Miner Inks Supply Deal with French Jeweler

RAPAPORT… Australia-based Burgundy Diamond Mines has signed a deal that will see it provide polished fancy-colored diamonds to luxury French jeweler Bäumer Vendôme.

The supply agreement calls for Bäumer to create high-end jewelry using a number of large fancy-vivid and fancy-intense-yellow diamonds the miner purchased from Arctic Canadian Diamond Company in September, Burgundy said Wednesday.

Aside from the initial price of the diamonds, Burgundy will receive a portion of the proceeds from the sale of the resulting jewelry.

The two have also reached an arrangement over the Argyle Stella, a square-radiant cut, 1.79-carat, fancy-vivid-purplish-pink diamond Burgundy acquired last month. Details of that deal will become public early next year, Burgundy said.

Burgundy, which owns mines including the Ellendale deposit in Australia, has also branched into downstream activities, including manufacturing and polished distribution.

“The sale agreement over the fancy-yellow diamonds represents a major advance in Burgundy’s strategy to becoming an end-to-end diamond company,” the miner noted. “The agreement gives Burgundy access to a significant share of the margin generated by retail jewelry sales and will provide several multiples of value.”

In the future, Burgundy intends to sell colored stones it mines — or buys from third parties — into the agreement with Bäumer. It will also form similar agreements with other jewelry houses that have shown interest, it explained.

“This form of collaborative agreement is unprecedented in the diamond industry and positions the company ideally to extract value from the entire value chain, from exploration through mining operations to cutting, polishing, jewelry design, manufacturing and retail sales,” said Burgundy CEO Peter Ravenscroft. “We will continue to focus on developing the brand architecture that will enable us to establish similar arrangements with other leading jewelry houses in Paris, London, New York and elsewhere, and further expand our business in the fancy-diamond sector.”

In addition to Ellendale, Burgundy owns the Blina diamond projects in Australia, and has an agreement with North Arrow Minerals over the Naujaat site in Canada. The company also operates an exploration venture in Botswana. In June, Burgundy opened a cutting and polishing factory in Perth, Western Australia, and last month established a French subsidiary for its polished diamonds on the Place Vendôme.

Image: The Bäumer Vendôme boutique in Paris. (Bäumer Vendôme)