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December 22, 2010 | Vol.25 No.636

2011: De Beers without the Oppenheimers?

Rumors are routinely denied. That doesn’t necessarily mean they are wrong – more often than not, their message may just be premature. It is our information, however, that, indeed, Anglo American is considering purchasing the 40 percent share in De Beers currently held by the Oppenheimer family. This would get it to 85 percent with the balance held by the government of Botswana. Needless to say that Anglo American had been pondering for quite a while trying to figure out “what to do with De Beers”: it was a question of either getting out or taking it all. Anglo American CEO Cynthia Carroll has crystallized her thoughts: “Our focus is very much on driving the [diamond] business for value. The business is on very solid ground with the recent refinancing and we continue to regard De Beers as a core business,” she said a few months ago. That basically settles that question.

However, it takes two to tango. In London’s financial markets, De Beers Chairman Nicky Oppenheimer has been seen as a potential seller for quite a while. He needs cash. He seeks diversification. Earlier this month, Oppenheimer sold 2.1 million Anglo American shares at £30.44 pounds a share, giving him something like US$100 million. He can’t easily sell off the still remaining slightly less than two percent (27.3 million shares) the family holds in Anglo American since these shares are pledged to Standard Chartered Bank as collateral for the US$400 million loan that was taken to finance the Oppenheimer contribution to reduce the De Beers debt. However, nobody should worry about the financial situation of the Oppenheimers; we should all be so lucky. Forbes lists the family still as ranking 154th on the list of the world’s billionaires.

Cash seems to be a relevant factor in terms of structuring a

By Chaim Even-Zohar

Cynthia Carroll, CEO of Anglo American

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possible deal between Anglo American and the Oppenheimers. If De Beers would have been listed, it would probably have a current market value of somewhere around US$9 billion. Anglo American will need to cough up some US$3 billion to buy out the Oppenheimers. It doesn’t have that kind of cash at the moment. London sources expect that a deal could be worked out paying some money now and more deferred to later. We don’t know.

De Beers is expected to announce 2010 diamond sales in the area of US$5.1 billion and it should post a profit before taxes of some US$1.2 billion. A De Beers spokesman, who refused to comment on specific figures, expects the results to be outright spectacular. Currently, De Beers’ debt is not consolidated with Anglo American’s debt in the latter’s books; De Beers still carries some US$2.8-US$3 billion in debts, and in an Anglo American takeover scenario, debt figures would be consolidated. It is not sure whether Anglo American would really want to assume a higher debt level.

Anglo American ‘Unhappy’ with De Beers Management

One of the main reasons for Anglo American to go after De Beers is, say my sources, mostly “unhappiness” with some of the management decisions. Stepping in now could, shall we say, “be preventive”. De Beers, for example, has put South Africa’s Finch mine up for sale. That mine still has a resource of some 30 million carats. There are three or four leading contenders to buy the mine, including Petra, Gem Diamonds, the Beny Steinmetz Resource Group and, apparently, also Rio Tinto. The mine would sell for less than US$100 million.

One of the reasons of De Beers to put the Finch mine on the block is that within a two- to three-year period, an additional US$250-US$400 million investment would be needed when the current block cave will run out of resources. Anglo American may hold a competitive advantage over others when it comes to the mining expertise to do the required development. Word is that Anglo American may not be happy with selling Finch at this time – and would like to prevent it from happening..

There are similar problems around the Snap Lake mine in Canada. Some believe the mine should never have been brought into operation – but it has been. There seems to be some continued calls for putting the mine under “care and maintenance,” but that would put De Beers potentially in conflict with contractual undertakings made to the government of Canada’s Northwest Territories in terms of employment thresholds and acquisition of local services. This is not the time to

upset the government of the Northwest Territories as De Beers is still waiting for its mining license for the Gahcho Kué mine, located 80 kilometers southeast of Snap Lake.

Stepping in now could also lead to receiving the con- templated sale of the Namaqwa alluvial mining operations. Apparently, Anglo American is also not happy with some of the mine sales that have been made, specifically the Cullinan mine in South Africa, which has reaped handsome returns to Petra Diamonds, its buyer. Flawed management of the Venetian Mine, which needs also a few hundred million of further investment, is also believed to be a thorn in Anglo American’s eyes.

The Next CEO of De BeersLast week, at a lunch meeting hosted by Nicky Oppenheimer in London for staff members, the

chairman confided that he was highly encouraged by the high quality of the candidates that had presented themselves for the job of the new De Beers managing director. A decision will be made, he clarified, within the next few months.

Who was he kidding? De Beers has been running without a full-time permanent managing

director since last July. Also at that time, announcements were made that the appointment would happen fairly quickly. The truth is, if there is going to be a change in shareholding, it doesn’t make sense for Oppenheimer to make a decision now – and leave the final choice to Cynthia Carroll. A De Beers spokesman takes issue with this interpretation: “It takes time to interview candidates and nobody is in a hurry. We don’t sense that the

Nicky Oppenheimer, De Beers Group Chairman

Aerial View of the Open Pit and Plant at Finsch Mine

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Anglo’s liking. If Anglo American takes over, it would want a candidate with proven mining experience.

