Business
Supply agreement with Tiffany
Supply agreement with Tiffany.
About this update from Gem Diamonds Limited
[{"type":"text","content":"\n RNS Number : 5223E Gem Diamonds Limited 22 December 2009 \n \n22nd December 2009\nGEM DIAMONDS LIMITED\n(\"Gem Diamonds\" or the \"Company\") \nGEM DIAMONDS AND TIFFANY SUBSIDIARY ENTER INTO SUPPLY AGREEMENT FOR ELLENDALE'S FANCY YELLOW DIAMONDS\nGem Diamonds (LSE: GEMD), the FTSE 250 diamond mining company that acquired Kimberley Diamond Company NL (\"Kimberley Diamonds\") in November 2007, is pleased to announce that Kimberley Diamonds has successfully entered into an agreement with Laurelton Diamonds, Inc. (\"Laurelton\"), the diamond sourcing and polishing subsidiary of global high-end jeweller, Tiffany & Co. (\"Tiffany\"), for the supply and sale of its fancy yellow diamond production from the Ellendale mine.\nThe Ellendale mine in Western Australia is renowned for its production of sought after fancy yellow diamonds and is widely regarded as the world's leading producer of these rare and beautiful diamonds. \nThe agreement, which formalises an existing supply arrangement dating back to July 2008, is effective from December 2009 and will run for the economic life of the Ellendale mine, affording Kimberley a contractual revenue stream for Ellendale's high quality fancy yellow diamond production. \nOn signature of the agreement, Kimberley Diamonds will benefit from an initial price which is less than 10% below the peak prices achieved before the onset of the financial crisis in 2008.The fancy yellow production from Ellendale's E9 pipe constitutes a substantial portion of Kimberley Diamonds' total revenue. Gem Diamonds' Directors believe that this increased price is both sustainable and favourable for the mine, and the regular price reviews that will commence in 2010 allow for the price to be fairly adjusted to the prevailing market by agreement. This agreement at current exchange rates and prices provides Kimberley Diamonds with a certain income stream and positive cash flow to enable the company to cover all costs as well as undertake further exploration at Ellendale. \nThe remaining commercial production from the Ellendale mine, which includes diamonds not covered in this agreement, will continue to be marketed through existing channels, including open tender and select direct sales. \nGem Diamonds CEO, Clifford Elphick commented:\n\"I am pleased that&nb...