It's beginning feel a lot like Christmas for Gem Diamonds after a deal with jeweller Tiffany lifted its shares more than 6% this morning.
The diamond miner remains the top riser on the FTSE 250 heading into lunchtime, with the shares up 10.8p, or 5.5%, at 208.7p.
It announced earlier that its Kimberley Diamond subsidiary has agreed a deal with Tiffany & Co subsidiary Laurelton Diamonds for the supply and sale of its "fancy yellow diamonds" - their use of 'fancy', not ours - from a mine in Western Australia.
The company explains:
"The Ellendale mine in Western Australia is renowned for its production of sought after fancy yellow diamonds and is widely regarded as the world's leading producer of these rare and beautiful diamonds."
"On signature of the agreement, Kimberley Diamonds will benefit from an initial price which is less than 10% below the peak prices achieved before the onset of the financial crisis in 2008."
Meanwhile, Tiffany's chief financial officer James Fernandez says:
"Tiffany has some very exciting design initiatives beginning in 2010 that will require high quality yellow diamonds. This agreement should fully and efficiently satisfy our supply needs."
Evolution Securities analyst Louise Collinge said the pricing details made "particularly positive news which we would expect to be reflected in Gem's share price." She adds:
"We view Gem as low-risk exposure to the diamond sector and we retain our Buy recommendation and our 301p target price."
