Hi,
If I recall correctly, at Diavik the grade is about 3 carats per tonne at a value of $60.00 per carat. IMO, $60/carat stones are "near gem" or "Indian goods". That is polite for "near industrial" or near bort quality in my opinion. The world is awash in cheap goods, however, even in a global recession, the multitude of truly wealthy will keep buying top quality goods. Debeers foists lots of near gem goods on cutters by: holding back top quality goods, and putting one or two really good stones in a CSO parcel full of stones that are economically marginal at best. As we all know, the buyers can hardly refuse. At the $110 per carat valuations at Ekati, the markets will likely be strained. Does the market want a flood of $60 per carat goods from Diavik? Given the capital cost here, is RTZ having second thoughts? However, there will always be a market for goods with the quality that have been recovered from Snap Lake to date. The rarity of top quality diamond and controlling its distribution is really what the CSO is all about. This is why I contend that in the end, Debeers must eventually own such a large, long life resource of high quality diamond at Snap Lake if they want to maintain their "franchise". This should make it clear as to why Diavik (and other diamond projects for that matter) is in doubt, IMO.
regards, |
