine anxiety about the future “This is very serious. This runs against all our ethics and good of the diamond business. governance principles. I hope these are not our diamonds. In DIB set out to uncover the transaction trail – finding the sellers any event, we shall do everything to assist the industry to get and the source of the undisclosed synthetic diamonds. Chaim to the bottom of this.” Even-Zohar’s second report on this subject follows: Instead, Lux sent e-mails to select trade journalists in which

Comparison : CVD + heated from IGI Parcel versus other CVD Chemical Vapor Deposition (CVD) synthetics can be grown under a range of growth conditions and chemistries and the spectroscopic properties of the material will vary according to these differing growth conditions. In addition, these synthetics may be heat treated after synthesis to improve certain properties and this heat treatment can lead to changes in impurity structures, which can also be probed using spectroscopic techniques.

Undisclosed CVD synthetic (Image 1): bluish green luminescence dominates as is often the case for synthetics that have been heat treated after synthesis. This CVD synthetic shows clear evidence of post synthesis heat treatment.

As grown CVD synthetic (Image 2): orange luminescence from nitrogen- vacancy defects dominates as is generally the case for CVD synthetics that have not been heat treated after synthesis.

Coarser striations observed in the CVD synthetic in Image 2. These striations are a result of the “steps” that form during CVD synthesis. The difference in Image 1: DiamondView Fluorescence image: striations indicates that the CVD growth process was significantly different Undisclosed CVD synthetic submitted to IGI resulting in different surface features forming during growth.

Regions of blue luminescence observed in the CVD synthetic in Image 2 are a result of extended defects called dislocations. For synthetics these are generally associated with lower quality material.

The greenish image of one of the stones in the IGI parcel shows identical characteristics of Gemesis synthetic images in the professional literature. The second image is of a non- heat treated CVD. The IGI is the lab that has the best Image 2: DiamondView Fluorescence image: judgment of what is a Gemesis stone, as they do all the Non-heat treated CVD synthetic Gemesis certification and know these stones very well. DIB # 710, May 30, 2012

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he implicitly tarnished other When the buyer of the undisclosed synthetic diamond parcel producers who allegedly have discovered that the goods were synthetics, he immediately the same synthetic capabilities called the New York broker who had served as intermediary and then declared: “Gemesis between him and Su-Raj. When the broker called Su-Raj’s Ashok can assure the industry with 100 Bhansali, the latter reputedly didn’t sound surprised. Formally, percent certainty it has not been he has apparently claimed innocence. He reportedly has said involved in selling its diamonds that he “had bought these goods on the New York market.” He as mined, and the undisclosed denied knowing that the diamonds sold in diamonds referenced in the DTC this transaction were synthetics. [DIB was and IGI alerts are not Gemesis unable to reach Bhansali before press time; diamonds.” we have left our phone number with his Stephen Lux We wonder what Stephen secretary.] Lux will say after learning that, This is something the diamond trade beyond any shadow of a doubt, his statement was 100 percent has to come to terms with: when caught inaccurate. More about this later. dealing in undisclosed synthetic diamonds that are being passed off natural, the first Synthetic Fingerprints reaction will always be “I didn’t know.” In Synthetic diamonds have a very specific fingerprint; the some instances this will undoubtedly be true. Jatin composition of the stone will identify its source. An experienced In this article we are not accusing Mehta producer explained it in layman’s terms as follows: “The basic anyone specifically of committing a crime. know-how for growing CVD or HPHT synthetic diamonds is not We are not qualified, nor do we have any intention, to do so. so difficult. The technology is widely available on the market. We are just presenting the facts as we have uncovered them. However, each producer has its own secret ‘recipe’ – what We do say, however, that clearly a crime was committed by materials to use, what ‘ingredients to put in it,’ what seeds, what someone in the transaction chain. Otherwise, no undisclosed combination of temperatures, etc. After having acquired the HPHT synthetics could have been submitted to the IGI lab. In our diamond growing equipment, it still took Gemesis some seven journalistic sleuthing, we didn’t look for people – but rather for years to get its recipe right. Therefore, when one compares several the diamond source. stones of Gemesis synthetics, one will unmistakably recognize that these come from one and the same source. The specific composition is unique to the Gemesis process.” The DTC Diamond Research Center basically made a comparison between the goods submitted to the IGI – photos of which we publish with this article – and other known Gemesis photos. In a most careful manner, the DTC wrote in its alert to clients: “The DiamondView and photoluminescence results indicate that the CVD synthetics have been heat-treated post synthesis and we note that the combination of characteristics listed above [in the alert] is strikingly similar to that reported by the GIA for 16 CVD synthetics received from Gemesis Corporation.” That being said, the ultimate confirmation comes fromfinding the physical source – the office, the inventory – of the synthetic diamonds that were submitted to the IGI. And indeed, we found it.

The Seller: Su-Raj Diamonds in New York Gemesis NY Fulfillment Center The trail of invoices covering the purchase of the undisclosed in Su-Raj Offices synthetic diamonds leads to the source – Su-Raj Diamond & Now back to Gemesis. In a letter to shareholders in November Jewelry USA in New York. This company is ostensibly owned by 2001, Steve Lux reports that “the company has been working a partnership between Ashok Bhansali and Jatin Mehta (the nonstop to properly complete and launch our new e-commerce very same Jatin Mehta who is also the majority shareholder website. It was the desire to report that the new Gemesis website, in Gemesis). More precisely, Jatin’s ownership is through the which would facilitate the sale of our diamonds and jewelry publicly listed Su-Raj company in India – at least until recently. directly to consumers, was up and running. However, that event

DIAMOND INTELLIGENCE BRIEFS 7293 Photos of EDITORIAL "Undisclosed Synthetic Parcel" - courtesy IGI, Antwerp

has yet to occur.” The website has, in the meantime, become operational. Writes Lux: “Gemesis has established its order fulfillment center in New York to appropriately handle the web-based sales.” Lux, CVD synthetic 0.52ct VS1 who had told us previously that he is the CEO in charge of all Gemesis global sales – both from Singapore CVD facilities and from those produced by the HPHT process in Malaysia – has in fact moved the firm’s diamond inventory to New York. This transfer was completed around the end of 2011. To make a long story short: the Gemesis New York fulfillment center, i.e. the Gemesis inventory, is housed in the very same Su-Raj Diamond & Jewelry USA offices from which the sale of undisclosed synthetic diamonds was made. Is this just a coincidence? Maybe. Gemesis has hired an experienced New York diamond salesman, Michael Chernick, to manage its fulfillment center. Chernick has a sterling reputation. He left a position as head of diamond buying at Kaprielian Enterprises, Inc. to work for Gemesis. After Lux made his statement about being “100% certain that the [undisclosed] diamonds were not Gemesis diamonds,” we CVD synthetic 0.58ct VS1 queried “How would you explain that a huge amount of pure synthetic stones would be available at your own fulfillment center, under the eyes of a Gemesis employee, in premises owned by the majority shareholder of Gemesis (both USA/Malaysia and Singapore) and that these synthetics would – as you suggest – 100% originate from NON-Gemesis sources?” Lux responded: “there is no common ownership between Su-Raj NY and Gemesis USA. It is true that we have rented space in NYC but this space is independent of any other company, has its own entrance, staff, safe and pays fair market rent for its use. The owner of the premises happens to be Su-Raj NY.” The undisclosed synthetic sale was made by Su-Raj Diamond & Jewelry USA – not by Gemesis. The paper trail shows that Su- Raj invoiced a local broker, and the local broker invoiced the Indian buyer in Antwerp. CVD synthetic 0.56ct VS1 An Equation That Does Not Add Up Somewhere, somehow, there is still something that doesn’t of character for him. Drawing Su-Raj into a possible criminal make sense. Jatin Mehta has invested tens of millions of dollars in investigation would immediately impact his company’s share acquiring or developing Gemesis synthetic gem-quality diamond price and would draw in stock exchange investigators. With the technologies. He is probably one of the two or three largest firms trail now clear, it was time for Su-Raj Chairman Jatin Mehta to in the gem-synthetics world. Why would he risk his investments, give some answers. his reputation, and his other diamond and jewelry enterprises by allowing a company under his ownership to engage in what Su-Raj New York is NOT Su-Raj India appears to be unscrupulous activities? Might it have been “an We caught Jatin on the phone while he was on his way from accident?” Dubai to New Delhi. He was eager to give explanations and to One might possibly argue about business ethics – Jatin is answer questions. The first thing he stressed was that on the 14th a shrewd and occasionally controversial businessman having of February 2012, the Su-Raj mother company in India formally created a billion-dollar diamond and jewelry empire. He has adopted a board resolution to disinvest from Su-Raj Diamonds also had his share of legal challenges. But even his (many) & Jewelry USA, Inc. (in New York), from Su-Raj Diamonds NV detractors will agree that he has a brilliant mind, bordering on (in Belgium), and from Su-Raj Diamonds (HK) Ltd. The board genius. Willfully doing something so stupid would be totally out authorized Jatin Mehta “to execute the necessary transfer forms