Oddly, some of my sources believe that that Anglo American also wants

someone that can look the president of Botswana in the eyes and feel comfortable and be skillful in maintaining an excellent relationship with the Botswana government. For

whatever reasons, this is an important factor in the considerations of Anglo American Chief Executive Cynthia Carroll.

The CandidatesSome of the leading outside can- didates bring financial, banking and mining experience to the table. Nevertheless, the rather conservative diamond world would invariably prefer continuity – and

vie for someone from within. “Don’t believe any so-called sources who claim to know what Nicky is thinking. He keeps this process very close to his chest and hasn’t given any indication as to what way he wants to go,” warns De Beers Director of Communications David Prager.

That doesn’t stop the speculation. An Anglo American takeover might be good news for DTC Chief Executive Officer Varda Shine, who brings diamond marketing skills to the table that are currently unavailable within Anglo American. It may not be enough to land her the top job in De Beers, but Carroll is certainly in favor of seeing more of the fair sex in corporate board rooms.

One of the current joint-acting Managing Directors of De Beers, Stuart Brown, is also interested in the job. Stuart is well-liked within Anglo American, but he is mainly appreciated as a financial man. His ruthless cost-cutting, implemented under Gareth Penny’s guidance, has earned him some kudos. It also may not be enough to get him the job. The other joint-acting Managing Director, Bruce Cleaver is apparently not in the running – if he is, then it isn’t common knowledge.

A major sightholder lamented that a business must be run by one captain, not by some joint managers or a triumvirate. Whatever decisions are being made, it should be in the best interests of all stakeholders to expedite the process. De Beers has been without a skipper on the helm for too long. Though uncertainty has become a part of the normal economic landscape, there are limits on how long the current situation can continue. For now, the possible shareholder rearrangement seems to overshadow the not-so pending CEO appointment. Next week it all may again be a different story.

Happy holidays to all.

company isn’t managed properly with the present team.”

The current management contract allows Nicky Oppenheimer to make the appointment single-handedly, though Anglo American would have a right of veto. After having assured his staff that he has a choice of excellent candidates, Oppenheimer would be well-advised to make an appointment without further delays – if, indeed, he wants to quell rumors of him selling out.

I nc identa l l y , l ong- te rm readers of this column will recall that well over a decade ago, we predicted that De Beers diamond mining operations at some point would be fully integrated within Anglo American stable while the Oppenheimers would walk away with money and with owning the Element 6 synthetics business, as well as the De Beers Diamond Jewellers joint venture with LVMH.

There is no reason to amend what we said then. To the contrary. The Oppenheimer’s scion, Jonathan, has demonstrated a fondness for the diamond synthetics business, which is held jointly with the Belgian Umicore Corporation. In recent years, the 60%-40% joint venture has been restructured in such a way that it is only applicable to abrasives, while the gem-quality synthetics are 100 percent owned by De Beers. The prospects of Jonathan Oppenheimer one day becoming the world’s largest producer and seller of gem-quality synthetics has always intrigued me. Mindboggling, actually.

Jonathan Oppenheimer is the Chairman of Element 6. Its Managing Director is Cyrus Jilla, who most DTC sightholders remember as the Bain & Company partner who brought Supplier of Choice to the diamond world. Jilla is one of the leading contenders to become Managing Director of De Beers, especially if one is looking for a candidate with marketing know-how. The mining business will be remote to him. Too remote, probably, for

NWT Process Operator Trainees at Snap Lake

Stuart Brown

Varda Shine

Cyrus Jilla

Jonathan Oppenheimer

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UN General Assembly Votes to Strengthen Efforts to Curb Trade in Conflict Diamonds

A discussion about the role of diamonds in fuelling conflict and the strengthening of global efforts to halt their trade highlighted the 65th plenary meeting of the United Nations (UN) General Assembly, which took place in New York on December 16, 2010.

UN member states adopted, by majority, a resolution proposed by Israel, the current chair of the Kimberly Process Certification Scheme, which calls for, among other things, UN member countries to be more consistent in implementing their

commitments to the KPCS and for KP participants to be more thorough in reporting on the origins of diamonds being traded.

While the resolution recognizes the "important contributions" of international players in addressing the problem of conflict diamonds and thereby in the settlement of conflicts, it also calls upon KP participants to "continue to articulate and improve rules and procedures to further enhance the effectiveness of the Kimberley Process Certification Scheme."

The resolution notes with satisfaction “the progress of work performed on footprinting diamonds from Guinea, Liberia and Sierra Leone in order to bolster the capacity of the West-African Kimberley Process authorities to address potential contamination of their own productions by sanctioned Ivorian diamonds and on updating of the footprint of Marange diamonds from Zimbabwe."

