13 Jul 2018

Rio Tinto to Sell Largest Argyle Vivid Pink

Argyle Alpha

Photo: Copyright Rio Tinto 2018

Rio Tinto will offer a 3.14-carat, vivid pink diamond at its 2018 tender, the largest stone of its color in the history of the annual sales event.

The emerald-cut Argyle Alpha (pictured) is one of 63 rare pink, red and violet diamonds — weighing a combined 51.48 carats — featuring in this year’s Argyle Pink Diamonds Tender. It is part of a collection of six “hero” diamonds the miner will offer at the sale.

“Rio Tinto’s Argyle mine is the world’s only source of these highly coveted pink, red and violet diamonds, and we expect considerable interest in this year’s collection,” Rio Tinto CEO Jean-Sébastien Jacques said Thursday. “The combination of strong demand and extremely limited world supply continues to support significant value appreciation for Argyle pink diamonds.”

This year’s tender, which the company has called Magnificent Argyle, also includes the Argyle Muse, an oval-cut, 2.28-carat stone, which is the largest purplish-red diamond ever offered at the tender, and came from a 7.39-carat rough. A second diamond, cut from the same stone, will also be up for sale.

The other hero diamonds include the square-radiant-shaped, 1.29-carat, fancy vivid purplish-pink Argyle Maestro; the princess-shaped, 1.57-carat, fancy dark grey-violet Argyle Alchemy; the Argyle Odyssey, a round brilliant, fancy intense pink stone weighing 2.08 carats; and the radiant-shaped Argyle Mira, a 1.12-carat fancy red.

Rio Tinto will unveil the gems at a world exclusive preview in Sydney, and will also showcase them in Hong Kong and New York. Bidding for the diamonds closes on October 10.

The company held its first Argyle Pink Diamond Tender in 1984.

Source: Rapaport
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13 Jul 2018

Pretty in pink: Rio Tinto kicks off one of its last rare diamond sales

Rio Tinto is launching one of its last ever pink diamond tenders as it prepares to shut the only pink diamond mine in the world.

The miner has put 63 of its rare pink diamonds from its West Australian-based Argyle mine up for tender, with prices expected to run to nearly $100 million for the entire lot.

Argyle Tender Hero Stones 2018

Rio Tinto has 63 rare pink and blue diamonds up for sale in 2018. Photo: Copyright Rio Tinto 2018

Every year, Rio Tinto selects its best pink diamonds to sell to the world’s wealthiest people, and this year’s auction features the largest ever vivid pink diamond since its sales began in 1984, Rio Tinto’s chief executive Jean-Sébastien Jacques told Fairfax Media.

The largest diamond in the 2018 tender is the Argyle Alpha diamond, weighing 3.14 carats, which was actually uncovered in 2015.

Before it was cut, the Alpha pink diamond weighed 5.88 carats.

Pink Jubilee

The Argyle Pink Jubilee. Photo: Jason South

While the process of creating regular diamonds is well understood – with diamonds able to be synthetically created – it is not yet known why pink diamonds are pink.

The largest ever pink diamond recovered from the Argyle mine, the Pink Jubilee, weighed 12.76 carats.

Although Rio Tinto has not set a price on Alpha, the record price achieved for a pink diamond was $US2.2 million per carat, potentially valuing Alpha at around $US7.9 million ($10.7 million).

The most expensive gem ever sold at auction was the 59.6 carat Pink Star diamond, sold for $US71.2 million last year.

The buyers are typically the super-wealthy, or luxury jewellery businesses from around the world. They are allowed to bid by invite only.

‘Niche market’

“It’s a niche market, there are very few people who are invited to bid. All the bids will be received before the 10th of October, and at that point, we will disclose who are the winners,” Mr Jacques said.

“Last year’s auction was very good and we expect 2018 to be even better.”

Rio Tinto CEO Jean-Sebastien Jacques inspects the Argyle Muse Diamond in Sydney on July 12, 2018. Photo: Dominic Lorrimer

The tender starts in Sydney before moving to Hong Kong and finishing up in New York.

However, this could be one of the last auctions with pink diamonds.