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and/or other documents and to do all necessary acts, deeds and things as may be required to carry out the aforesaid disinvestment of the subsidiary companies.” Thus, while the name Su-Raj still appeared on the doors in New York, Belgium and Hong Kong, and the businesses were still operating as Su-Raj, Jatin Mehta made it clear that he was not involved with them anymore. The business in New York continued with his former partner, Ashok Bhansali. Though this may appropriately reflect the legal situation, it still raises many questions. Clearly, Jatin Mehta went out of his way to disassociate himself with the undisclosed synthetic sale that had taken place in his offices. However, he remained very vague as to whom the shares of these subsidiaries were sold and for how much, and what has happened with their diamond stocks. The “effective implementation” date is not known as well. Su-Raj (India) Company Secretary Asish Narayan confirms that the U.S. company "has not been privatized and its shares have not been sold to [Jatin's son] Mr. Suraj Mehta. Information on the sale of the shares will get reflected in our Annual Report to the shareholders and Statutory Authorities as per the legal requirements of ouyr country."

The New York Inventory of Su-Raj In the diamond business, when a partnership is being dissolved, one of the partners (usually the financially stronger one) will post a notice in the diamond bourses announcing that from a certain date, one partner ceases to assume responsibility for the debts, obligations and actions of the other partner. Under New York law, if at the time the transaction took place, Jatin was neither a shareholder nor a director, he, indeed, cannot be held responsible for the company’s actions. The nature of the “partnership” with Ashok Bhansali may well become a potent issue as this saga evolves. According the Su- Raj India Company Secretary Asish Narayan, “the question of breaking the partnership does not arise as the above [disinvested companies] are 100% subsidiaries and separate legal entities duly registered under the relevant corporate laws of respective countries.” According to the records of the New York Department of State, as of May 25, 2012, no name change had been filed for Su-Raj Diamonds & Jewelry USA, Inc. So why would Su-Raj India disinvest in its subsidiary but allow new shareholders to continue to use its name? In India, Su-Raj (the mother company) is a member of the diamond bourse. The question thus arises as to whether such an announcement of ownership change to the bourses needed to be made. Narayan assures us that “our Company has not violated any statutory or customary laws of the Bharat Diamond Bourse.” In any event, the New York diamond market was apparently not aware of the separation. But the essence – to me – was the synthetic diamond stocks. How is it that whoever made the sale

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originated from some [unnamed] Chinese producer who also Bharat Diamond sells massive amounts of gem-quality synthetics on the market.” Bourse When I countered that the synthetics submitted to the IGI had the specific Gemesis fingerprint, the implications of which Jatin Mehta clearly comprehended, he offered another scenario: “There were some people who had left Gemesis before I assumed control; they might have stolen our technology and are thus producing our typical characteristic Gemesis goods,” he suggested. Neither answer is satisfying. Gemesis didn’t have CVD technology before Jatin Mehta became the controlling shareholder. So it seems implausible that the technology was stolen; and even if this was the case, it would have taken years to get to any production on a meaningful scale. Again, something doesn’t add up.

The Ashok Bhansali Factor Jatin Mehta suggested that at the relevant time, the Su-Raj at Su-Raj Diamonds & Jewelry USA in New York had access to office in New York was managed and owned by Ashok Bhansali. these un-inscribed synthetic diamond stocks? Irrespective of the kind of involvement in the specific transaction – on which we don’t want to comment – there remains the Jatin Mehta Explains general question of overall legal responsibility. If Bhansali is a Jatin Mehta had no clear answers. He alluded that it was member of the Diamond Dealers Club of New York, this may possible that the seller of the undisclosed synthetics (i.e. his former also have ramifications. partner) “had misappropriated stocks held previously by the Most of our contacts say that Bhansali is an employee and partnership.” It was also possible, he suggested, that “these stocks not a principal of Su-Raj Diamond & Jewelry USA, and if he

THE GEMESIS BOARD OF DIRECTORS: COUNCIL OF SAGES

ho runs the U.S. Gemesis Corporation? Its Board of Directors that counts only three individuals: Chairman (and company founder) Carter W. Clarke, Gene Josephs and Stephen Lux. The company has probably more than 100 Wshareholders, but the reality is that the bulk of the shares (next to the 50.1 percent that is held by Jatin Mehta or his assignee) are held by a gentleman, now well over 80 years old, named Dwaine Willett. When Gemesis was about to go bankrupt, around 2006, Willett came to the rescue investing US$20 million in the company. When Willett joined, virtually all of the company’s original shareholders saw their holdings diluted to next to nothing. One of those shareholders is Grace Venture Capital, an early supporter of Gemesis. Willett comes from car dealerships. His background includes positions with A Betterway Rent-A-Car Inc., Willet Toyota Inc., and a Honda dealership in the Atlanta region. Since 1969, he has owned and operated up to seven auto dealerships in the Atlanta, Georgia, and Orlando, Florida, regions. He has been a majority shareholder in seven Budget-Rent-A-Car franchises operating in the Southeast and Midwest of the United States. From the car rental business Willet drove straight into Gemesis through a company called Investment Partners of Orlando in which he is a partner. He appointed the president of this investment company, Gene Josephs, as his representative on the board of Gemesis. What background does Josephs bring to the table? Josephs, now in his early 70s, worked for IBM Corporation for 31 years holding various positions including systems engineer, marketing representative, financial programs manager within state/local government, product staff and field marketing management. In 1998, he assumed the helm of Investment Partners of Orlando (IPO), a venture capital firm with investments primarily in high technology companies. He sits on the boards of a range of companies in the software, high-tech and banking sector. Carter W. Clarke, now deep in his 80s as well, founded and served as the first CEO of Gemesis. He spent 26 years in the U.S. Army in a variety of command and staff positions, attaining the rank of Brigadier General in 1970. Clarke retired from the Army in 1973 to pursue business interests. From 1975 to 1980, he founded several electronic security companies. He is the last remaining member of the old guard. Jatin Mehta is not represented on the board. Maybe he doesn’t need it.

