by Will Purcell
The diamond stocks box score for Monday was a mediocre 51-65-122 as the TSX Venture Exchange fell 10 points to 1,282. Polished diamond prices fell 0.25 per cent to a new 18-month low. Abdullah Chatila, controlling shareholder of Diamond Circle Capital, picked a bad time to make a hostile bid for the company's shares. (The bid failed because he offered $3.50 per share for a stock trading well above $4, so he launched Plan B: selling off Circle's main asset, an 11-stone parcel of gems worth an estimated $52-million.) Circle sold five diamonds this summer for $9.7-million and last week it unloaded three more for $20.8-million. Only three stones are left and are unlikely to sell for the $22-million needed to break even. The company says it is trying to sell the remaining gems but the market "remains difficult."
Given Diamond Circle's woes, shareholders of Robert Gannicott's Harry Winston Diamond Corp. (HW) had best be patient for a fledgling diamond fund to place a big order. Harry, which gained 17 cents to $13.01 on 321,000 shares, said 16 months ago it expected to sell $250-million worth of polished diamonds to Zurich-based Diamond Asset Advisors AG. Harry would then sell them on consignment. If they sell for more, the fund goes up. If they sell for less, the fund diminishes. The latter seeming more probably of late, there have been no purchases as yet. Mr. Gannicott recently said the first order might come in October, but "selling anything of that type has not been easy for the people that are doing it." Nevertheless, Mr. Gannicott occasionally manages to turn a lack of news into a cryptic hint of hope. He told analysts and shareholders last month that he was unable to say much about the fund but added, "I just grabbed myself by the throat there."