Mr Jacques said the world is about to lose its main supply of pink diamonds as its Argyle mine is approaching the end of its supply. Argyle accounts for about 90 per cent of the world’s pink diamonds, with the remaining 10 per cent being random finds in other diamond mines.

“This is the only mine which has consistently produced these types of diamond,” Mr Jacques said.

“It took only a few billion years to produce them all. The mine has only a few years left, about three years.”

While Rio Tinto is shutting down the Argyle mine, it still operates the Diavik diamond mine in Canada’s frozen far north.

“We like diamonds, which is why we have comprehensive exploration for diamonds. It takes a lot of time and a lot of dedication, and we hope to find a new mine like Argyle, but we have to be patient,” Mr Jacques said.

Source: Sydney Morning Herald
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19 Jun 2018

Nest Egg: Diamonds in your SMSF, darling?

This following article was first featured on nestegg.com.au


A kiss on the hand may be quite continental, but are diamonds an investor’s best friend?

It depends, SMSF technical expert and general manager at Super Concepts Graeme Colley told Nest Egg.

He said the diversification prospects offered by investing in precious gems need to be worth the liquidity risk and administrative burden.

“Of all the around 20,000 funds we’ve got [at Super Concepts], we’d have around about 10 that would have diamonds in them and they range from clear diamonds right through to the more expensive coloured diamonds,” Mr Colley said.

“They’ve made a choice to invest in that. It’s not a particularly large percentage of the fund, even though diamonds are relatively expensive, so what they look at is the diversification of the investment.”

He said larger SMSFs are generally more suited to investing in diamonds in order to spread the risk and warned that liquidity can be a problem if the fund is overweight in diamonds.

Anna Cisecki, executive director at specialised diamond brokerage Australian Diamond Portfolio, agreed that liquidity poses a risk, along with choosing poor-quality or common stones.

She said red, blue and pink diamonds are the best bet for would-be investors, given their rarity and potential for future price appreciation.

Noting these stones have seen performance rise by nearly 13 per cent per annum over the last 12 years, Ms Cisecki predicts this growth will continue given the nearing closure of the Argyle Diamond Mine, which produces more than 90 per cent of the world’s pink diamonds.

“Diamonds also tend to hold their value even when financial markets are volatile, so they provide some diversification benefits when looked at in the context of an overall SMSF portfolio,” she added.

“Diamonds are not best suited to short-term investors, as they don’t offer daily liquidity like shares, so investors should ideally have a three to five-year plus timeframe if they’re looking at this sector.

“To help ensure you’re picking a quality diamond, most investors like SMSF trustees will work with a specialised diamond broker… who will source a diamond on their behalf, and ensure they diamonds are independently assessed and valued by a certified diamond laboratory.”

Mr Colley said SMSF trustees should also be aware of the different restrictions and requirements on investing in diamonds.

Storage

Trustees need to understand the difference between investment diamonds and jewellery.

“With an investment diamond you can stick it in your back pocket if you’re that excited … whereas if it’s jewellery, it falls under the artworks and collectibles rules in the superannuation legislation and they’ve got to be stored in a particular way and they’ve got to be insured,” Mr Colley said.

“You can’t use them as jewellery personally because it’s in breach of the [sole purpose test] rules as well.”

He said most people with investment diamonds store them in a bank vault, or in a personal safe.

Acquisition

Diamonds owned by a member can’t be put into an SMSF.

“Grandma’s ring, if it came to you after her death, can’t go into the fund. That’s an important consideration, it’s not only things that you might own personally going into your own fund but also any other trustees of the fund,” Mr Colley said.

Valuation

SMSFs need to have the assets valued at market value every year, Mr Colley said. Members may need to prove the existence and storage of the diamond and may also draw the attention of auditors.

“Being able to justify or certify where they are can be an important consideration as well,” he said.

“For those that are thinking of going ahead with it, they really need to look at it as to whether it’s a true investment or they’re just doing it because their heart’s telling them to do.

“Be sensible, diversify your investments and make sure it’s a good investment.”