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is a principal, it would only be a few percentages, perhaps signifying more of a profit-sharing arrangement rather than a formal ownership. The 44-year-old Bhansali has a long history with Su-Raj, actually all of his working life has been tied to the company. As a teenager, he started to work for the company in Mumbai. He soon moved to what was then called Alma Diamond in New York, which was a partnership between Jatin Mehta and a now retired brother-in-law. Bhansali has been associated with a number of companies, such as ASB International, Inc. (in New Jersey), Su-Raj Diamonds Industries PVT Ltd. (in New York) and others. More recently, he also seems to be a shareholder in Shine Diamonds & Jewelry LLC, a company established in 2007 in New York. Another company is VJM Jewelry, LLC, in New York, which closed its doors in mid-2011. His status at Su-Raj Diamond & Jewelry USA is formally that of A close-up of the boxes of undisclosed Company Secretary and Treasurer, while Jatin Mehta is Chairman. synthetic diamonds To what extent any of this makes Bhansali owner or responsible that were submitted to director is not for us to determine. Clearly, Bhansali is a core the IGI in Antwerp. factor in this story. GEMESIS SYNTHETICS ARE UNIQUE AND IDENTIFIABLE Where is the Gemesis Rough Production? The individual characteristics (or “recipe”) of each The interview with Jatin Mehta was extremely frank. Moving CVD synthetic diamond is also the result of the specific to the subject of rough synthetic production, we noted that technologies derived from unique patents. This week, based on publicly available information, there seems to be a another Gemesis-Singapore patent was published as lot of synthetic rough unaccounted for. Where is the missing described below. Producers using patents held by other synthetic rough, we queried. Jatin countered that there had producers sooner or later will find themselves in court. never been much production – and the figures quoted in the market are greatly exaggerated. LATEST GEMESIS SINGAPORE PATENT DETAILS: Our figures are based on a variety of sources. There was Method for growing white color diamonds by using diborane a 2007 interview (by Danielle Rossingh of the National Post), and nitrogen in combination in a microwave plasma where Gemesis CEO Steve Lux stressed his “aim is to take 10% chemical vapor deposition system of the rough market, in value terms, in five years.” That would Applicant: The Gemesis Company, Singapore put synthetic rough sales at a US$1.7 billion annual level, which Publication: 2012-04-05 is clearly not remotely the case – and certainly not for Gemesis. Filed: 2010-10-11 Focusing specifically on his company, Stephen Lux (in a 2009 Status: application interview with David Finlayson, a journalist with “The Gazette”) said: “Four years ago, Gemesis had 24 diamond-producing machines. Scientific Description: The present application discloses the Now it has several hundred producing hundreds of millions of details of a microwave plasma chemical vapor deposition dollars revenue at the wholesale level.” Hundreds of millions? process that uses Nitrogen and Diborane simultaneously in In 2011, according to the Gemesis financial reports submitted combination along with the Methane and Hydrogen gases to shareholders, Gemesis’s gross revenues were running at a to grow white color diamonds. The invention embodies level of about US$250,000 per month. That comes to about using nitrogen to avoid inclusions and impurities in the CVD US$3 million a year (three single millions). We know that a few diamond samples and Diborane for the color enhancement years ago, the company was selling synthetic rough at a level during the growth of diamond. It is also found that heating of some US$2-US$3 million a month. Thus, we have now the of the so grown diamonds to 2000 C results in significant rather perplexing and incomprehensible situation in which the color enhancement due to the compensation of Nitrogen company is obviously growing – but its revenues are plunging and Boron centers in the samples. The origin of the various to near nothing. The hundreds of millions of dollars in revenues colors in diamond is explained on the basis of the band on the wholesale level seem, to paraphrase a term used by Lux, diagram of CVD diamond. “close to 100% a distant pipe-dream.”

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New Synthetic Marketing Strategy labs, yourself, to come immediately to India and I will facilitate in the Making? visits to every place where we have diamond jewelry for you Why would the Su-Raj mother company disinvest from Su-Raj to inspect,” he answered. “I am running a transparent business offices in such important countries such asUSA , Belgium and Hong on the highest ethical standards.” Kong? According to one source close to the situation, “Jatin Then I asked if, likewise, he would cooperate – and have his Mehta will walk the extra mile to keep the synthetics business people cooperate, including those at Gemesis – in giving all out of the Su-Raj public company. He is most likely to register information and every assistance to investigate the New York these companies in the names of his children and wife Sonia and undisclosed synthetic diamond sale. To this, he answered, “of then turn these venues into marketing offices of synthetics. For course! That goes without saying.” I believe his response was this very same reason one can soon expect the disinvestment uttered with the utmost sincerity. from the Dubai-based subsidiary Su-Raj Diamonds and Jewellery DMCC as well,” predicts my source. [By the way: Su-Raj in India is What Next? A Sigh of Relief! going to change its name in the near future – it will be renamed On the eve of the Las Vegas show, the greater understanding “Winsome Diamonds and Jewellery Limited.”] of the source of the undisclosed synthetic diamond transaction “It seems quite likely that much of the Singapore CVD synthetic trail will give many dealers a sigh of relief. They can be confident production, annealed by the Gemesis Malaysia operations, is about their own stocks, as they know where they bought their own already channeled through the New York office. This would goods. The “witch hunt” that was going on, easily representing certainly explain the undisclosed synthetic diamond sale,” the loudest whisper in the diamond pipeline, is over. What remains concludes the insider. is that the industry and the authorities will have to decide what This could be reason for the minimal sales level of Gemesis to do with the players in the fraudulent transaction trail. USA – to the detriment of its American shareholders. Since the Clearly, something happened in a New York partnership creation of Gemesis, some US$50-US$60 million has been poured that had been dissolved. The main ex-partner, Jatin Mehta, has into it, says one shareholder. This begs the questions: Where is the unequivocally pledged his cooperation in getting to the bottom money? Where is the rough? Was Su-Raj “bypassing” Gemesis of this. Ashok Bhansali has still not returned our phone calls. in its sales, as the New York incident might imply? No, we still don’t know everything yet – but we know enough to conclude that there is no reason for a clash between the Anyone Invited to Inspect Su-Raj Jewelry synthetic producers and the natural diamond industry. Both sides Su-Raj mostly sells its products to jewelry wholesalers in New seem committed to take all the necessary measures to avoid York, Antwerp, Hong Kong and Dubai with whom it has long recurrence. And, most importantly, the main players involved are established relationships. “Is it possible,” I asked Jatin Mehta engaged – and will be engaged – in a dialogue. This certainly will almost hesitatingly, “that if we would take a tour of jewelry restore the confidence that had been shaken by this unfortunate stores selling your products we might find undisclosed synthetics Antwerp/New York incident. ♦ diamonds set in jewelry?” Jatin became upset. “I invite any industry body, the DTC, the Chaim Even-Zohar

HRD Antwerp among the Diamond Labs with Synthetic-Detection Technology n this editorial, we have mentioned the IGI and De Beers as having technology to distinguish synthetic Idiamonds from naturally mined ones. The HRD Antwerp diamond lab has also developed a compact screening device, called the “D-Screen,” which differentiates natural from potentially synthetic colorless or near-colorless polished diamonds. HRD “For the large majority of near colourless polished diamonds on the market, D-Screen guarantees that Antwerp's D-Screen the diamond is not-synthetic and not-HPHT treated. For the number of stones that are referred for further Technology examination, an additional investigation in a reliable laboratory is necessary,” reports the HRD Antwerp. The diamond-grading lab says that it has also developed a compact screening device for traders to use in their office or elsewhere that will conclusively identify synthetic diamonds. “By screening the diamonds, ‘D-Screen’ can distinguish between natural diamonds and potentially synthetic or treated ones. The instrument tells whether a diamond passes the test or is recommended for further examination in the diamond lab.”

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Alrosa Mulls Report: Mbada Diamonds Injects $300 Million Rough Supply into National Coffers to Gokhran in 2012 Marange diamond miner Mbada Diamonds has contributed approximately Alrosa and its subsidiaries Alrosa- US$300 million in revenue to the Zimbabwe government over the past two years, RUSSIA Nyurba, Almazy Anabara and according to Mbada Chairman, Dr. Robert Mhlanga.

