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Gold/Mining/Energy : ORIOLE SYSTEMS (OOL:VSE) -- Ignore unavailable to you. Want to Upgrade?

To: Philip Choy who wrote (419)	6/22/1999 12:40:00 PM
From: Edward Sawicki	Read Replies (1) \| Respond to of 605

FOCUS-De Beers regains sparkle as gem sales surge (Writes through with share price reaction, analyst comment) By Ben Hirschler LONDON, June 22 (Reuters) - Diamond giant De Beers reported a 44 percent jump in first half sales of rough stones on Tuesday, boosted by strong U.S. retail demand and signs of recovery in Asia. Sales by the firm, which controls 70 percent of the world's supply of diamonds, totalled $2.447 billion at the first five of its 10 annual ''sights,'' where uncut gems are sold to a select group of trade buyers. That represents a sharp turnaround from last year when first half sales were $1.700 billion and sales for the year as a whole hit an 11-year low of $3.345, hammered by weak Asian markets. ''Clearly the demand for diamonds has recovered very strongly...I would be surprised if De Beers don't sell more than $4 billion of diamonds in the full year,'' said Jack Jones, mining analyst at CIBC World Markets in London. De Beers said the recovery reflected improving confidence in cutting centres, which had allowed its London-based Central Selling Organisation (CSO) to increase sales progressively during the first half of 1999. It said global retail sales were likely to be higher in 1999 than last year, although not at the levels reached in 1995 and 1996. Analysts polled by Reuters had forecast sales of $2.0-2.3 billion and the better-than-expected results lifted De Beers shares 1.6 percent to 148.40 rand in Johannesburg. The stock has virtually doubled since the start of the year. De Beers, which stockpiles diamonds in times of surplus, reined back supplies sharply in 1997 and 1998 in the wake of the Asian crisis -- a policy which it said was now paying off. ''The consequent low level of stocks in the cutting centres at the beginning of 1999, coupled with a limited supply of rough from non-CSO sources, the better than expected retail sales in the U.S. over the Christmas period, continued consumer confidence in the U.S., and some tentative signs of recovery in the Far East, have combined to create a better mood in the cutting centres,'' it said. James Allan, a diamond analyst at Barnard Jacobs Mellet in Johannesburg, said the outlook for the rest of the year was good, although sales were likely to be seasonally lower in the second half as usual. Analysts said first half sales had got an extra boost to the tune of around $100 million by purchases of stones for use in a limited edition of 20,000 individually numbered ''Millennium Diamonds'' which De Beers is producing. Despite the sparkling sales figures, De Beers sounded two notes of caution on its likely first half financial results. Delays in diamond exports from South African mines following a row with the government appointed diamond valuator will hit the diamond account in the first half, although exports are expected to resume in the near future. In addition, timing differences in the payments of dividends by Anglo American Plc (quote from Yahoo! UK & Ireland: AAL.L) and other changes resulting from a reorganisation of relations with Anglo will reduce De Beers' investment income by around $100 million in the first half. De Beers owns 35.4 percent of mining group Anglo, which restructured and moved its primary listing to London last month.