Reference to ZimbabweAllegations of illicit trade and human rights violations in Zimbabwe have complicated

the KP consensus process over the year. Specifically, concern has been raised by the lack of consensus regarding the status of rough diamond exports from Zimbabwe's Marange area. However, little mention was made of the matter in the resolution.

According to UN Radio, outgoing Chairman of the Kimberly Process, Boaz Hirsch, did raise the Zimbabwe issue during the plenary when he ttold the UN General Assembly that "Israel placed extensive focus on finding a solution to the issue of rough diamonds exports from the Marange area in Zimbabwe. I am concerned that no consensus has been reached on the way to move forward. Efforts to overcome this challenge are still ongoing. If we are unsuccessful, I would recommend that the incoming Chair take all measures to reach a long-term solution on this issue."

The Democratic Republic of Congo will be the new incoming KP chair.

For those who want to have the flavor of hearing the whole discussion, click on: http://tinyurl.com/2998wqh To read the draft resolution, click on the link below, which will take you to our Resource Library, where you can download the document: http://tinyurl.com/254pk87

SRDSIL To Seek Government Support in Sourcing Rough Diamonds

The 1,500 Indian diamantaires composing the Surat Rough Diamond Sourcing India Limited (SRDSIL) are turning to the Gujarat government for help in securing direct sourcing of rough supply for the Surat diamond industry.

In the next couple of days, a delegation of SRDSIL's founding members is expected to visit Gandhinagar to meet the Minister of State for Industries, Saurabh Patel, reports The Times of India.

The SRDSIL had hoped to receive direct rough supply from Zimbabwe after signing a memorandum of understanding with the Zimbabwe government in October to guarantee the regular direct supply of rough diamonds worth US$1.2 billion a year from the Marange diamond area. However, last month, Kimberley Process Chair Boaz Hirsch issued a notice banning the trade of Marange diamonds until further notice. Subsequently, India’s Ministry of Commerce and Industry sent a letter to the Gems and Jewellery Export Promotion Council and to the Department of Revenue advising its Joint Secretary, Sandeep M. Bhatnagar, to adhere to the KP Chair's notice.

The SRDSIL members believe the huge quantity of rough diamonds mined in Zimbabwe will resolve the shortage that the Surat industry has faced for the past few months. The supply of raw material from mining companies Alrosa and Rio Tinto, as well as from the DTC, has been insufficient and has reduced the polished diamond production by more than 30 percent, reports The Times of India.

"The main motive behind forming the diamond consortium was to help the small and medium diamantaires in getting enough raw material to cut and polish and giving more employment to the workers. We want the Gujarat government to help the diamond industry in Surat…," a senior founding member of SRDSIL told the news source.

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Grace Mugabe among Zimbabwe Elite Suing over WikiLeaks Cables

A number of lawsuits are coming out of Zimbabwe following the WikiLeaks release of classified U.S. State Department cables that implicated members of the Zimbabwe political elite in the illicit trade of diamonds. At the forefront of the legal action is Grace Mugabe, the wife of President Robert Mugabe, who has reportedly filed a US$15 million damages suit against the weekly Zimbabwe

Standard newspaper for publishing the stories based on the WikiLeaks leaks. Also suing the newspaper for US$12.5 million in damages is central bank governor, Gideon Gono, who was also mentioned in a leaked cable as being involved with profiting from diamond activity.

A third lawsuit, for the amount of US$10 million, was filed by Centeral Intelligence Organization boss Happyton Bonyongwa against Andrew Cranswick, Chief Executive

of African Consolidated Resources, who was named in one of the leaked cables as being the sole informant to U.S. Ambassador in Harare James McGee and the source of the allegations.

Basis of LawsuitsIn one of the cables, the U.S.

Ambassador to Zimbabwe wrote after meeting with Cranswick that “According to Cranswick, there is a small group of high-ranking Zimbabwean officials who have been extracting tremendous diamond profits from Chiadzwa. Cranswick said that RBZ Governor Gideon Gono, Grace Mugabe, wife of President Robert Mugabe, Vice President Joyce Mujuru, Mines and Mining Development Minister Amos Midzi, General Constantine Chiwenga and wife Jocelyn, CIO Director Happyton Bonyongwe,

Manicaland Governor Chris Mushowe, and several white Zimbabweans, including Ken Sharpe, Greg Scott, and Hendrik O,Neill, are all involved in the Marange diamond trade.”

The article at the basis of Mugabe and Gono’s lawsuits is titled “First Lady, Gono, in Diamond Scanadal – WikiLeaks,” and was published in the Standard’s December 12 edition, reports the state-owned The Herald. The article attributed its information to the WikiLeaks cable.

Lawyers' ClaimsThe lawyer representing both Gono and Mugabe, George Chikumbirike, called the

Standard’s report “false and highly defamatory,” according to the New Zimbabwe. He also claims that the article gave the impression that Mugabe “used her position as the First Lady to access diamonds clandestinely, enriching herself in circumstances in which the country was facing serious foreign currency shortages,” as cited by SW Radio (Africa).