Severalmaz could supply up to 4 billion ZIMBABWE Recently appearing before the government’s Portfolio Committee on Mines rubles (US$124.5 million) worth of rough and Energy, Mhlanga said his company had earned a total of US$592.5 million diamonds to the State Precious Metals and since commencing operations in 2009, Gemstones Repository (Gokhran) in 2012, reports the state-run Herald. He said reports Interfax, citing an Alrosa statement. of that amount, US$76.2 million had Alrosa did not sell diamonds to the been paid to government as royalties, Gokhran in 2011. The repository bought US$33.9 million for resource depletion, US$1 billion in rough from Alrosa in 2009. and US$5.96 million had been paid According to Interfax, Alrosa thought as marketing fees, according to the about selling US$300 million worth of news source. He added that a further diamonds to the Gokhran in 2011, but US$117.2 million had been paid to changed its mind after market prices government as dividend, US$42.5 increased last year by, on average, 53 million as corporate tax and US$17.8 percent to US$129.5 per carat. Instead, million had been paid as withholding Robert the Gokhran reportedly bought diamonds tax. Mhlanga from OJSC Nizhne-Lenskoye and OJSC “In total we have paid a total of Uralmaz, neither of which is a member of US$293,549,914 to Government and this constitute nearly 50 percent of the gross we the Alrosa group. generate with 26 percent going to working capital while 24 percent went to the other The Gokhran can spend up to 9.95 shareholder (Reclamation),” Mhlanga said, as quoted by the Herald. He added that billion rubles (US$309.8 million) on precious the company’s accounts are audited by KPMG. metals and gemstones this year, compared During his presentation, he reportedly raised the issue that U.S. and EU sanctions with a budget of 10.45 billion rubles against the diamond mining companies operating in Chiadzwa were hindering them (US$325.4 million) in 2011, notes Interfax. from competing on a level playing field.

A Second Chinese Firm May Start Mining Marange Diamonds KP Chairwoman Another Chinese firm may soon joinAnjin in its diamond mining Visits Angola operations in Zimbabwe’s Marange diamond area. As part of The Chairwoman of the Kimberley its diversification strategy, China-based Tiens, an international Process Certification Scheme (KPCS), U.S.

ZIMBABWEcompany involved in marketing Chinese traditional medicines Ambassador Gillian Milovanovic, was in ANGOLA and supplemental health food products, is planning to send a Angola last week for a two-day working special delegation to Zimbabwe to meet with President Mugabe and visit, reports the Angola Press. Citing a statement to formalize plans to venture into diamond and platinum mining, reports released by the U.S. embassy in Angola, the the state-run Herald. press service notes that the main purpose of Speaking shortly after his arrival at Harare International Airport last week, the ambassador’s visit was to meet with local Tien President Kevin Hou confirmed that in the following month a special authorities interested in diamond mining. delegation from Tiens headquarters will meet Zimbabwe government During her visit, the KPCS Chair was to hold talks officials over their proposal, reports the news source, which adds that with Angolan officials of the Ministries of Foreign the Tien president was welcomed by Zanu-PF Politburo member Cde Affairs and Geology, Mining and Industry, as well as Kumbirai Kangai and his wife. with representatives of the state-owned diamond “We are hoping to co-operate with Zimbabwe companies in this company Endiama and the African Diamond huge business plan. Zimbabwe has vast business opportunities and a Producers Association (ADPA), to discuss the KPCS- good market hence we are looking forward to expand our activities in related issues, reports the Angola Press. This was this country,” Hou said, as quoted by the Herald. the ambassador’s first visit to Angola since her Country manager Lei Li said there are about 100,000 Tiens distributors appointment as chair of the KPCS in 2012. currently in Zimbabwe.

DIAMOND INTELLIGENCE BRIEFS 7299 4 CORNERS OF THE GLOBE

10 Illegal Diggers Killed SDA Calls on Indian in South African Diamond Mine Institutes to Offer Search and rescue teams have recovered the bodies of 10 illegal diamond Diamond, Jewelry diggers who were killed last week in a collapsed tunnel at De Beers’ deserted INDIA Courses Namaqualand diamond mines in South Africa’s Northern Cape Province, India’s Surat Diamond Association according to media reports. (SDA) is proposing that state-run industrial While 11 diggers escaped from the collapsing tunnels last Tuesday, May training institutes (ITIs) as well as other 22, and one survivor was rescued, De Beers believes that an additional 11 universities associated with the diamond SOUTH AFRICA diggers remain trapped in what it calls the “illicit diamond digging operation” industry start offering diamond polishing at Bontekoe, the site which forms part of the illegally excavated tunnels. and jewelry manufacturing courses to help fill the vacuum of skilled manpower trained Rescue Efforts in modern technology used in the trade. De Beers Consolidated Mines (DBCM) officials and representatives from its mining According to the Business Standard, and support team have been at the site of the accident since last Tuesday as part of in coming years, an estimated one million the rescue team, which also includes Proto Teams and trained workers will be required for the South African Police Services Disaster Recovery Phillip India’s domestic diamond and Barton Unit. According to DBCM, three of the 11 diggers who jewelry manufacturing needs. had escaped harm returned to the site to assist the “About 20 per cent of the recovery team to try and map where the tunnels and workforce migrated during the trapped diggers might be. The rescue team has also slowdown in 2008, of which only deployed a Trapped Persons Location Device above 10 per cent are back. So there grown and in the collapsed tunnels where people is already a deficit. Plus there may be trapped. is only one institute, the Indian “We express our condolences to the relatives of Diamond Institute, (IDI) which the deceased recovered from the Bontekoe site. provides training of using modern We continue to have one priority and it remains technology in diamond polishing,” single-mindedly to search for survivors and enable the safe recovery of all trapped SDA President Dinesh Navadia said, as diggers,” said Phillip Barton, DBCM Chief Executive Officer, in a statement released quoted by the news source. over the weekend. “We will continue to deploy our Company resources at the site Citing the big gap in supply and until the tunnels are found and safely cleared in the coordinated effort to, hopefully, demand of workers trained in modern recover any survivors still trapped at the site.” technology of diamond polishing and Barton added: “Our mission is to safely find any survivors of the collapse. We are jewelry fabrication, former SDA President focused on a human tragedy not on other matters. We again urge, personally, all Rohit Mehta estimates that the industry those directing, encouraging and participating in illegal mining to put safety first and needs at least 200,000 trained workers to cease their activities and to cooperate with the authorities in the region before every year. another person is injured of loses their life.” “It is estimated that we require 10 lakh [1 million] workers in jewellery fabrication Namaqualand units in the next couple of years. The GJEPC DBCM stopped operations in Namaqualand around three years ago pending the and other jewellery associations believe mines’ sale to fellow miner Trans Hex, which signed a US$27 million (225 million rand) that full-time courses in jewellery should acquisition deal last year. The miner reportedly closed down access to the mines in be introduced by universities. We need April when it discovered illegal miners from the area had started work in the tunnels. many more institutes like IDI to impart education and degree courses in the Namaqualand Mines in South gem and jewellery field,” Chandrakant Africa's Northern Cape Province Sanghvi, regional Chairman of the Gems and Jewellery Export Promotion Council (GJEPC) and President of the Gujarat Hira Bourse, told Business Standard.

DIAMOND INTELLIGENCE BRIEFS 7300 4 CORNERS OF THE GLOBE

Element Six Former Botswana President Joins Shrenuj Board Announces Its First U.S. Integrated diamond firm Shrenuj & Company Limited reports that Festus G. Synthetic Diamond Mogae, former President of the Republic of Botswana, has joined the company’s Manufacturing Facility INDIA Board of Directors as an independent director. in Silicon Valley Mogae, who worked at the International Monetary Fund and the Bank of Botswana Synthetic diamond super- before serving as the country’s Vice-President from 1992 to 1998, rose to the post of materials company Element Six President in 1998 and served two full terms of presidency, the maximum allowed by

