Adair Jewelers

As AMAX Exploration retired from the Yogo dike in 1995, another significant supply of Yogo sapphires appeared on the markets from an unexpected source Intergem. Before its 1985 failure, Intergem had aggressively promoted Yogo sapphires in many areas of the Untied States where jewelers typically had never heard the stones, much less stocked them in their stores. Intergem had greatly furthered national awareness and acceptance of Yogo sapphires, but its demise created two problems. First, no one continued the promotional effort; second, the supply of Yogos became erratic. 

As Intergem's cash flow worsened during its last months, the company paid its sales representatives commissions not in cash, but in sapphires. After Intergem collapsed, many of its former salepeople continued to make their rounds, selling their own sapphires until their supplies were gone. As market supply became tighter and more erratic, many jewelers, including those who had done well with Yogos, liquidated their remaining stocks and returned to Australian and Oriental sapphires. 

In 1986, a potential buyer for the Yogo property had asked Jim Adair, an independent jeweler from Missoula, Montana, to prepare a marketing proposal for Yogo sapphires. Based on his eight years of successful retail experience with Yogos, Adair provided this thoughtful analysis of why Intergem and other companies had failed to successfully market Yogo sapphires. 

To develop a successful marketing plan for Yogo sapphires, one must first study and analyze the past marketing strategies, all of which may ultimately be classified as failures. Although a few operations met with initial success, none sustained that success over the long term, and Intergem is merely the most recent example of the failed marketing strategies. 

My eight previous years in the retail jewelry business have been spent with companies that either distributed or sold Yogos. During Intergem's inception, I managed a chain store that became one of Intergem's largest customers. During those years, I noticed that the basic items purchased from companies other than Intergem moved far better than Intergem's items. With its price more than double those of other similar items, Intergem had thereby priced itself—and the jewelers carrying Intergem stock—out of the market. 

Intergem, with is heavy, custom-type look and high prices, effectively eliminated the Yogo sapphire as a competitively priced item that could sell in any market, and not merely in a few stores in Montana. Intergem repeated the error of previous mine operators: They tried to use the stones that were one-quarter carat or larger as their "bread and butter," then compounded that error by attempting to sell only overpriced, finished jewelry. 

In any discussion of Yogo sapphires, I've noticed that several terms keep coming up: culls, seconds, flats, and melee. These terms describe roughly 85 percent of all the rough sapphires produced at the Yogo mine.
Basically, I suggest taking the 85 percent of the mine production and making it the "bread and butter." The other 15 percent—the beautiful, larger stones that place the Yogo sapphire truly in a class by itself—must be the "gravy." This approach may be accomplished profitably by following these steps:

1. Price of the nicer loose Yogos must be lowered to become competitive with imported, heat-treated stones. Although the Yogo is a truly superlative stone, that quality and beauty become irrelevant if the jeweler can't earn a profit.
2. Tap markets other than those in Montana, keeping the jewelers' profitability as a primary concern.
3. Smaller stones must all be "diamond-cut" overseas to reduce cost and maintain beauty.
4. Larger stones must be sold loose, not mounted, to assure a higher turnover rate.
5. Everyone involved in the marketing structure must work within their own areas of expertise. In other words, let the mine sell stones, let manufacturers make jewelry, and let jewelers sell the jewelry. 

Although the prospective buyers did not purchase the Yogo property, Jim Adair would later have the opportunity to follow his own advice by marketing a supply of Yogo sapphire that had been locked away in a New York City bank vault. When Intergem collapsed, Citibank, one of the company's prim creditors, ended up with a huge stock of Yogo sapphires reportedly worth as much as $3.5 million. The sapphire stock included some 200,000 carats of rough, 22,000 carats of cut gems, and more than 2,000 pieces of finished jewelry. 

With no in-house expertise in gemology or gem and jewelry marketing, Citibank was unable to sell the sapphires or even to estimate their actual worth. Rather than attempting to sell the "Intergem legacy" in piecemeal lots, Citibank first tried to dispose of the sapphires and sapphire jewelry in a convenient single sale. A new York City gem and jewelry wholesaler bid $275,000 for everything, an offer that Citibank rejected. 

The Intergem sapphires continued to gather dust in a Citibank vault until 1991, when Sofus Michelson, director of the Center for Gemstone Evaluation and publisher of the Michelson Gemstone Index, became interested. Michelson offered to help Citibank liquidate the stones. In 1992, Michelson met Jim Adair, who by this time had built Adair Jewelers, his Missoula, Montana jewelry business into one of the world's leading retailers of Yogo sapphires. Would Adair consider looking at a large and "unusual" collection of Yogo sapphires? Adair, definitely interested, made the first of many trips to New York City.

At Citibank's New York offices, the Intergem sapphires, still in their original four canvas bags with lead seals intact, rested in underground vaults of an adjacent building. Armed guards transported the sealed bags across the street to the Citibank offices for the first look at the stones in six years. With bank officers present, Adair removed the seal on the first canvas bag, reached inside- and withdrew a strange material accompanied by a cloud of dust. Bank officers coughed as Adair studied the material in his hand. 

"Well?" one of the Citibank officers asked impatiently. "What is that stuff?" 

The drama of the moment notwithstanding, Adair couldn't help but laugh. "It's dirt—ordinary dirt!" the Montana jeweler announced. Someone at Intergem, during that company's last days, had apparently filled a canvas sack with dirt and a few worthless sapphire chips, sealed it, and passed it on to Citibank as another sack of "Yogo sapphires." Why? Adair believes it was either an attempt at black humor or an effort to deceive the bank as to the amount of sapphires it was actually receiving.
The second bag was little better, with some gem-quality stones mixed in with reject material. The third bag was better yet, but still not good enough to satisfy the Citibank officers. Only when Adair removed the lead seal and opened the last bag did the bank officers breathe a collective sigh of relief. The last bag contained a small fortune in fine rough and glittering gems. Adair spent days sorting through the Yogos, purchasing several hundred thousand dollars' worth of both cut and rough stones. In October 1994, Adair also purchased the finished Intergem jewelry from Citibank. 