Meanwhile, Bonyongwa’s lawyer, Joseph Mafusire says that the allegations in the newspaper report had damaged his client’s fame and reputation. Mafusire demanded that Cranswick pay his client the money in damages within five days, otherwise he would be summoned to the High Court, sources say.

Cranswick has since distanced himself from the WikiLeaks cables, claiming to the media that he never met with any U.S. government officials.

UN Demands Liberia to Freeze Former Warlord's Assets

The United Nations (UN) Security Council has demanded, for the

fourth consecutive year, that the Liberian government fulfill its obligations to freeze the assets of former president Charles Taylor, currently on trial for war crimes and crimes against humanity before the UN-backed Special Court for Sierra Leone (SCSL) in The Hague.

In a unanimous resolution on sanctions that aim to eradicate the sources of conflict, ranging from illegal funding to illicit trade in natural resources to arms trafficking, the Security Council noted the lack of progress in implementing a 2004 resolution demanding that all the assets of Taylor, family members and associates be frozen to prevent them from obstructing the restoration of peace in Liberia and the region, reports the UN News Service.

At the same time, the Security Council acknowledged the government's regional and international leadership regarding the Kimberley Process and its efforts to halt the trade of conflict diamonds, which Taylor used to finance his actions during the civil wars he waged in the country and in neighboring Sierra Leone. In 2001, the UN imposed sanctions on Liberian diamonds.

The Security Council extended for another year the mandate of a Panel of Experts set up in 2007 to monitor compliance with the sanctions imposed in connection with the country’s civil war, according to the UN News Service.

The UN body called on the Panel of Experts to conduct two assessment missions to Liberia and neighboring African states during the coming year to investigate any violations with regard to the illicit trade in arms, including individual perpetrators and sources of financing, such as natural resources, and to monitor progress in the freezing of assets, forestry reform and compliance with the Kimberley Process, according to the news source.

The Security Council also stressed UN Mission in Liberia’s (UNMIL) continuing

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Report: CAR Needs Urgent Reform of Mining SectorExtreme poverty and armed conflict in the diamond-rich areas of the Central

African Republic (CAR) put thousands of lives in danger and demand urgent reform of the mining sector, states the Brussels-based International Crisis Group (ICG), an independent, non-profit, non-governmental organization committed to preventing and resolving deadly conflict.

In its latest report, titled Dangerous Little Stones: Diamonds in the Central African Republic, the ICG examines how after decades of misrule and state fragility, the government of the CAR “has neither the will nor means to ensure the country’s precious stones benefit its people,” says an ICG press release.

Causes of Sector InstabilityThe NGO asserts that political motivations undermine good governance

of the country’s sector and leave artisanal miners and their families struggling for their livelihoods. Additionally, claims the NGO, high export taxes encourage smuggling that weak mining authorities are powerless to stop.

“Miners enduring poverty and a parasitic state are quick to join rebel groups”, says Ned Dalby, Crisis Group’s Central Africa Analyst. “Meanwhile unchecked criminal networks enable fighters to profit from mining and selling diamonds illegally and continue to prey on civilians.”

Since CAR President François Bozizé came to power in 2003, industrial diamond mining companies have almost all left, leaving only a huge informal sector, according to the group.

The regime seeks to reap profits by means of a strict legal and fiscal framework and centralized, opaque management, but expensive licenses and corrupt mining police in the country make it harder for miners to escape the poverty trap, says the report. The government’s closure in 2008 of most diamond exporting companies severely cut investment in the production chain, costing many miners their jobs and thus helping cause a spike in infant malnutrition, claims the ICG.

Rampant smuggling fosters illicit trading networks that deprive the state of much needed revenue, while the government’s refusal to distribute national wealth fairly has led jealous factions to

launch rebellions, says the NGO. Profits from mining and selling diamonds illegally enable armed groups to collect new recruits and create a strong incentive not to disarm.

What is NeededThe ICG says that reform of the diamond sector is “imperative to improve the living

conditions of miners and their families, boost the state’s revenues and help break the cycle of armed conflict.” Moreover, the government needs to institute more democratic control of the sector, a matter mainly of political will, and enhance transparency.

The ICG’s report calls on international partners to help build the capacity of mining authorities in the capital and mining zones - but only once the government has demonstrated genuine commitment. The reform strategy should prioritize artisanal above industrial mining, which has less direct impact on mining communities, says the report, which adds that the reform should also aim to reduce incentives for smuggling and tighten controls to stop armed groups from profiting from diamonds.

Marange Imports into Dubai Banned until Consensus is Reached

The office of the Kimberley Process (KP) in the UAE, together with the Dubai Multi Commodities Centre (DMCC) and the Dubai Diamond Exchange (DDE), has issued the following statement regarding the trade of Marange rough:

NO IMPORTS FROM MARANGE INTO UAE UNTIL CONSENSUS IS REACHED

The UAE KP Office has reminded UAE diamond traders in a notice that no shipments from Marange diamonds will be permitted to be imported into the UAE until full consensus amongst KP Participants is reached.