UNITEDreports STATES that it is opening its first U.S. the constitution of Botswana, till 2008. Mogae currently serves as Special Envoy of manufacturing facility in Silicon the United Nations Secretary-General on Climate Change. In 2010, he also joined the Valley. The facility will house employees Advisory Board of U.S. Nonprofit TeachAIDS. in the production, technical and customer Among his other internationally recognized achievements, Mogae was awarded service fields, and will serve to establish the Grand Cross of the Légion d’honneur by former French President Nicolas Sarkozy a direct connection to Element Six Tech- in 2008 for his “exemplary leadership” in making Botswana a “model” of democracy nologies Division’s customers and partners and good governance. in the U.S. “Mr. Mogae brings a great wealth of Festus Mogae The company, part of the De Beers knowledge in areas including finance, Family of Companies and co-owned by economics, corporate governance, and Belgian materials group Umicore, says leadership. He has been an exceptional that its continued expansion into the role model in leadership and has in-depth U.S. market is in direct response to the understanding of diamond-economics,” growing demand and interest in synthetic says Shreyas Doshi, Chairman and diamonds for commercial use in advanced Managing Director of Shrenuj & Co. technology applications. “A significant part of our growth is “As the pioneers of the commercial CVD expected from diamond producing diamond markets, we have the technical countries. We have fairly large manu- excellence, capabilities and track record facturing operations in Botswana and South Africa. The insight of Mr. Mogae into to develop entirely new applications these producing centers will help us achieve our ambitious targets,” adds Doshi. for synthetic diamond,” says Cyrus Jilla, Element Six Chief Executive Officer. “With Financial Results our new Santa Clara facility, we will build In other company news, the integrated gem and jewelry manufacturer and retailer on our 25% year on year growth, and has recorded a 28 percent increase in revenue for fiscal 2011-2012 to US$560.3 million deliver innovative products which enhance (INR 31.5 billion). The DTC sightholder’s profit for the year, totaling US$12.5 million (INR productivity, reduce energy consumption 703.4 million), also showed a double-digit growth of 24 percent. and lower operational costs.” During the year, Shrenuj commissioned a jewelry-manufacturing unit in Botswana The company has also recently and a diamond-polishing unit in South Africa. It also proposes to augment its diamond announced the construction of a US$32 polishing manufacturing by commissioning another large-scale factory in India later million synthetic diamond supermaterials this year. research and development facility in The company reports that it secured a “significantly large” supply contract for Oxford in the UK. To read more details of 2012-15 from the DTC London and DTC Botswana. this UK facility, click here: “We are pleased with the performance of the company, especially since the http://tinyurl.com/cyfd4fq year 2011-12 was particularly challenging. The input prices of raw material, [namely] diamonds and gold were on the rise. The economic uncertainty added to lowered sales revenues in Euro zone. The rise in US demand was compensated by slightly subdued growth rates in China. In this scenario, our focus was on preventing credit risk while sustaining growth,” says company Chairman and Managing Director Shreyas Doshi. Continues Doshi: “The rise in revenue is a result of further broad-basing our customer base and extending our footprint to new markets. This is a long-term strategy and we will see its impact on our bottomline in the coming four to five years. The fact that we have been able to protect our margins despite a falling rupee is evidence that our systems and operational efficiencies have improved during the year.”

Synthetic Diamond in semiconductors provides superior thermal management of high power devices; lowering device operating temperatures resulting in system size reduction and improved reliability (Photo: Business Wire) DIAMOND INTELLIGENCE BRIEFS 7301 DIGGING THE DIRT

Alrosa’s 2011 Diamond Sales Grow 24% in Value Russian mining conglomerate Alrosa reports that it produced 34.6 million carats in 2011, up 1 percent from the 34.3 million carats produced in 2010. Total revenue for the year grew 21 percent to US$4.4 billion (137.7 billion rubles), which the Yakutia-based miner attributes to “solid” diamond sales and strong prices. Net profit for Alrosa more than doubled in 2011 to US$853.9 million (26.7 billion rubles). Alrosa’s debt declined 6 percent to US$3 billion (95.5 billion rubles).

Diamond Sales In 2011, Alrosa sold 32.9 million carats, down 17 percent in volume from 39.5 million carats sold in 2010, when the miner says it sold diamonds from inventories accumulated in 2009. Despite the decrease in sales volume, a continuous increase in diamond prices drove Alrosa’s diamond revenue for 2011 up 24 percent in value to US$4 billion (125.3 billion rubles). According to Alrosa, the average diamond price per carat increased 53 percent year over year to US$129.5 per carat in 2011. Alrosa reports that in 2011, prices for its gem- quality diamonds reached US$196.9 per carat, up 60 percent from US$123.3 per carat in 2010. The price per carat for non-gem-quality diamonds also rose 60 percent year over year, from US$4.8 per carat in 2010 to US$7.7 per carat in 2011.

2011 The miner says that 2011 was characterized by strong demand in the first nine months and a period of lower demand in 4Q. “To sustain average selling prices in 4Q 2011, Alrosa reduced auction sales and offered diamonds of better quality to its clients under long-term agreements. These measures resulted in an increase in Alrosa’s average selling prices in 4Q 2011 and helped to partially compensate for lower sales volumes,” explains the miner in its 2011 financial results.

Q1 2012 In a recently published statement summarizing a meeting of its Executive Committee, which met on May 25, Alrosa reports that it produced 8.1 million carats during the first quarter of 2012, down 19 percent year over year from the 10 million carats produced in the first quarter of 2011.

DIAMOND INTELLIGENCE BRIEFS 7302 DIGGING THE DIRT

Rockwell Completes Two Strategic Projects at Saxendrift the technology will be incorporated into the mines which we are planning to build at our Middle Orange River projects to grow our production profile.”

Bulk X-Ray System The commissioning of the bulk x-ray technology that was approved by the Board in September 2011 was completed to scope and on budget in mid April 2012 with very encouraging results so far. This strategic initiative is based on a high throughput Bourevestnik (BV) sorter and one BV single particle sorter and is aimed at improving concentrate efficiency and final sorting of diamond-bearing ore with a total capital cost of $1.5 million, reports South Africa's Saxendrift Mine Rockwell. Having started processing old recovery tailings at Saxendrift in April, Rockwell Diamonds Inc. has higher quality gravels, cleared of excess 316 stones totaling 1,109 carats have completed two strategic projects at its sand and small particles being fed into been recovered in the first four weeks Saxendrift mine in South Africa’s Northern the plant,” explains James Campbell, of production. This includes 14 stones Cape Province. The new in-field screen Rockwell Chief Executive Officer. “We exceeding 10 carats with the largest and the bulk x-ray and single particle are now also in a position to consider weighing 52.67 carats. sorter plant were the first capital projects mining certain blocks that have a higher This project has been viewed as a approved by Rockwell’s board for sand content, that could previously not “Proof of Concept” test plan, which, if implementation by the company’s new be processed and have the potential to successful, could be applied to Rockwell’s management team. increase the life of mine at Saxendrift.” other, as yet undeveloped, Middle Campbell adds that: “The new in-field Orange properties, says the miner. In-Field Screen screen, along with contops and a change The project program includes The new in-field screen was in the bottom cut-off has enabled us to sampling of recovery and pan plant commissioned to address the high increase our monthly volume throughput tailings. Once complete, the 100 tonnes sand content in the gravel that was by over 30% whilst maintaining our per hour plant will be used to bulk sample impacting the mine’s ability to achieve operating costs at the same level as a year the gravels from the Jasper Mine, subject its productions targets. ago… Based on the results of this project, to the acquisition proceeding as planned. The new 3.0m x 8.0m Dabmar Bivitec screen is designed to treat gravels with a high sand and moisture content at the required processing rates. The project, which included a magnetic scalping plant, came in under budget and has been delivering the anticipated benefits for the past four months, notes Rockwell. The screen is running in excess of 95 percent efficiency notwithstanding the fact that it is operating at 17 percent above its design throughput. “Another meaningful positive impact of the new in-field screen is enhanced Saxendrift In-Field Screen pan plant efficiency. This is due to the

