GEMS AND JEWELRY INDUSTRY THIS WEEK

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1 GEMS AND JEWELRY INDUSTRY THIS WEEK FEB 27 MAR 5 DIAMOND NEWS In 2007, Dubai s polished diamond trade increased 88% to $6.34 billion over 2006 according to the Dubai Diamond Exchange. India was one of the largest beneficiaries from Dubai as imports from India grew by over 80% to $ 2.33 billion. Alrosa had a successful 27 th international auction of diamonds. The company sold all of its 11,700 carat worth diamond rough for $42.6 million. Sarin, the Israeli based leading manufacturer of diamond processing equipment posted 18.5% growth in revenues to $37.12 million for the full year. However, higher taxes caused net profits to drop by 4.4% to $8 million. METAL NEWS GOLD PRICES Gold gathered steam this week as Gold futures for April delivery hit an all-time high of $992 an ounce on 4 March, the underlying fundamentals for gold remained unchanged, i.e. a sliding dollar against the euro and higher crude oil prices. South African Miner Gold Fields said that 6900 jobs are at risk due to power rationing that has caused the miner to suspend all mining activities for a month. PLATINUM PRICES Platinum remained steady in the last fortnight not losing its gains made early in the month of February. Platinum traded consistently around the $2150 per ounce mark. Polygon.net Pvt. Ltd Diamond News 1

2 OTHER INDUSTRY NEWS Anglo American Chief Cynthia Carroll is discontent over South Africa s decision to single out the mining sector to bear the brunt of power shortages. Providing electricity to the mining sector must be priority as it provides so many jobs and the sector is critical to the nation s economy. GOLD INCHES TOWARDS $1, Gold kept up its steady climb towards the psychological $1,000 mark as investor s poured money into precious metals as a hedge against inflation as the dollar deteriorated to a new low against the euro on speculation of a further US interest-rate cut. Gold for April delivery yesterday surged to a record of $ an ounce on the Comex division of the New York Mercantile Exchange before ending up at $975 an ounce. Meanwhile, silver futures for May delivery reached a 27-year high of $ an ounce, before settling at $ This year alone, gold has increased in value by 16%, while silver has risen by 33%. Investment demand for gold and the rest of the precious metals looks set to remain strong in the coming sessions as investors look to offset rising oil prices and continued dollar weakness, TheBullionDesk.com analyst James Moore said in a research note cited by MarketWatch. ALROSA ROUGH AUCTION ACHIEVES $42.6 MN 01- Alrosa s 27th international auction of rough diamonds, which was co-organized by the Diamond Chamber of Russia, completed on February 28 and generated total sales of $42.6 million, according to a statement on its website. The company said that all 11,700 carats, divided into 109 lots, sold successfully. One stone set a record high per-carat price of $25,000, it added. The overall sale average was $3,641 per carat. The sale included seven stones greater than 50 carats, the largest of which weighed carats. Alrosa said the next auction would begin by mid-march. SARIN 2007 NET PROFIT FALLS 4.4% TO $8.01 MN 03- Polygon.net Pvt. Ltd Diamond News 2

3 Sarin Technologies Ltd., an Israel-based manufacturer of diamond processing equipment, posted an 18.5% growth in revenues to $37.12 million for the full year 2007 due to strong sales in emerging markets. Net profit, however, fell 4.4% to $8.01 million on higher taxes. The emergence of new diamond processing plants in Africa focused marketing efforts in Russia and China and growth in India, our key market, were underpinned by firm demand for Sarin's expanding range of products, Sarin chief executive officer, Zeev Leshem, said in a statement. Polygon.net Pvt. Ltd Diamond News 3

