TORONTO (miningweekly.com) – Toronto-based diamond-miner and high-end jewellery retailer Harry Winston on Thursday reported a consolidated net loss of $45,1-million for the three months ended April 30.

A year earlier, the company posted a $21,13-million profit.

Earnings this year were affected by a weaker market for rough diamonds and jewellery, as well as several one-off items, including a noncash dilution loss of $34,2-million as a result of the investment by Kinross Gold in Harry Winston's 40% interest in the Diavik diamond mine, in Canada's Northwest Territories.

Rio Tinto owns the balance of the mine and is the operator.

The firm also took a $5,8-million net foreign exchange loss, compared with a $0,2-million net foreign exchange gain in the comparable quarter of the prior year, and an after-tax gain on the insurance settlement of $1,9-million.

Excluding these items, the net loss would have been $6,9-million.

Consolidated sales for the quarter were $109,6-million, compared with $156,1-million a year ago, resulting in a 69% decrease in gross margin and a loss from operations of $10,1-million.

Sales from the Diavik mine fell 29% year-on-year, to $57,7-million, while rough diamond production for the calendar quarter was 0,7-million carats, consistent with production in the comparable quarter of the prior year.

During the quarter, rough diamond prices fell to levels not seen since the inception of the Diavik project, seven years ago, said CEO Robert Gannicott.

The retail segment recorded a 30% decrease in sales, to $51,9-million, with a loss from operations of $5-million.

In March, Harry Winston agreed to sell 19,9% of itself, plus an effective 15% interest of the Diavik diamond mine, to Canadian gold-miner Kinross, for $150-million.

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