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Weekly Market Report

DIAMOND MARKET OVERVIEW

Polished trading volumes were generally low over the past week, due to the holiday season in Europe. The main focus is on the Hong Kong Jewellery & Gem Fair mid-September, where traders are expecting to see a pick up in trading levels. Meanwhile, there are reports of an oversupply of polished inventory in the cutting centres. Coupled with lacklustre demand, due to the summer lull, we could see inventory sales at discounted prices as liquidity becomes tighter. Also affecting polished trading is the retail landscape, where traditional US retail chains have been caught up by consumers increasingly turning to internet retailers, as well as heavy discounted trendy fast fashion. This is forcing the trade to look for new sales channels. In the broader market, the main polishedprices index ended the week down, opening at 117.17 on Friday, from Monday’s opening at 118.83.

ROUGH MARKET

De Beers announced sales results of its August sale, which came in higher at $572 million, compared to $541 million the previous month. Despite softening demand in the secondary market, the leading diamond supplier remains bullish about the second half.  De Beers told Mmegi Business earlier this week that the prospects for healthy demand in the second half of the year were “looking strong”. It said projected robust demand for rough diamonds in the second half of the year was expected to lift Debswana’s production to peak levels last seen in 2014, according to the Mmegi Business report.  Debswana produced 24.2 million carats in 2014, but cut production to 20.4 million in 2015 and 20.5 million carats in 2016 amid mid-stream overstocking and weak demand.  In April, De Beers said it was targeting 20.5 million for the full year, however, according to the Mmegi report, the figure is expected to be closer to 22 million.

CORPORATE AND EVENTS

Nearly two years after unearthing a tennis ball-sized 1,109-carat rough diamond, Lucara Diamond Corp is considering forming a partnership to sell the stone if it still does not have a deal in the next six to eight weeks, Reuters reported. Lucara, which failed to sell the world's largest uncut stone at Sotheby's auction house in June 2016, continues to receive offers, Chief Executive William Lamb said on a conference call with analysts, said the Reuters report. The Vancouver-based miner is mulling "one or two" options for an outright sale, but such bids have failed to meet financial scrutiny in the past, Lamb noted, the Reuters report said.

Aim-listed Firestone Diamonds’ Liqhobong diamond mine, in Lesotho, is now expected to produce between 800,000 carats and 850,000 carats in the 2018 financial year, miningweekly.com reported. This is lower than the one million carats previously targeted and is expected to impact revenues in the financial year to June 30, 2018, said the miningweekly.com report. Firestone said it was currently undertaking a review of the current life-of-mine plan to optimise mining operations at its 75%-owned diamond operation, according to the miningweekly.com report.

Montana billionaire Dennis Washington has hired Patrick Evans to run Dominion Diamond Corp. after he agreed to buy the business for $1.2 billion last month, Bloomberg reported. “We are pleased that Patrick will become CEO of Dominion Diamond Corp. upon closing of the transaction," said Lawrence Simkins, president of The Washington Cos., said in an email to Bloomberg. "Having operated a mining company in the Northwest Territories, Patrick already has a familiarity with the region and strong relationships with local officials and indigenous leaders.” Evans is the former chief executive officer of Mountain Province Diamonds Inc., which owns the Gahcho Kue diamond mine with De Beers in Canada. Evans left the company with immediate effect in June in what the company said was a “mutual decision”, the Bloomberg report said.

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