How To Estimate A Parcel Of Rough Spinel

Appraising parcels

A. Take a random fraction from a parcel. Note its size.

B. Sort the gems into groups by stone type, size, and quality.

C. Appraise each group (from B) per carat.

D. Weigh each group (from B) in carats.

E. Multiply the per carat value of each group (from C) by the carat
weight of that group (from D).

F. Add the total values of each group (from E) together.

G. Multiply this sum (from F) by the number of similar sized fractions you
could have found in the parcel (from A). This is the value of the
whole parcel.


Appraising Rough And Native Cut Gems

A. Hints for appraising rough:

-Even the best dealers can be off on their profit estimation by 30%.
Judging rough is very difficult.

-Fiber optic light and immersion liquid will help find inclusions.

-Material other than precious usually is sold as "mine run". This is unsorted
products of a mine or medium to low grade material from a mine.

-If buying mine runs, check for tailings and already cut stones. Avoid them.

-Concentrating on a particular grade helps give accuracy.

-Try to buy sample first and have it cut. Go to several cutters. When buying
the whole lot, make sure it's the original lot.

-Handle with care. Use soft surfaces to prevent breaking stones.


Scenario # 2

3 kilos rough spinel for sale at $6000 per kilo. Sort and grade a 200 gram sample as follows:

Quality A
50 grams

Quality B
95 grams

Quality C
55 grams

Estimated sell price after cutting:

A
$50/carat

B
$15/carat

C
useless

Cutting charges: $1/carat
Yield: 25%
Overhead: 30% of cost after cutting

Calculations:
3000 grams (3 kilos)/200 gram sample = 15 (the coefficient)
50 grams x 15 = 750 grams
95 grams x 15 = 1425 grams

A

5 (one fifth of a gram = 1 carat) x 750 grams = 3750 carats

B

5 (one fifth of gram = 1 carat) x 1425 grams = 7125 carats

Multiply by .25 for yield, so:

A

937.5 carats

B

1781.25 carats

A

937.5 carats x $50 = $46875

B

1781.25 carats x $15 = $26718.75

Cutting charges at $1/ carat:

937.5 carats + 1781.25 carats = $2718.75 carats
2718.75 carats x 1/carat = $2718.75

Selling price: $73593.75 ($46875 + 26718.75)

Total cost : $18000 (3 kilos x $6000) + $2718.75 (cutting charges) x 1.20 (overhead)
= $24862.50

Profit : $73593.75 - $24862.50 = $48731.25