FTSE 250 diamond mining company, Gem Diamonds (LSE: GEMD) has agreed to supply high-end jeweller, Tiffany & Co (NYSE: TIF), with its fancy yellow diamonds from the Ellendale mine in Western Australia. The deal will run for the economic life of the Ellendale mine, providing a contractual revenue stream for Ellendale's high quality yellow diamond production. The agreement formalises an existing supply arrangement from July 2008.
The Ellendale mine is operated by Gem Diamond subsidiary, Kimberley Diamond Company. The mine is renowned for its production of sought after and rare fancy yellow diamonds.
"I am pleased that Kimberley Diamonds has been able to conclude a long term supply agreement for Ellendale's production of fancy yellow diamonds with such a highly regarded brand and major player in the diamond jewellery and retail sector”, Gem Diamonds CEO, Clifford Elphick commented, “The agreement should provide a sustainable platform on which the Ellendale mining operations can grow”
The diamond miner will benefit from an initial price which is only 10% below 2008’s peak prices.
Kimberley’s remaining commercial production from the Ellendale mine will continue to be marketed through existing channels, including open tender and select direct sales.