The UAE remains a strong supporter of the Kimberly Process Certification Scheme of which it is a member since 1992.

importance in improving security and helping the Liberian government establish its authority throughout the country, particularly in the diamond, timber, and other natural resources-producing regions, and border areas.

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Rockwell Diamonds’ John Bristow Resigns as

President, CEORockwel l Diamonds Inc . has

announced that Dr. John Bristow has resigned from the positions of President and Chief Executive Officer.

The Board of Directors is currently in discussion with Bristow, who remains as a Director, to provide consulting services to the company to maintain continuity during the transition period.

According to the Board, over the last year, it has had in place a senior corporate management growth strategy initiative, which has involved the successful recruitment of a new Chief Operational Officer, Chief Financial Officer. Thus, Rockwell plans to complete the engagement of an experienced senior executive as President and Chief Executive Officer who has equal financial and operational background. In the interim, the Chief Operative Officer and Chief Financial Officer are reporting to a Board Committee.

The Vancouver-based diamond-mining company has three alluvial diamond operations in Northern Cape Province in South Africa: the Holpan and Klipdam mines located north of Kimberley and the Saxendrift mine located on the Middle Orange River southwest of Kimberley. Its Wouterspan mine is currently on care and maintenance. In addition, Rockwell in the process of acquiring the Tirisano project, located in the Ventersdorp alluvial diamond district in the North West Province of South Africa, from Etruscan Diamonds Limited.

Debswana Appoints Jim Gowans as New Managing Director

The board of Botswana diamond miner Debswana has appointed of Jim Gowans to the position of Managing Director, with effect from the beginning of January 2011.

Gowan’s contract will run for a defined three-year period, during which time he will focus on optimizing and improving Debswana operations and the continued development of a strong Batswana management team.

Since February 2010, Gowans has served as De Beers Group’s Chief Operating and Technical Officer. Prior to this, Gowans was Chief Executive Officer of De Beers Canada for four years.

Gowan has over 30 years experience in running large-scale, open-pit mining projects while placing a strong focus on environmental stewardship, safety management, governance and performance, says De Beers.

Prior to joining De Beers, which is partners with the Botswana government in the 50:50 percent Debwana joint venture, Gowan held a number of senior executive roles in various mining operations – such as Inco Limited (now Vale Inco), Placer Dome Ltd (now part of Barrick Gold), and Cominco Ltd (now Teck Resources) - in regionally diverse countries, including USA, Chile, Indonesia, Australia, Papua New Guinea and Canada.

“Jim will be tasked with ensuring that Debswana’s mines are among the best-managed anywhere in the world,” says Nicky Oppenheimer, Debswana Board Chairman.

“Jim has an unparalleled world-class pedigree in mining with over 30 years of practical management experience in almost every aspect of the industry,” says Eric Molale, Debswana Board Deputy Chairman. “Jim will be tasked with developing a new generation of leaders in Debswana who will have to take on the responsibility of running the world’s greatest diamond mines. Each and every member of the Board believes he is the best person to lead Debswana as the company faces an exciting, yet challenging, future,” adds Molale.

Baroness Shriti Vadera Joins BHP Billiton Board as Non-Executive Director

Diversified miner BHP Billiton has appointed a new Non-Executive Director, Baroness Shriti Vadera, to the BHP Billiton Board, effective 1 January 2011.

Throughout her professional experience, Vadera has held a number of advisory and ministerial roles in the British government, most recently serving as Minister for Africa and Minister for Economic Competitiveness & Enterprise.

The Baroness has also held a number of international positions, including advising the Republic of Korea on its term as Chair of the G20, Temasek Holdings on strategy, and the government of Dubai on the restructuring of Dubai World. Prior to her time in the British government, Vadera spent 14 years in investment banking at UBS Warburg where she specialized in advisory work in emerging markets.

“Shriti Vadera’s unique combination of finance and policy experience makes her an excellent addition to the BHP Billiton Board. She is highly regarded for her work in the private sector and with governments around the world. Her expertise in global economic issues and extensive experience in Africa and Asia will be a source of invaluable insight as BHP Billiton continues to grow its global business,” says BHP Billiton Chairman Jac Nasser.

The appointment of Baroness Vadera brings the number of BHP Billiton directors to 12.

Jim Gowans

John Bristow

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De Beers to Close U.S. Diamond-Jewelry Publicity, Advertising Arms

De Beers is ceasing operations of its U.S. publicity and advertising arms, the Diamond Promotion Service (DPS) and the Diamond Information Center (DIS), to consolidate its focus on promoting its “Forevermark” diamond brand in the United States, reports National Jeweler.