Rather than sending the smaller, flatter rough stones to Far Eastern cutters for standard cutting, Adair and Michelson designed entirely new "custom" cutting shapes suited specifically for smaller, flatter stones that retained the brilliant life and delightful cornflower blue color inherent to Yogo sapphires. 

In 1997, yet another company announced its intention to mine the Yogo dike. Pacific Sapphire Company, Ltd., based in Vancouver, British Columbia, signed a $1.3-million, four-year lease-purchase option agreement with Roncor and geared up for large-scale mining on the main section of the dike. At full production, Pacific Sapphire ambitiously planned to mine 100,000 tons of dike rock annually and to recover a half million carats of sapphire. From the beginning, the company took a risky approach, counting on sales of sapphires to fund its start-up operations. It quickly fell behind on production and by 2001 had recovered only 9,000 carats of cuttable rough. Unable to meet its lease obligations, much less exercise its purchase option, Pacific Sapphire joined the long succession of failed mining ventures at the Yogo dike. 

Meanwhile, Vortex Mining continued to work the western extension of the Yogo dike. By 1999, when the Vortex Shaft had reached a depth of 265 feet, the company was mining 2,000 tons of ore and recovering 45,000 carats of rough sapphires each year. In 2000, Vortex reorganized as Yogo Creek Mining LLC, then immediately expanded its operation by driving an 8- by 10-foot, 1,875-foot-long declined tunnel that intersected the dike at the 300-foot level. The decline workings, the deepest ever made in the dike, revealed rock with an unusually high sapphire content.

By 2004, Yogo Creek Mining, which had been working on the Yogo dike for nearly 20 years, ranked second only to the old English Mine in operational longevity. But just when things looked brightest, at least from the mining perspective, the company fell victim to the old marketing problems that had plagued other Yogo entrepreneurs. Proceeds from the sale of sapphires had failed to meet the costs of mining and marketing. In 2005, Yogo Creek mining was forced to terminate its operations and sell off its entire stock of cut and rough sapphires. 

Heading the line of prospective buyers was Missoula jeweler Jim Adair, whose growing business continued to focus on fine Yogo sapphire jewelry. In 2000, Adair had moved his store from its original mall location to a newly built, freestanding building. Having done well with the Yogo sapphires acquired from Citibank in 1994, Adair was now interested in expanding his stock. And when Yogo Creek Mining moved to liquidate its stock of Yogo sapphires, Adair was ready. 

"Even though Yogo Creek Mining had worked at the dike for twenty years, they still couldn't make it," Adair says. "And I wondered if it might not have been the last mining venture. With that thought in mind, I saw the Yogo Creek Mining liquidation as perhaps the last chance for anyone to acquire a sizeable stock of rough and cut Yogo sapphires." 

Adair was impressed by the quality of Yogo Creek Mining's gems and rough stones, but didn't have the substantial amount of cash necessary to buy them. Undaunted, he quickly found an investor who put up the required capital to enable him to purchase the entire stock-3,300 carats of finished gems and 90,000 carats of rough. 

Adair's stock of Yogo sapphire gems and rough now far exceed that of all other commercial jewelers combined. This abundance, is reflected in Adair's jewelry store, which is now the largest in the three-state area and has 17 display cases filled exclusively with fine Yogo sapphire jewelry. The prices of these pieces range from $99 for a pair of delicate Yogo sapphire earrings to more than $80,000 for a superb, one-of-a-kind, multi-stone necklace. 

"I first became fascinated with Yogo sapphires 30 years ago while working in a California jewelry store," Adair says. "It's interesting how that chance encounter has evolved. Today, I have the largest and finest collection of Yogos anywhere. And I'm carrying on the history and tradition of what I consider to be the most beautiful sapphire in the world. And should my kids decide to become jewelers, they, too, can count on a stock of Yogo sapphires." 

Today's growing interest in the Yogo sapphire reflects nothing more than the rediscovery of the stone's fine quality and great beauty, attributes that had been recognized from the beginning. After earning awards at the turn-of-the-century Paris and St. Louis expositions, Yogo sapphires went on to gather many other honors. By 1918, Yogo sapphires appeared in the personal gem collections of the Duchess of York, Princess Mary and Queen Victoria of England, and Kaiser Wilhelm of Germany. Historians also believe that Yogo sapphires, possibly misrepresented as "Orientals," were acquired for the British Royal Crown Jewel Collection. In 1920, Johnson, Walker and Tolhurst, Ltd., presented four cut Yogos, thirty roughs, and specimens of the dike rock matrix with visible imbedded sapphires to the British Museum of Natural History in London, where they are still exhibited today. 

Tiffany & Co., of New York City, one of the earliest champions of the Yogo sapphire, created what is still the most magnificent piece of Yogo sapphire jewelry ever made —a large iris-shaped brooch containing 120 Yogo sapphires. These stones, mined by Charles Gadsden's men in the early 1900s, were sold to Tiffany by the New Mine Sapphire Syndicate. In 1909, the Tiffany Iris Brooch, as the famous piece is known, was purchased by Henry Walters, an avid jewelry collector who patronized contemporary artists. The brooch, with its 120 Yogo sapphires, recently completed a ten-city, three-year traveling exhibition called "Objects of Adornment: Five Thousand Years of Jewelry from the Walters Art Gallery, Baltimore," a tour sponsored in part by the National Endowment for the Arts.