DIAMOND INTELLIGENCE BRIEFS 7303 DIGGING THE DIRT

RioZim in Talks with Rio Tinto for Full Control of Murowa Diamond Mine Independent Zimbabwean owned and listed miner RioZim Limited has engaged Rio Tinto in talks to take full control of the Murowa diamond mine in South Central Zimbabwe following the global miner’s intention to leave the diamond business, Aerial View of Ekati’s Koala Pit reports Reuters, citing a key shareholder in RioZim. Report: KKR No Longer Interested in Ekati Sale Currently, Rio Tinto holds a 78 percent KKR & Co. L.P. has backed away from the sale of BHP Billiton’s Ekati diamond mine stake in Murowa, which produced 367,000 in Canada’s Northwest Territories, the Financial Times reports, citing unnamed sources. carats in 2011, while RioZim controls 22 The New York-based private equity house was initially named as a potential bidder percent of the mine. RioZim was created in for the mine back in March, following BHP Billiton’s November announcement that it 2004 when Rio Tinto largely left Zimbabwe was reviewing its diamonds business and its future in it. The sale of the Ekati mine, which while retaining its diamond interest. industry participants say is worth between US$750 million and US$1.2 billion, had also “We’re now in discussions with Rio Tinto attracted initial interest from private equity firm Apollo Global Management, among Plc to acquire the 78 percent of Murowa others, according to the Financial Times. that they want to offload,” reportsReuters , While KKR could still renew its interest in Ekati, the firm’s turnaround raises questions quoting Harpal Randhawa, whose private about demand for such assets, the newspaper reports. Meanwhile, Rio Tinto, who equity group Global Emerging Markets announced a similar strategic review of its diamond business in March, has appointed (GEM) recently bought 25 percent of the Morgan Stanley to assess options for its diamond mines in Australia, Canada and Zimbabwe, Zimbabwean firm. which, all together, could be worth as much as US$2 billion, writes the Financial Times. Rio Tinto announced in March its BHP Billiton has maintained that it could hold on to Ekati, though the auction is still intention to leave the diamond industry, ongoing. The news report also notes that sources have observed in recent days an effectively inviting bids for its diamond interest from De Beers in buying the mine despite concerns of potential antitrust issues. operations, including the Argyle mine in While BHP Billiton still holds an 80 percent interest in Ekati, in early February, it Australia and its 60 percent share in the completed the sale of its 51 percent interest in the Chidliak diamond exploration Diavik mine in Canada. project in Canada’s Nunavut province to project operator Peregrine Diamonds Ltd. Randhawa, who said only time would tell if his group’s decision to invest in RioZim was “either brave or stupid,” said Afri-Can Completes Geophysical Survey the firm was compliant with Zimbabwe’s on EPL 3403 Marine Diamond Concession empowerment law as it was 54 percent Afri-Can Marine Minerals Corporation reports that it has completed its geophysical controlled by locals, according to Reuters. survey on Exclusive Prospecting License (EPL) 3403 marine diamond concession in Under Zimbabwe’s current indeginiza- Namibia. tion law, the government seeks to transfer According to the Canadian diamond exploration company, the geophysical at least 51 percent shareholding in foreign survey covered 1,251 line-kilometers over an area of 90 square kilometers in the firms, including mines and banks, to locals. south end of EPL 3403. The survey also included Depositional Areas 1, 2 and 3 already According to the news source, RioZim, delineated by previous sampling programs. which is battling to clear a US$50 million The survey data were “consistently of very high resolution and quality” and will debt owed to local banks, badly needs to enable Afri-Can to develop cross-section maps and three-dimensional models of recapitalize its gold mines and develop its the Depositional Areas. The geology, morphology and stratigraphy of the south end substantial coal and chrome concessions. of EPL 3403 will be analyzed in preparation for the second sampling phase, notes the company. The goal of the geophysical survey and second sampling Murowa Processing phase is to start delineating resources on Depositional Areas 1 and 2 in anticipation of trial mining. EPL 3403 covers approximately 800 square kilometers and is adjacent to and contiguous with Namdeb’s Atlantic One Mining Lease (ML) 47, which currently produces in excess of 1,100,000 carats per year.

DIAMOND INTELLIGENCE BRIEFS 7304 DIGGING THE DIRT

Mountain Province Diamonds Kao Project in Phase 1 Production Approves C$31.3M Initial Gahcho Kué Capital Program Mountain Province Diamonds Inc. and its Gahcho Kué Joint Venture partner, De Beers Canada Inc., have approved the initial capital to advance the Gahcho Kué diamond mine at Kennady Lake in Canada’s Northwest Territories in preparation for development. The US$30.5 million (C$31.3 million) budget [US$20.8 million (C$21.3 million) for 2012 and US$9.8 million (C$10 million) for Q1, 2013] will focus on advancing: preparation work for the construction and operating permit applications; front-end engineering and design (FEED); preparations and procurement for the 2013 winter road; detailed engineering; purchase of critical long-lead equipment; and the feasibility study update. The Gahcho Kué Project consists of a cluster of four diamondiferous kimberlites, three of which have a probable mineral reserve of 31.3 million tonnes grading 1.57 carats per Namakwa Diamonds’ First Auction tonne for total diamond content of 49 million carats. of Kao Diamonds Nets $6.47 Million In related news, the technical sessions of the Environmental in Revenue Impact Review (EIR), which were intended to resolve as many Namakwa Diamonds Ltd’s first sale of diamonds from the Kao technical issues as possible prior to the public hearings, took place diamond mine in Lesotho realized revenues of US$6.47 million, in Yellowknife from May 22 to May 25, 2012, and concluded with achieved prices 17 percent higher than initial estimates. The successfully, reports the miner. The EIR continues to progress in recent auction took place in Antwerp through Fusion Alternatives, accordance with the work plan established by the Mackenzie tender partner of I Hennig & Co. According to Namakwa, sales Valley Environmental Impact Review Board (MVEIRB) with the will continue through Fusion Alternatives for at least the next closure of the public record under the EIR expected prior to six months. the end of 2012. During the auction, 16,388 carats were sold at an average Additionally, Mountain Province Diamonds reports that an selling price of US$395 per carat, with an average diamond size updated independent valuation of the diamonds recovered of 0.36 carats. The largest diamond sold was 38 carats at US$6,668 from the Gahcho Kué project, conducted by WWW International per carat, with an 11-carat diamond selling for US$15,020 per Diamonds Consultants Ltd. and based on the WWW Price Book carat and four diamonds with sizes varying between 6 and 14 as of March 7, 2012, indicates that the valuation of the Gahcho carats selling for an average of US$7,100 per carat. Kué diamonds increased marginally from April 2011 to March The diamonds sold were sourced predominately from the 2012 with the actual value per carat increasing by approximately mine’s hardrock kimberlite ores. Namakwa Diamonds holds a 1 percent from US$185 to US$186. The modeled values also 62.5 percent interest in Kao, with the government of Lesotho and remained essentially unchanged. Kimberlite Investments Lesotho Limited holding the remaining Mountain Province, which holds a 49 percent share in Gahcho 25 percent and 12.5 percent, respectively. Kué, also controls 100% of the Kennady North Diamond Project “We are delighted with the outcome of our first tender sale comprising thirteen leases and claims immediately to adjacent in Antwerp of [Kao mine operator] Storm Mountain Diamonds’ to the De Beers JV property. production from the Kao Mine. Achieved prices were 17% higher than anticipated resulting in an additional US$1m in sales Gahcho income. The significant improvement in achieved price reflects Kue aerial both the increased parcel size on comparative diamond sales view in Johannesburg, as production ramps-up at the Kao Mine, and the international exposure provided by our tender partner, Fusion Alternatives. We look forward to regular monthly sales in Antwerp for the foreseeable future,” says Richard Collocott, Chief Executive Officer of Namakwa Diamonds. Since January 2012, Namakwa has sold 49,771 carats from the Kao mine, achieving US$13.76 million in revenue.