4 By region, Sarin s revenues from India rose by 12.1% year-on-year to $25.37 million. Sales in Africa jumped 79% to $2.5 million, while its European sales fell by nearly 13% to $1.7 million. Revenues from North America for the year climbed 9% to $1.48 million, Sarin said. GOLD FIELDS SAYS POWER CUTS PUT 6,900 JOBS AT RISK 03- South African miner Gold Fields Ltd. said it may be forced to cut 6,900 jobs or 13% of its entire workforce because of the total suspension of production for 1 full week due to power shortages and continued electricity rationing. The company forecast a 20% to 25% decline in gold output for the third quarter versus the December quarter. It is further confirmed that, as a consequence of the 10% power reduction imposed by the state-owned power company Eskom, sustainable production at its South African operations is likely to decline by between 15% and 20% from the June quarter onwards. Meanwhile, Eskom has indicated that the power crisis will persist for at least five years, through to 2012, when two new power plants become operational. DUBAI S 2007 POLISHED IMPORTS +73% TO $3.67 BN 05- In 2007 Dubai s polished diamond trade (imports plus exports) increased by 88% to $6.41 billion as compared to 2006, according to the Dubai Diamond Exchange. The emirate s polished diamond imports for the year rose by 73% to $3.67 billion, averaging $269 per carat. During the 12 months, polished diamond exports more than doubled (115%) in value to $2.73 billion and rose 28% in volume terms to 9.33 million carats. The average value of polished exports was $293. Last year, India was Dubai s largest source of and destination for polished diamonds. In 2007, Dubai s polished imports from India grew by 88% to $2.33 billion, averaging $226 per carat. Meanwhile, the Emirates polished exports to India last year nearly tripled (192%) to $1.63 billion compared to The average value of polished exports to India was $220 per carat. U.S. IN RECESSION, SAYS WARREN BUFFETT 05- Billionaire investor Warren Buffett, whose investment firm Berkshire Hathaway, owns jewellery retailers Ben Bridge, Borsheim's and Helzberg's, said the US economy is in Polygon.net Pvt. Ltd Diamond News 4

5 recession and that the slowing economy and housing slump were hurting his company, according to media reports. Buffett explained that while the US might not have met the formal tests of recession two successive quarters of negative growth most people's situation - certainly their net worth - has been heading south for a while now. Polygon.net Pvt. Ltd Diamond News 5

6 By any common sense definition, we are in a recession, Buffett said in an interview on CNBC television. Business is slowing down. We have retail stores in candy, home furnishings and jewellery; across the board, I'm seeing a significant slowdown, he added. Buffett said economic conditions have not worsened to levels in 1973 and 1974, when there was a meltdown in equity prices. He told CNBC that stocks were not cheap, and also warned that the dollar would continue to weaken. GOLD FUTURES HIT RECORD $ Gold futures for April delivery hit an all-time high of $992 an ounce yesterday, driven by the dollar s continuing slide against the euro and crude oil s rally to a new peak of just under $104 a barrel, prompting fears of rising inflation, according to media reports. On Monday, spot gold also reached a record high of Rs.12,745 ($316) per 10 gm in Mumbai, partly due to the rupee s depreciation against the dollar by about Rs Everyone has basically thrown in the towel on the greenback, Matt Zeman, a metals trader at LaSalle Futures Group Inc., told Bloomberg. Gold is knocking on the $1,000 door. Meanwhile, silver futures for May delivery yesterday climbed to a 27-year high, reaching $20.74 an ounce before ending the day at $ So far, in, gold and silver have increased in value by 17% and 35% respectively. ANGLO CHIEF CALLS S.A. MINE POWER CUTS UNFAIR: RE 05- Anglo American chief executive Cynthia Carroll said the South African mining industry should not have to bear the brunt of the electricity shortage on its own and that the government must apply restrictions universally, reports Business Day. The article said that while mining companies have been restricted to using 90% of normal power consumption since end-january, the rest of South Africa does not face any such electricity constraints. We should not single out mining as a target, given its significance today and in the future. It is massive in projects and investments and capital spending, Carroll explained. There will be significant shortfalls on the production side and we certainly want to protect the platinum industry in this country. Polygon.net Pvt. Ltd Diamond News 6

7 According to the Business Day report, South African mines consume about 15% of its power and contribute 7- to 8% of the country s gross domestic product. It is important that the minister of minerals and energy recognizes that the disciplines and the agreements have to apply universally. We have to work together and support one another, recognizing that this industry is so critically important, she added X Polygon.net Pvt. Ltd Diamond News 7