TORONTO (miningweekly.com) – Canadian precious gem miner Dominion Diamond Corp on Thursday reported a 61% year-on-year rise in revenue during its fiscal 2015 first quarter that ended April 30, boosted by improved output from the Ekati mine.

TSX- and NYSE-listed Dominion reported revenue of $175.5-million compared with $108.8-million a year earlier.

However, the cost of sales leapt 69% to $137.7-million and the gross margin fell to 21.6% compared with 25.1% a year earlier.

During the quarter, the company which operates its two diamond mines in Canada’s Northwest Territories, sold 259 000 ct of rough from the Ekati mine for $92.8-million and 582 000 ct from the Diavik mine for $82.7-million.

The company reported a net profit of $10.7-million for the quarter compared with $505.8-million a year earlier, which was influenced by the company’s $750-million sale of its luxury brand segment Harry Winston to Swiss watchmaker The Swatch Group.

During the first three months of the calendar year, Diavik produced 1.9-million carats, flat on the comparable year-ago period. However, processing improved by 17% year-on-year as a result of improvements in mining rates, as the underground ramp up progressed to full production from all three kimberlite pipes.

Dominion said it expected to produce about 6.1-million carats of diamonds from Diavik this year.

During the three months to April 30, the Ekati mine produced about 400 000 ct of rough diamonds. Mining was focused on the Fox openpit, the Koala underground mine and on pre-stripping operations at the Misery pushback openpit.

The company recovered 100 000 ct from the Koala North and Koala underground mines and 100 000 ct more from the Misery South pipe and south-west extension.

Those diamond recoveries were not included in the company’s reserve estimate and were, therefore, additional to output.

Dominion said it expected to produce about 900 000 ct of rough diamonds from Ekati during the fiscal year; however, the guidance for Ekati would be reviewed at the end of the second quarter of fiscal 2015.

MARKET DYNAMICS

Dominion reported that rough diamond demand maintained the strong momentum experienced at the start of the calendar year and rough diamond prices held steady.

The diamond market had also overcome earlier concerns about liquidity in the Indian diamond manufacturing industry and it had become increasingly evident that tighter credit would lead to more sustainable growth in both market demand and diamond pricing, Dominion said.

Polished sales remained healthy with shortages still evident in the lower price ranges. The major retail jewellery markets remained upbeat with solid growth in the US and in the market for jewellery in China. The market in Japan was strong before the introduction of a new consumption tax in April.

“A year on from our purchase of the Ekati operation, we continue to improve ore production and recoveries as we develop new ore sources.

“The receipt of full operating permits for the Lynx openpit development in less than a year from application speaks better than words about the determination of a newly empowered government of the Northwest Territories to effectively manage through this transition and to support well planned resource development,” Dominion CEO and chairperson Robert Gannicott said.

Despite kicking the day off with surging trade on the NYSE and scoring $0.81 a share in the first half of the day, Dominion's stock closed up only half a per cent on Thursday at $13.58 apiece.