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They are smaller than people think. Not counting the years of R&D, one average growth cycle for one white diamond actually costs more than what mining companies typically report for their cost-per-rough-carat dug from the ground. Mines use giant diesel earth moving and processing equipment, while we use scientists, electricity, and advanced machinery and alloys, but the variable cost-per-carat for rough diamonds are somewhat comparable. From there, the cost for polishing, grading reports, jewelry, logistics, marketing, etc. are all basically the same whether the diamond was grown or mined. White grown diamonds are generally 10-30% less expensive at retail than mined diamonds, however most of that is just due to lean, vertically integrated companies. We grow, cut, distribute and retail our diamonds as well as jewelry, so have a bigger slice of the rough-to-retail pie. That extra margin isn't huge, but is enough to sustain the business as well as progress the research, development and production. Mined diamonds pass through many more hands between the mine and the consumer, and each step adds some markup. A mined diamond entity that only sells rough, only polishes, or only buys and sells polished mined diamonds at wholesale would see smaller margins, but that can be made up for in greater volume of mined diamonds traded. It is also worth pointing out that the diamond success rate is sustainable, but not every growth cycle is profitable. While we can monitor the external HPHT equipment, we cannot see the actual diamond growth until after the cycle is complete. For example, a cycle may run for two weeks, but we find out afterward that it stopped growing on day three, or there were some bad inclusions on day six, and what could have been polished into a one carat gemstone (and cost the same to grow) may not yield anything, or may only yield a much smaller gemstone. The total production cost has to be averaged over the total successful sales. This includes growing diamonds that sit in inventory for a long time due to lower clarity, less desirable colors, etc. |