A U.S. office for Forevermark has been set up in Connecticut and will be headed by Charles Stanley, said National Jeweler, citing a source at JWT. According to the source, while it is currently unknown what other marketing activities De Beers might undertake in the U.S. market, the company will be focused around Forevermark.

De Beers’ past diamond-promoting programs include Journey diamond jewelry and the three-stone ring, as well as Everlon, which was not open to all members of the trade. In October, De Beers revealed its plans to bring Forevermark to the United States, though the company says it is still in the exploratory stages of that endeavor.

No specific instruction is currently available regarding what retailers who want to use DPS services going forward should do. According to National Jeweler, an e-mail generated automatically by DPS.org and sent out to members of the trade last week stated, “Please be advised that the DPS.org site will no longer be active as of December 31st, 2010. As such, if you are interested in obtaining any DPS materials for your future sales training and marketing needs, please visit the site before the end of the year. Thank you, The Diamond Promotion Service.”

Three U.S. Jewelry Retailers as Members Join JAU.S. luxury department stores Neiman Marcus, Saks Fifth Avenue and retail chain

Ultra Diamonds have become members of Jewelers of America (JA), the national trade association for businesses serving the fine jewelry retail marketplace.

“As distinguished jewelry destinations to consumers nationwide, we are pleased that Neiman Marcus, Saks Fifth Avenue and Ultra Diamonds have decided to join the nation’s oldest and largest network of retail jewelry professionals,” says President & Chief Executive Officer Matthew A. Runci.

Neiman Marcus has served the luxury market for over a century. The company operates 41 Neiman Marcus stores across the United States and two Bergdorf Goodman stores in Manhattan.

Saks Fifth Avenue, which opened in Manhattan in 1924, offers European and American designers in its Jewelry & Accessories departments of its 47 stores, located in 23 states. Ultra Diamonds, founded in 1991, is the fifth largest specialty fine jewelry retailer in the United States with 165 stores in 33 states. The company focuses on the off-price/value market and offers diamond fashion, bridal and gemstone jewelry, as well as a wide variety of brand-name watches.

As JA retail members, Neiman Marcus, Saks Fifth Avenue and Ultra Diamonds have committed to JA’s Code of Professional Practices, which sets high social, environmental and ethical business standards for JA Members’ day-to-day operations. In addition to advancing members’ reputations through its Code, JA provides membership benefits that include exclusive corporate and employee guidance on complex industry issues, such as conflict diamonds and responsible gold; and legislative advocacy on issues – like sales tax fairness – that impact the industry and retail businesses. In addition, JA Members take advantage of large discounts on business services and free marketing resources and opportunities – such as participation in national consumer contests.

Kohl's to Expand ELLE Brand into Fashion

Jewelry and Beauty Categories

U.S. specialty department store Kohl's and media group Lagardère Active are expanding Kohl’s ELLE-branded contemporary lifestyle collection into fashion jewelry and beauty. The ELLE BIJOUX jewelry collection and ELLE-branded line of cosmetics will be available exclusively in Kohl's stores nationwide and Kohls.com beginning Spring 2012.

ELLE BIJOUX will include runway-inspired fashion jewelry, including necklaces, earrings, bracelets and rings. The ELLE-branded line of cosmetics will ultimately include make-up and color, skin care, bath and beauty and nail products.

Kohl's will collaborate with Lagardère Active Enterprises on the ELLE BIJOUX product design, which will be managed out of Kohl's New York Design Office. Kohl's will continue to manage the distribution and marketing of all ELLE-branded merchandise.

Kohl’s initially launched fashion magazine ELLE’s branded fashion collection in 2007, and due to strong customer response, it has expanded from apparel into other categories such as shoes and an ELLE DÉCOR-branded line of home goods.

"ELLE has always been a lifestyle brand as we strive to inspire style in all aspects of a woman's life," says Robin Domeniconi, ELLE Group's senior vice president and chief brand officer. "Building upon our successful apparel line at Kohl's is an exciting and appropriate venture for us. With the introduction of these new lines, we can continue to help the Kohl's customer celebrate their own personal style."

Matthew Runci

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IGI Holds Inaugural Polished Diamond Grading Class in Greece

The International Gemological Institute (IGI) has completed its first Polished Diamond Grading class in Greece, jointly organized with well-known Greek gemologist and former IGI student, George Spyromilios.

The six-day IGI Polished Diamond Grading Course was held November 14-19 in the center of Athens, at the Electra Palace Hotel, close to area jewelers and diamond dealers. Led by Jean Mangnay, IGI worldwide head of education, the course provided Athenian

trade professionals with advanced knowledge of international grading standards.

Fourteen students learned how to grade clarity, color and cut of diamonds using diamond samples as well as gemological equipment, including microscopes.

Graduates of the course acquired skills with which to identify, grade and

understand diamonds according to world grading and market standards. They were also awarded the IGI Diploma in Polished Diamond Grading.