Source: nestegg.com.au
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16 May 2018

Historic blue diamond auction exceeds expectations — sold for AUD$9 million

A 6.16-carat blue diamond that was secretly passed down through European royalty over three centuries has fetched USD $6.7 million (AUD $9 million) at a Sotheby’s auction in Geneva — USD $1.4 million (AUD $1.9 million) more than what experts expected it to be sold for.

The pear-shaped, dark grey-blue gem, known as The Farnese Blue, is believed to be one of the most important historical diamonds left in private hands until today, which was the first time the stone was put up for sale.

Found at India’s Golconda mines, it was given to Elisabeth Farnese, daughter of the Duke of Parma, in 1715 to mark her marriage to King Philip V of Spain.

The royal couple descendants owned the Farnese Blue, as they married into other European families, travelling from Spain to France, Italy and Austria. During more than 300 years, nobody — except from close relatives and the family jewellers — knew of the gem’s existence.

This was the first time The Farnese Blue, passed down through European royalty, went on sale. (Image courtesy of Sotheby’s)

“All this time, it was hidden away in a royal jewellery box,” Philipp Herzog von Wurttemberg, chairman of Sotheby’s Europe, said in a statement.

“With its incredible pedigree, the Farnese Blue ranks among the most important historic diamonds in the world,” he noted.

The last person to own the diamond before today was one of Elisabeth’s descendants.

Sotheby’s has not released the identity of the buyer.

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30 Apr 2018

The Inner Facets Of Diamond Investing

Anna Cisecki, Executive Director of Australian Diamond Portfolio, was asked to contribute to Equity magazine, a monthly publication issued by Australian Shareholders’ Association (ASA), the peak body representing independent investors in Australia.

With growing interest in pink diamonds, the article below outlines the main reasons to invest in pink diamonds, an overview of performance, as well as some tips on investing.

 

Over the last 15 years, demand for investment grade pink diamonds has soared, with investors all over the world, including in Australia, seeking to purchase these truly unique assets.

Australian Diamond Portfolio (ADP) has had a front row seat facilitating the growth in this sector locally, and has helped thousands of Australians source, store and trade pink diamonds.

In this article, we look at some of the benefits, & logistics, of investing in this asset class.

There are many benefits that pink diamonds bring to a well-diversified investment portfolio. For Australian investors with a SMSF, we see three key reasons why these precious stones should be on the radar.

Pink diamonds offer potential for capital gains

Over the past decade and more, anyone that has purchased a pink diamond has seen a significant appreciation in value on their investment. This is captured in the chart below, which highlights the growth in prices across several categories of investment grade pink diamonds since 2005.

All categories have appreciated in a similar manner over the period, averaging between 12-20% per annum.

Whilst international equities and other more traditional asset classes have appreciated strongly in the past few years, the returns from pink diamonds since 2005 exceed most listed assets.

We expect the strong capital gains to continue in the years ahead, as a wave of new demand is likely to coincide with a spectacular decline in supply.

On the supply front, it is important to note that almost 95% of annual natural pink diamond supply is mined right here in Australia, at Rio Tinto’s world-famous Argyle Mine. In operation since the early 1980s, the mine is scheduled to completely cease production by 2020, as supply has been exhausted.

This pending closure of the world’s primary source of pink diamonds is a major bullish factor for the investment diamond market.

On the demand side, whilst equities have had a great run since early 2009, valuations are now increasingly stretched (especially in the United States), whilst bond yields are still hovering near multi-generational lows.

With inflation starting to stir, and cash accounts in most of the developed world still paying close to zero in real terms, every day more and more investors are turning to alternative hard assets, including diamonds, as returns in more traditional assets are likely to be limited in the years ahead.

Given the supply constraints discussed above, higher demand can only be met through higher prices.

Pink Diamonds provide protection from market volatility

Pink diamonds have shown very good stability and consistency of performance over the long-term. Unlike more volatile assets such as shares, they do not suffer the violent ups and downs that can understandably rattle investors.

This can also be seen in the previous chart, which highlights the fact that there has been almost no downward movement in the 13 or so years of market data the chart covers, including the period that encompassed the worst of the GFC.

Instead, pink diamonds offer many years of relatively modest gains, interspersed with years where investment demand and prices soared. These are valuable attributes in any investment.