DIAMOND INTELLIGENCE BRIEFS 7305 BRIEFLY NOTED

Gem-A to Hold International Gemmology Conference in November 2012 The Gemmological Association of Great Britain (Gem-A) has announced that it is holding an international gemological conference in London scheduled for November 3-5, 2012. The conference, to take place in the Hotel Russell, Bloomsbury, aims to bring together a range of globally renowned speakers and international delegates to discuss a variety of relevant issues pertaining to the international gem and jewelry trade. According to Gem-A, this year’s speakers include: • Dr. Hanco Zwaan from the Netherlands Gemmological Laboratory, who will talk about new sources of emeralds from Brazil. DEF Gala to Salute • Thomas Hainschwang from GEMLAB, Liechtenstein, who will cover the challenge of Global Success identifying recent generations of melee-sized synthetic diamonds. of Botswana’s Diamond • Bear Williams of Stone Group Laboratories, USA, who will give a report on advanced Industry instruments for the smaller labs. The Africa-focused Diamond Empower- • Lore Kiefert from Gübelin Gem Lab, Switzerland, who will focus on gems from Guinea, ment Fund (DEF) and the embassy of Sierra Leone, and Liberia. the Republic of Botswana have invited • Also speaking are Richard Hughes, author of Ruby & Sapphire, Joanna Whalley from international diamond industry leaders, the Victoria & Albert Museum, and Jerry Sisk from JTV, Jewelry Television. government officials, and business Seminars and talks have been arranged for Saturday, November 3rd and Monday, executives to attend a special VIP black- November 5th to coincide with the conference. Tuesday, November 6th will be dedicated tie event to celebrate the global success to visits to the Crown Jewels and the Natural History Museum in London. of the diamond industry in Botswana. The event, titled The Gala Salute to Botswana: “Diamonds Empower Africa,” is scheduled NY Giants Unveil Tiffany &Co.-Designed for June 5, 2012, at the Botswana embassy Super Bowl Ring in Washington, DC, and will take place Professional American football team the New York Giants recently unveiled their during the Kimberley Process Certification commemorative championship ring for winning Super Bowl XLVI at Tiffany & Co.’s Scheme’s intersessional meeting. flagship store inNew York. The white gold ring was designed by Tiffany & Co. with input “We are pleased to recognize the from the team’s ownership, General Manager Jerry Reese, Coach Tom Coughlin and outstanding progress and sustainable players – notably captains Eli Manning, Justin Tuck and Zak DeOssie. impact that the diamond industry “We feel especially honored to craft the trophy and commemorative rings for Super continues to have on the people and Bowl XLVI, because both are in celebration of our own New York Giants, who gave us economy of Botswana as a global model yet another performance on the field that no Giants fan will ever forget,” saidMichael of good corporate social responsibility,” J. Kowalski, chairman and CEO of Tiffany & Co. says Phyllis Bergman, DEF President. The top of the ring is covered in round brilliant diamonds that are During the evening, there will be a live pave set. There are also four Vince Lombardi trophies on the ring top, auction for a six-night safari adventure commemorating the four Giants’ Super Bowl wins, and each set with for two, donated by Wilderness Safaris in a marquis diamond representing the football. The trophies surround Botswana, including an exclusive day tour the Giants’ iconic NY logo, which is set with round brilliant diamonds of Diamond Trading Company Botswana’s on an outline of blue enamel. The top of the ring also includes 37 blue facility in Gaborone. In addition, Debswana sapphires channel set on the outer bezel. The text around the bezel reads will arrange for a private tour of its Jwaneng “2011 World Champions New York Giants.” The team’s 2007 ring was white mine, the world’s richest diamond mine gold and featured diamonds without additional color. by value. The rings shank tells the story of this season’s championship team and honors The Presenting sponsor for the Gala Salute Giants legacy. One shank of the ring has the Giants logo, the Lombardi Trophy, the NFL to Botswana is Tiffany & Co. Support shield, the words “Super Bowl XLVI” and the final score – NYG 21 NE 17. The opposite sponsors include Exelco Group, Julius shank has the recipient’s name, the Giants circular logo with the player’s number in Klein Group, and Leo Schachter Diamonds. the center and EST. 1925 (the year the franchise was founded). The lower palm side of DEF’s mission is to develop the shanks list the four seasons the Giants won the Super Bowl: 1986, 1990, 2007 and 2011. next generation of leaders in Africa Additionally, engraved inside the ring are the words “Finish” and “All In” two phrases by supporting education initiatives in that reportedly rallied the Giants throughout the 2011 season. diamond-producing nations.

DIAMOND INTELLIGENCE BRIEFS 7306 OFF THE SHELF

Signet Jewelers Posts Christie’s Magnificent Jewels Brings in $72.3 Million 1.4% Growth in Q1 Sales Christie’s Magnificent Jewels sale, held earlier this month in Geneva, brought in Signet Jewelers Limited reports that US$72.3 million with an 84 percent sell-through rate by lot and 86 percent sell-through sales for the first quarter, ended April 28, rate by value. The auction’s top lot was an antique Indian emerald, diamond and 2012, grew 1.4 percent to US$900 million, enamel 18th century sarpech, which sold for US$4.7 million, setting a world record price compared to US$887.3 million recorded for an Indian sarpech at auction. a year ago. The auction’s second-highest earner was a pair of pear-shaped Total sales in the specialty jewelry D, VVS2, potentially IF diamond ear pendants of 16.21 and retailer’s U.S. division, where it operates 15.67 carats by Harry Winston, which sold for US$4 million, under the brands Kay Jewelers and Jared or US$127,500 per carat. The sale’s third-highest earner, The Galleria of Jewelry as well as other an octagonal-cut Burmese sapphire brooch of 47.15 regional brands, came to US$751.5 million, carats by Mellerio, sold for US$3.6 million, or US$77,500 up 1.8 percent, compared to US$738 million per carat, achieving a record price per carat for a This 32.08-carat cushion- in the same quarter a year ago. Burmese sapphire at auction. shaped Burmese ruby Meanwhile, Signet Jewelers reports The Magnificent Jewels sales results combined with the and diamond ring by Chaumet, renamed “The that total sales in its UK division, where it May 14th charity auction, the Jewels for Hope: The Collection Hope Ruby,” sold at the “Jewels for Hope: The operates under the brands H. Samuel and of Mrs. Lily Safra, totaled US$110.2 million, the highest result Collection of Mrs. Lily Ernest Jones, were US$148.5 million, down for a series of jewelry auctions at Christie’s Geneva. Safra” charity auction for US$6.7 million, setting 0.5 percent versus the US$149.3 million “From the ‘Hope Ruby’, which sold for a record US$6.5m a new world record recorded a year ago. from the collection of Mrs. Lily Safra to an Indian emerald price for any ruby sold at auction. The company’s income before taxes sarpech which achieved a sensational price after a 10 minute totaled US$128.5 million, a 9.1 percent bidding-war in the saleroom between two determined bidders, jewellery buyers from rise year over year, while its net income all over the world showed great depth as they bid at the highest levels for every rare for the 13-week period grew 9.4 percent jewel and gem offered,” says Rahul Kadakia, Head of Christie’s Geneva and New to US$82.5 million. York Jewellery Departments. For more details of the auctions’ results, click here: http://tinyurl.com/8x4ed96

BIDZ.com, Inc. Signs Going Private Merger Richemont’s Jewelry Sales Rise 32% Agreement Swiss luxury goods group Richemont reports that its jewelry sales increased 32 Bidz.com Inc., an online jewelry retailer percent to US$5.9 billion (€4.6 billion) for the fiscal year ended March 31, 2012. has entered into a definitive merger Both brands comprising its Jewelry Maisons, Cartier and Van Cleef & Arpels, performed agreement with Glendon Group, Inc. to “exceptionally well” and reported high growth across product categories and channels. be acquired for $0.78 per share in cash. “Demand for High Jewellery pieces was solid and more accessible jewellery ranges The proposed transaction is expected enjoyed very strong demand. Cartier’s watch collections, including premium and to close in the fourth quarter of 2012, and technical pieces, were equally successful,” reports Richemont in its fiscal report for is subject to certain closing conditions the 12-month period. specified in the merger agreement. Sales for the group’s Specialist Watchmakers Maison increased 31 percent during Glendon Group has obtained equity the fiscal year to US$2.97 billion (€2.3 billion) financing commitments in an aggregate Richemont’s total global sales for the 12-month period grew 29 percent to amount sufficient to complete the merger. US$11.3 billion (€8.9 billion). According to Richemont, the growth in sales reflected the There is no financing condition to Glendon continuing demand for established product lines, Group’s obligation to complete the merger. the successful introduction of new products Following completion of the tran- and the impact of boutique openings. By saction, Bidz.com, which offers its region, Asia-Pacific recorded the highest products through a live auction format sales growth for the fiscal year (43 percent) as well as a fixed price online retail following by Americas (26 percent), Europe store, Buyz.com, would become a (20 percent) and Japan (13 percent). privately held company and its stock Richemont’s profit for the fiscal year would no longer trade on the Nasdaq grew 43 percent to US$1.97 billion (€1.5 Capital Market. billion).

