Sarine Technologies said geopolitical uncertainties stemming from the hostilities in the Ukraine, which commenced in late February, and the renewed outbreak of Covid-19 in China with the resulting lockdowns ordered there, generated uncertainties that had minor negative impact on the group's business environment in the first quarter of 2022.

Sanctions notwithstanding, the flow of rough diamonds into the value chain, including those of Russian origin, continued unabated in the first three months of 2022. Sarine added that midstream polishing activities were commensurately robust, as evidenced by the utilisation of our inclusion mapping systems, which continued throughout the first three months of 2022 on levels similar to those realised in late 2021, with averages exceeding 100,000 stones daily.

The company said that on the backdrop of these overall positive business conditions, the group realised revenues of $15.6 million in the first quarter of 2022, only 9.9% below its exceptionally strong first quarter of 2021, with a robust gross margin of 71.8%. Trade of rough and polished diamonds-related revenues accounted for 11.6% of overall revenues. The company’s profit from operations was just under $4.0 million, and, with ongoing beneficial tax rates, its net profit was just under $3.4 million.

The company said, “Subsequent to the first quarter's end, stricter sanctions on Russian rough diamonds in general, and Alrosa's production specifically, were enacted in April. These sanctions have reportedly had a more pronounced effect on the flow of Russian production, which accounts for some 35% of the total world output, into the midstream polishing segment, though it is not yet clear to what extent.

“We have so far not experienced any meaningful decrease in Galaxy®-family scanning activity in April, as compared to the scanning activity in the first quarter. In fact, scanning in April was higher than any of the preceding 12 months, except for March. Scanning data do indicate some reduction in polishing activity at some of our Indian customers since the beginning of May, however this may also stem from the onset of the summer vacation period in India, and has been manifested in reduced work shifts or days of operation (e.g., curtailed Sundays).

“As of this writing, we have not seen any material impact on our business from the ongoing geopolitical conditions. To a degree, the uncertainties affecting our Indian customers and their ramifications primarily on their demand for small stone Meteorite™ scanners, are being offset by renewed expansion of diamond polishing businesses in the southern African countries. We continue to closely monitor the ongoing situation arising from the conflict in the Ukraine.

Sarine’s Galaxy Meteor system. Photo: © Sarine