 Pink diamonds provide an Australian dollar hedge

As diamonds are priced in US Dollars, they will benefit from any fall in the Australian dollar, which will increase the price of the diamonds domestically.

Given many economists expect the AUD to fall in the coming years, currency diversification, is becoming increasingly important to SMSF trustees.

Diamonds offer a relatively straightforward, and unique way of achieving this currency diversification, whilst simultaneously giving the investor exposure to an uncorrelated hard asset.

Adding all this together, whilst diamonds are a non-income producing asset, and are definitely not best suited for short-term traders, they can play a role in a portfolio, as the potential for capital appreciation, the protection from market volatility, and the Australian dollar hedge combine to provide important diversification benefits for Australian investors.

Tips for Investing

Whilst many might imagine that investment grade pink diamonds are the preserve of ultra-high net worth individuals, the market is actually very accessible to a far wider pool of investors, including SMSF trustees.

At a minimum, investors would need to commit to AUD $20,000 per stone, though in our experience, most investors accessing this space tend to start with an investment closer to AUD $50,000, and often work their way up to portfolios of AUD $100,000 or more.

Given the average SMSF is these days holding close to $1 million in assets, portfolio allocations tend to be in the 5-15% range.

We encourage clients to see investment diamonds as a minimum 3-5 year investment, as this timeframe will give them the best chance of partaking in the upside the market has to offer.

Selling diamonds is also very straightforward, and typically takes 3 months at a maximum, about the same time it takes to sell real estate. ADP’s brokerage service upon completed sale totals 5%.

Finally, from a compliance and reporting perspective, diamonds owned inside a SMSF are required to be ‘securely stored’, and insurance and regular valuations are .

Companies like ADP provide a solution covering all these requirements, including independent valuations on an annual basis, fixed-rate storage for $272 pa as well as facilitation of insurance (underwritten by Lloyds of London) through our vaulting partners for an approximate fee of just 0.20%-0.36% p.a. of the diamond portfolio value.

Source: Page 6, Equity Magazine 

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18 Apr 2018

3-Carat Fancy Intense Blue Diamond Fetches a record breaking US$5.3 Million

A 3.09-carat rectangular-cut fancy intense blue diamond sold for more than US$5.3 million, setting a world record price per carat for an intense blue diamond. The gem, which was set on a platinum ring flanked by tapered baguette-cut diamonds, sold for well above its high estimate of US$3 million.

It was the top lot at Christie’s New York Magnificent Jewels sale held Tuesday. The auction of 211 lots achieved more than US$45.6 million, with 88% sold by lot and 96% by value. The sale was highlighted by fancy colored diamonds, colorless diamonds and signed jewels by JAR, Van Cleef & Arpels and Cartier.

The other top lots are as follows:

A ring set with an 8.42-carat cut-corner rectangular modified brilliant-cut fancy intense pink diamond, flanked by tapered baguette-cut diamonds, mounted in platinum and rose gold. It sold for just over US$5 million, within estimates.

A crossover ring set with a 2.85-carat pear modified brilliant-cut fancy intense pink diamond, and a 2.42-carat pear brilliant-cut fancy vivid blue diamond, further adorned with baguette-cut diamond shoulders and circular-cut diamond gallery set in platinum. It sold for more than US$4.5 million, within estimates.

A crossover ring set with a 2.10-carat pear brilliant-cut fancy vivid blue diamond, and a 1.98-carat pear brilliant-cut colorless diamond flanked by a tapered baguette-cut diamond and mounted in platinum. It sold for nearly US$3.5 million, within estimates.

A diamond thread ring by JAR set with a 22.76-carat elongated oval brilliant-cut diamond within a diamond-set, two-tiered thread-work gallery and hoop, mounted in platinum. It sold for more than US$2.7 million, within estimates.

A ring set with a 33.46-carat rectangular-cut diamond, flanked by tapered baguette-cut diamonds mounted in platinum. It sold for nearly US$2.3 million, beating its high estimate of US$1.8 million.

A ring set with a 2.81-carat modified square brilliant-cut fancy intense blue diamond with pavé diamond shoulders mounted in platinum. It sold for US$2.1 million, besting its US$1.5 million high estimate.