DIAMOND INTELLIGENCE BRIEFS 7307 OFF THE SHELF

Rio Tinto Finds Strong Potential for New Tiffany & Co.’s Worldwide Sales Diamond Jewelry Niche in China Rise 8% in Q1 Rio Tinto reports that new market research confirms the Tiffany & Company has recorded an 8 percent growth in growing trend towards diamond fashion jewelry in China. Global worldwide net sales to US$819 million for the first quarter ended market research company Ipsos was commissioned by Rio Tinto April 30, 2012. Net earnings rose 1 percent to US$82 million. to help them further understand consumer perceptions in China regarding fashion jewelry (i.e., jewelry pieces comprising small, Sales by Region affordable diamonds). Sales in the Americas, which represent slightly less than half of worldwide sales, rose 3 percent to US$386 million. Combined Findings Internet and catalog sales in the Americas increased 1 percent. Of particular note were the following findings: Sales in the Asia-Pacific region increased 17 percent to US$195 • Chinese consumers no longer see diamonds as purely a million. In Japan, sales rose 15 percent to US$142 million while store of wealth or bridal purchase. sales in Europe increased 3 percent to US$88 million. • Diamond fashion jewelry is desirable and part of a broader Meanwhile, Tiffany reports that its other sales declined 14 trend in China towards “affordable luxury.” percent to US$9 million due to lower wholesale sales of finished • Diamond fashion jewelry is attractive as a versatile accessory products to independent distributors. for everyday wear. The high-end jewelry retailer opened four stores during the • Design is critical to the Chinese consumer when purchasing first quarter: inMexico City, Montreal, Salt Lake City and Wuhan, fashion jewelry. China. As of April 30, 2012, Tiffany & Co. operated 251 stores (105 in the Americas, 59 in Asia-Pacific, 55 in Japan and 32 in Europe), Rio Tinto says that these insights challenge the conventional compared with 232 stores (96 in the Americas, 52 in Asia-Pacific, wisdom that Chinese consumers only appreciate large, high- 55 in Japan and 29 in Europe) a year ago. quality white diamonds or gold jewelry. “In terms of our sales for the first quarter, regions outside the According to PLDG Creative Intelligence, Americas performed generally as expected. However, the Americas an independent global jewelry trend region underperformed, continuing a soft trend that began in the and forecasting company, this trend in last quarter of 2011 and compounded by the difficult comparison China is consistent with other key jewelry to substantial sales growth in last year’s first quarter. These sales markets where, “diamond jewellery results led to net earnings modestly trailing our expectations,” consumers increasingly want affordability, says Michael J. Kowalski, chairman and chief executive officer. beautiful designs and to feel unique. As a result international brands and designers Outlook Jean-Marc are using small diamonds for innovative “We are updating our forecast for the full year to reflect these Lieberherr designs, not tied to the bridal market.” first quarter results and to reflect lower near-term expectations. Although we are very early into the second quarter, worldwide China Expansion sales are currently increasing by a low-single-digit percentage, Notes Jean-Marc Lieberherr, General Manager for the sales reflecting difficult year-over-year comparisons and decelerating and marketing of Rio Tinto Diamonds: “These are important findings rates of economic growth in many countries,” adds Kowalski. for Rio Tinto as we are accelerating our marketing investment In its updated management outlook for the full year ending in the Chinese diamond jewellery market. It is also good news January 31, 2013, the company expects worldwide net sales to for diamond manufacturers, jewellery designers, retailers and increase 7-8%, versus the previous expectation calling for 10% consumers.” growth. With growth in China expected to change the face of the In other company news, Tiffany & Co.’s Board of Directors has diamond jewelry market, Rio Tinto has partnered with leading appointed Andrew W. Hart to the newly created position of Senior diamond jewelry manufacturer and retailer Chow Tai Fook, Vice President - Diamonds and Gemstones. Hart joined Tiffany in promoting diamonds as fashion accessories in imaginatively 1999 and, since 2002, has been Vice President - Diamonds and designed jewelry. Gemstones. Hart will continue to report to James N. Fernandez, executive vice president and chief operating officer. Additionally, Tiffany’s stockholders have appointed Robert Singer to its Board of Directors. He will chair the board’s audit committee and replaces Thomas Presby, who has retired. Singer’s appointment brings Tiffany’s board’s total to nine.

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Hearts On Fire Diamonds Releases New APP for iPhone and iPad Beau Sancy Hearts On Fire has released a new app for the iPhone and iPad that allows consumers to both browse the entire Hearts Sotheby’s Earns $9.7 Million On Fire jewelry collection as well as view four new brand videos for ‘Beau Sancy’ that help buyers understand the difference and value of the Sotheby’s Geneva earned US$89.6 million from its recent brand’s diamonds. Magnificent Jewels and Noble Jewels sale, whose top lot, the According to the diamond-jewelry retailer, the catalog 34.98-carat “Beau Sancy,” fetched US$9.7 million. The sale had a portion of the app gives consumers the opportunity to sort by sell-through by lot of 85.3 percent and by value of 94.6 percent. categories such as diamond engagement rings, diamond earrings, and diamond pendants. When browsing through the catalog, Beau Sancy once a design is chosen, a larger jewelry image, product details, Passed down through the royal families of France, England, and pricing then become available. Prussia and the House of Orange, the stone, a “modified pear In addition to the product catalog, there is a never-before- double rose cut” royal diamond, exceeded its pre-sale estimate seen tour of the Hearts On Fire Diamond cutting factory. of between US$2 to US$4 million. “Hearts On Fire knows that today’s consumer needs to access First acquired by Nicolas de Harlay, Lord of Sancy, in information whenever and wherever they need it. Allowing our Constantinople in the mid to late 1500’s, the Beau Sancy is most customers the ability to easily see brand and product information likely to have originated from the mines in south-central India on their iPhones and iPads will enhance their research and near the city of Golconda, the source of history’s best-known shopping process,” says Caryl Capeci, VP Marketing Hearts On Fire. diamonds, including the Hope, the Koh-i-Noor and the Regent, Users have the ability to purchase any of the designs on the according to Sotheby’s. The Beau Sancy has been shown publicly app by contacting the Perfection Stylist team. only four times in the last 50 years: first in 1972 inHelsinki ; in 1985 To download the app for free, visit: http://www.heartsonfire. in Hamburg; in 2001 in Paris; and finally in 2004 in Munich. com/app. The Hearts On Fire diamonds are sold in 650 retailers spanning Other Highlights 34 countries and in 14 HOF stores globally, as well as via the internet. The sale’s second highest earner was a ring featuring a Fancy Intense purple-pink brilliant-cut diamond weighing 3.71 carats set between two marquise-shaped rubies, which fetched US$5.5 million against a pre-sale estimate of US$2-US$4 million. Another highlight was a diamond necklace suspending a pear- shaped diamond weighing 41.40 carats, named by the buyer as “Dubai Vision,” which sold for US$4.95 million, against a pre-sale estimate of US$3-US$4.9 million. Among other highlights were a Harry Winston diamond ring weighing 36.43 carats sold for US$4.1 million, while a natural pearl and diamond Murat Tirara by Chaumet sold for US$3.9 million.

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