Hailing from Athens, as well as other main cities such as Thessaloniki and Crete Island, the majority of students were jewelers who sought further education in an effort to increase sales. IGI says it plans to hold a second Polished Grading Class in Athens in early 2011 and already has several students enrolled. IGI Graduate Gemologist Diploma programs are held in more than a dozen countries including India, China, the UAE, Italy, Turkey, Mexico and Belgium and are offered in more than 10 languages.

RJC Announces Third Certified MemberThe Responsible Jewellery Council (RJC) has announced that the French diamond

wholesaler, RAYMOND BLOCH SA, is the first diamond supplier in the Council’s membership to be certified against the ethical, human rights, social and environmental standards as established by the RJC’s Certification System.

The successful verification assessment of RAYMOND BLOCH SA was conducted by STR, an RJC-accredited auditing firm. “The RJC is delighted to congratulate RAYMOND BLOCH SA on becoming its first certified diamond supplier. Many RJC Members have commenced the process towards Certification and we look forward to announcing their achievements in 2011 and beyond,” says Michael Rae, RJC’s Chief Executive Officer.

AWDC Serves as Main Sponsor of Upcoming Diamond Trade Fair

The Antwerp World Diamond Centre Diamond (AWDC) has taken on the role of main sponsor and patron of the second edition of the Antwerp Diamond Trade Fair, which will open on January 30, 2011.

Ari Epstein, Deputy Chief Executive Officer of AWDC, said that while his organization also had supported and sponsored the fair's premier edition earlier this year, AWDC had resolved to increase its support and presence at the second edition of this Antwerp-based exhibition.

"By initiating this unique fair, the Antwerp Diamond Bourse and the Diamond Club of Antwerp have offered solid proof that an exclusive international diamond trade show in our own city can be not just successful, but also present a great marketing opportunity for Antwerp's diamond sector at large," Epstein stated.

The by-invitation-only diamond trade fair is expecting a turnout of visitors mostly comprising European jewelers, designers and manufacturers. However, unlike its predecessor, the upcoming fair will also welcome retailers from outside Europe.

For the second edition of the fair, the exhibitors will make use of the diamond trading halls of both the Bourse and the Club and increase the number of exhibiting companies to 60, compared to 40 for the first edition, according to the AWDC.

Neiman Marcus Hires New Precious and Designer Jewelry Chief

U.S. luxury retailer Neiman Marcus has hired Ann Stordahl, currently executive vice president and general merchandise manager at Neiman Marcus, to head the precious and designer jewelry department. Stordahl will now be responsible for the retailer's precious jewelry, designer jewelry and beauty categories, reports National Jeweler.

Lisa Kazor, senior vice president and general merchandise manager, previously oversaw the precious and designer jewelry categories, along with gift galleries, intimate apparel and children's. Kazor will continue to manage the intimate apparel and children's categories, but will add to her list bridge sportswear, contemporary sportswear, dress collections, coats and apparel from the designer brand St. John, says the news source. The trading hall of the Antwerp Diamond Bourse

IGI Students in Greece

DIAMOND INTELLIGENCE BRIEFS 6361

DIGGING THE DIRT

Firestone Diamonds Earns $1.6 Million on First Diamond Sales

Firestone Diamonds plc, has completed its first diamond tender from the company’s BK11 Mine in Botswana and Liqhobong Mine in Lesotho. A total of 14,673 carats were sold for gross proceeds of approximately US$1.6 million. More than 30 local and international buyers attended the tender, which was held between November 29th and December 9th at the diamond miner’s new sales office at Diamond Technology Park in Gaborone, Botswana.

Liquobong GoodsA total of 12,510 carats from the Main Pipe at Liqhobong were

sold on behalf of the Firestone’s 75 percent owned subsidiary, Liqhobong Mining Development Co. (Pty) Ltd, for US$1,228,625.

The average price achieved of $98 per carat is 14 percent higher than the most recent valuation of US$86 per carat, according to the company.

The L iqhobong parcel included 1,745 carats of boart (industrial diamonds).As noted by the company, the parcel is not considered to be representative of run-of-mine production, which is expected to contain a lower

proportion of boart. When the boart is excluded, the average price of the Liqhobong parcel increases to US$113 per carat.

The parcel did not contain any special or fancy colored stones, which the Main Pipe at Liqhobong is known to produce. As a result, Firestone expects that prices achieved for Liqhobong production in 2011 to be in excess of US$100 per carat.

BK11 GoodsFrom Firestone’s BK11 mine, a total of 2,162 carats were sold

on behalf of the company's 90 percent owned subsidiary, Monak Venture (Pty) Limited, for US$383,191. The average price achieved of US$177 per carat is in line with the most recent valuation of US$175 per carat for diamonds from the west side of BK11, where current mining operations are focused.

The majority of the diamonds sold were recovered from the treatment of low-grade overburden, and are of lower quality and smaller average size compared to the run of mine production expected from the higher grade kimberlite that will be mined in 2011, notes the miner. The BK11 production plant is expected to be operational at the target production capacity of 1.5 million tonnes per annum by January 2011.

