Chicago-based jewelry manufacturer IWI Holdings (NASDAQ) intends to purchase, on an annual basis, between 100,000 and 500,000 carats of commercial-grade sapphires from Montana-based American Gem (TSE).
The deal would provide American Gem with potential revenue of US$5-25 million per year. The company’s president, Gregory Dahl, notes that “while the IWI transaction provides for the sale of commercial-grade gemstones smaller than one carat, we estimate that about 65% of the value of the sapphires we produce in Montana is in stones cut to over one carat.” IWI, operating through various affiliates and subsidiaries, is in the business of manufacturing gem-mounted jewelry for U.S. markets. Its sales activity is geared to department stores, catalogue showrooms and jewelry chains, among other market segments. Major customers include Walmart, Home Shopping Network and J.C. Penny.
With the Montana operations curtailed for the winter, American Gem hopes to restart production later this spring. In April, the company plans to start up its third sapphire plant at Gem Mountain. Production from Gem Mountain, combined with output from two existing operations (Dry Cottonwood Creek and Moffat Gulch), is expected to exceed 30,000 rough carats of sapphire per day. Total production in 1995 is expected to reach 6 million carats of rough stones, and American Gem estimates that cut gemstone production will reach 1.3 million carats.
The company has an inventory of 6 million rough carats and 60,000 carats of cut stones.
Be the first to comment on "American Gem signs major sapphire sales agreement"