A large transformable emerald and diamond necklace by Van Cleef & Arpels centered with a 24.32-carat detachable oval-cut emerald that can be worn as a brooch, within a two-tier surround of circular and marquise-cut diamonds. The remainder of the necklace is set with a series of seven graduated rectangular-cut emeralds within two-tier circular-cut diamond surrounds, joined by oval or circular-cut emerald, pear and marquise-cut diamond links, mounted in platinum and 18k gold. The necklace can be separated and worn as a bracelet. It sold for US$1.5 million, above its $1.25 million high estimate.

A 12.19-carat round brilliant-cut diamond that sold for US$1.4 million, within estimates.

A sapphire and diamond necklace by Cartier centered with a 58-carat cushion-cut sapphire, suspended beneath a 28.51-carat cushion-cut sapphire joined by 4.13-carat a modified square-cut diamond. A circular, two-row platinum and 18k white gold neckchain is accented by square-cut diamonds.

Source: Forbes

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22 Mar 2018

Historic Blue Diamond with royal pedigree up for auction

This spring, the Farnese Blue, a diamond with an incredible historic pedigree, will be offered by Sotheby’s—marking the first time the gem has ever been brought to auction.

Originally given to Queen of Spain Elisabeth Farnese by the Philippines to celebrate her marriage to King Philip in 1714, the gem was later owned by a descendant of France’s last queen, Marie Antoinette. Over the next 300 years, it was furtively passed down through four European royal families. The 6.16-carat, pear-shaped dark gray-blue diamond was hidden in a casket as it traveled through Spain, France, Italy, and Austria.

“With its incredible pedigree, the Farnese Blue ranks among the most important historic diamonds in the world,” said Dr. Philipp Herzog von Württemberg, chairman of Sotheby’s Europe and managing director of Germany, in a statement from the auction house. “From the first minute I saw the stone, I could not resist its magic, and as such, it is a huge privilege to have been entrusted with this sale.”

Like the Hope Diamond, this gem is thought to have come from India’s Golconda mines. This region was the go-to source for exceptional colored diamonds up until the 1720s, when mining shifted to Brazil.

“It is difficult to put into words the excitement of holding between thumb and forefinger a gem discovered centuries ago, knowing it originated in the legendary Golconda diamond mines of India,” said David Bennett, chairman of Sotheby’s international jewelry division and cochair of Sotheby’s Switzerland. “This stone has witnessed 300 years of European history and in color is reminiscent of historic Golconda blue gems such as the Hope Diamond.”

The legendary diamond will be offered at Sotheby’s Magnificent Jewels and Noble Jewels sale in Geneva on May 15. Its estimated value is between US$3.7 million and US$5.3 million.

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01 Mar 2018

Rio Tinto Releases 2017 Annual Report, slashes outlook for Argyle Mine

Rio Tinto’s 2017 annual report released today includes significant changes in estimates of Ore Reserves and Mineral Resources at Rio Tinto’s Argyle Diamond mine in East Kimberley, Western Australia.

Rio Tinto has lowered its estimate of diamonds it can viably extract from the Argyle mine, after experiencing operational difficulties and reducing its price forecast.

The asset’s ore reserves slumped 45% to 16 million tonnes at the end of 2017 versus a year earlier, the company said in a statement. That translates to 38.5 million recoverable carats, at a grade of 2.4 carats per tonne of ore. Reserves are the economically extractable material present in a mine, and are distinct from resources, which refer to all deposits.

The decrease includes almost 5 million tonnes of ore that Rio Tinto depleted during the year at the mine in Australia. It comprises a further 3 million tonnes due to reduced production outlook resulting from operational challenges in 2017, it said.

Rio Tinto also cut its price expectation for the mine for 2020 and 2021, resulting in a higher “economic shut-point” — the minimum volume it must produce per quarter for operations to be worthwhile. This, combined with adjustments to its estimates of future mining grades, shaved just over 5 million tonnes off its reserves.

The available reserves will enable Argyle operations to continue until 2020. The company could increase the estimate and extend the life span beyond that, depending on how the mine performs, it added.