Firestone plans to hold nine tenders in 2011. The average size of the BK11 tenders is expected to be approximately 12,000 carats, and the average size of the Liqhobong tenders is expected to start at approximately 15,000 carats, increasing to 50,000 carats by the fourth quarter of 2011.

Diamcor Finalizes Acquisition of Krone-Endora Project from DBCM

Diamcor Mining Inc. has now finalized all steps necessary to complete its acquisition of Krone Endora from De Beers Consolidated Mines Limited (DBCM).

The Canada-based junior diamond miner previously announced on October 13, 2010 that it had received Exchange acceptance for the finalization of the acquisition, after which the parties proceeded to complete a confidential Memorandum of Understanding (MOU) setting out the principal terms and conditions for the company’s potential future use of existing water conveyance infrastructure at DBCM’s Venetia Diamond Mine in the Limpopo Province of South Africa. The completion of the MOU satisfied the involved parties that the final remaining initial suspensive condition of the agreement could be waived, and allowed the parties to complete the cession of the Sale Prospecting Rights for the Project from De Beers to DMI Minerals South Africa (Pty) Ltd on December 13, 2010, according to Diamcor.

De Beers has taken steps to submit the formally executed cession documents for registration with the Department of Mineral Resources, and upon confirmation of their registration in the Department's Mineral and Petroleum Titles Registration Office, all closing documents and payments will be released from escrow and the transaction will be concluded.

The Krone Endora project, which consists of the prospecting rights over the farms Krone 104 and Endora 66, is located directly adjacent to De Beers’ flagship Venetia Diamond Mine in the.

The deposits which occur on the properties of Krone and Endora have been the subject of various ongoing exploration efforts by De Beers over a period of several years, and currently consist of an inferred resource estimate of 54,258,600 tonnes of diamond-bearing gravels and 1.3 million carats of diamonds as reported in the initial Independent National Instrument 43-101 Technical Report filed by Diamcor on July 30, 2009.

Firestone BK11 Rough

Diamonds

DIAMOND INTELLIGENCE BRIEFS 6362

DIGGING THE DIRT

Drilling Intersects Kimberlite Pipe at Stellar Diamonds’ Droujba in Guinea

West Africa-focused diamond miner Stellar Diamonds plc, has completed a drilling program at its Droujba mine in Guinea whose primary objective was to model the ore body to a depth of 150 meters by drilling angled holes through the kimberlite and to collect representative samples for microdiamond analysis.

The first two of three angled holes that were drilled, DH1 and DH2, were drilled across the "short axis" of the pipe in opposite directions to one another. The third hole, DH3, was drilled across the "long axis" of the pipe.

"We are delighted to report that the first three holes at Droujba have proven the continuity of the kimberlite pipe to a depth of at least 120m,” says Karl Smithson, Chief Executive Officer.

Further diamond drilling has also been planned on the geophysical anomalies that are in the immediate vicinity of the Droujba kimberlite pipe.

Two samples, totaling approximately 300kg, of the kimberlite pipe have been collected from the drill core and dispatched to the Saskatchewan Research Council laboratory in Canada for microdiamond analysis. In addition,

a number of samples have been collected and dispatched to South Africa in order to correctly define the kimberlite units and assist in assessing the relative diamond potential of the ore body. The results of this analytical work are expected in the first quarter of 2011, says Stellar.

The pipe was previously mined in early 1960's by the Russian Aid Mission to a depth of approximately 20 meters with grades as high as 200 carats per hundred tonnes (cpht), according to Smithson. “It was previously postulated that the ore body was not considered to extend significantly deeper than the mined depth due to a shallow angled fault, however our drilling has now disproven this” adds Smithson.

The initial 3,000 meter drilling program for Droujba will continue uninterrupted through the New Year period and will be extended to include adjacent geophysical targets which could represent additional kimberlites, according to Smithson.

South Korean Miner to Develop Diamond Mine in Cameroon

The government of Cameroon has repor ted ly g ranted a development license to South Korean miner C&K Mining to develop the Mobilong diamond mine near the southeastern town of Yakadouma, according to news reports.

The South Korean company is reported to have a 65 percent stake in the project while the West African country’s government owns the rest, sources say.

C&K Mining’s license is valid for 25 years and then renewable every 10 years from then on.

Sources citing Cameroon’s Ministry of Foreign Affairs and Trade say the mine is estimated to contain over 420 million carats.

In June 2009, Cameroon and C&K Mining made a discovery of gem-quality and industrial diamonds at Mobilong, with probable reserves estimated at 736 million carats, according to an earlier Reuters report.

In that July 2010 Reuters report, C&K Mining had said that initial production at Mobilong would start at the alluvial level with an annual output of 50,000 carats, but would rise to about 800,000 carats when full production would reach the hard rock conglomerate.

Droujba Kimberlite

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