TORONTO (miningweekly.com) – Diamond miner and jewellery retailer Harry Winston late on Wednesday reported a 3% increase in gem sales for the quarter ended July, despite a 41% price rise, as the timing of diamond tenders impacted its results.

This resulted in a 23% decrease in profit for the quarter when compared to the same prior-year period to $10-million, which was helped by a near tripling in earnings from the company’s luxury jewellery segment.

Speaking on a conference call on Thursday, Harry Winston CEO Robert Gannicott said the rough diamond market saw “exceptional” price growth for the three months ended July, though there was a hiccup in August, as luxury consumers reacted to Standard & Poor’s debt rating downgrade of the US.

This led to what he called a “pause” in purchases for watches and jewellery that lasted about 10 days.

“August sales, in fact recovered to meet expectations,” Gannicott added.

“We would also expect the rough diamond market to recover its poise over the coming quarter.”

Mining mammoth BHP Billiton saw rough prices fall by as much as one-fifth in its August tender, while other producers suffered 10% to 15% reductions, BMO Capital Markets analyst Edward Sterck said in an interview earlier this week.

Both he and RBC Capital analyst Des Kilalea expect that that diamond prices will consolidate until the end of the year, with no further big swings up or down.

Prices have surged 50% over the past 12 months for some rough categories.

“Looking forward, we expect continued strong growth in jewellery and time piece demand from China, while Japan and the Middle East improve and the US and Europe remain subdued,” Gannicott said.

He added that the company wasn’t expecting global rough diamond prices to lift in the near term, the price per carat of production out of Harry Winston’s Diavik mine, which it owns in joint venture with Rio Tinto, should climb.

That’s because the company will be moving into areas of the mine that contain higher-value stones.

Harry Winston’s share of Diavik’s production for the July quarter showed an 11% increase to 0.72 million carats. The company owns 40% of the mine.

Gannicott said that the company would publish a new mine plan for Diavik in the coming quarter.

EXPLORATION JV

Earlier this week, Harry Winston announced it had inked an agreement with North Arrow Minerals and Springbok Holdings to form an exploration venture and pool the three companies’ properties located at Lac de Gras in the Northwest Territories.

Under the deal, Harry Winston would spend $5-million over five years exploring for gems there, and earn a 55% stake in the joint venture.

The joint venture property is 10 km south of the Diavik mine and 40 km southeast of BHP Billiton’s Ekati operation.

Shares in Harry Winston were over 2% in the red on Thursday, trading at $14.44 each on the TSX at 9:57.