However, the miner said other mineralised deposits at Argyle do not demonstrate economic prospects and are not scheduled for production. As such, Argyle Mineral Resources, exclusive of Ore Reserves, decreased from 15 million tons to zero.

The Argyle diamond mine is expected to produce 3 million carats less of diamonds this year than it did in 2017 – Image copyright 2018 Rio Tinto

Rio Tinto is the industry’s third largest producer by volume, yet only has interests in two producing diamond mines, its 100%-owned Argyle mine in Australia and a 60% stake in the Diavik mine in Canada.

By volume, 76% of the company’s net production is estimated to come from Argyle – the largest mine in the world in terms of carat volume produced. The majority of the mine’s production is low quality in terms of size and colour, and the mine’s economics are driven by the occurrence of fancy pink diamonds that fetch a significant premium to white and most other fancy coloured stones. In 2018, Argyle’s production is expected to decrease by 3 million carats year-on-year to 14 million carats.

Argyle production commenced in 1983 and, at one point, produced as much as 40 million carats annually, making it arguably the industry’s most important mine. However, as a result of normal depletion, annual production has dropped to 14-17 million carats in recent years.

In 2016, Rio took a $241 million impairment charge on Argyle after reassessing mine-life expansion economics and has now cut the mine’s recoverable diamond reserve estimate to 39 million carats, thus reducing the remaining mine life to less than three years.

Sources: Rapaport, Rio Tinto, Mining Journal, Paul Ziminsky
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07 Dec 2017

Graff Blue Diamond Ring Fetches $13M

A ring featuring two fancy vivid blue diamonds by Graff Diamonds smashed its pre-sale estimate at Christie’s Magnificent Jewels sale on Wednesday, as blue diamonds continued to dominate the New York auction scene.

The pear-shaped, modified-brilliant-cut diamonds, weighing 3.36 carats and 2.71 carats with VVS2- and VS1-clarity, respectively, sold for $12.6 million, well above their estimate of $6.5 million to $8.5 million, Christie’s said. Both stones have the potential to be re-cut to be internally flawless, the auctioneer added.

At the same sale, a cut-cornered, square step-cut, 38.91-carat, D-color, VS1-clarity diamond went for $3.6 million, or $93,613 per carat, beating its high estimate of $3.5 million.

A brilliant-cut, 23.26-carat, E-color, VVS2-clarity diamond fetched $2.4 million, translating to $101,139 per carat. It had drawn an estimate of up to $1.5 million.

Total proceeds at the auction came to $62.6 million. The sale followed a Sotheby’s auction in New York on Tuesday, in which the top item, a 5.69-carat fancy vivid blue diamond ring, found a buyer at $15.1 million, beating its $15 million upper estimate.

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06 Dec 2017

Blue Diamond Sells for $15M at Sotheby’s New York

Sotheby’s sold US$54 million worth of jewellery at its New York auction on Tuesday as several pieces containing rare blue diamonds and gemstones yielded higher-than-expected prices.


An anonymous buyer spent $15.1 million, or $2.7 million per carat, on an emerald-cut, 5.69-carat, fancy vivid blue, VVS1-clarity diamond ring, beating its upper estimate of $15 million, the auctioneer said. Meanwhile, a pear-shaped, 2.05-carat, fancy intense blue, internally flawless diamond ring fetched $2.7 million, or $1.3 million per carat, in a sale to a member of the trade — well above its high estimate of $1.5 million.

Sapphire jewelry also attracted strong prices. A Van Cleef & Arpels bracelet containing 193.73 carats of the blue stones went to a private collector for $3.1 million, having drawn an estimate of up to $1.5 million. A sapphire-and-diamond necklace-bracelet combination by Harry Winston — with seven emerald-cut sapphires weighing a combined 123.13 carats — fetched $1.9 million, beating the expected price of up to $1.5 million.

“The market continues to show its strength in colored stones, with today’s results driven by intense competition for important colored diamonds, sapphires and emeralds in particular,” Sotheby’s jewelry-division chair Gary Schuler said.

A 110.92-carat, L-color, VS1-clarity diamond — the largest round diamond in auction history — appeared on Sotheby’s list of unsold lots. The company did not immediately respond to a request for comment outside of New York working hours.

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