TORONTO (miningweekly.com) – Toronto-based Harry Winston Diamond Corp earned $16,5-million in the three months ended July 31 – the company's second quarter – compared with a $24,5-million net loss a year earlier.

The company reported higher prices and sales volumes for rough diamonds from its share of the Diavik mine, in Canada's Northwest Territories, and also achieved a 37% increase in retail sales from its high-end jewellery and watches unit.

Profit in the quarter benefited from a net foreign exchange gain of $3,3-million, compared with a net foreign exchange loss of $25,3-million in the second quarter of 2009.

Harry Winston said consolidated sales for the quarter rose 62%, to $153,7-million.

The company's rough diamond sales increased 89%, to $86,8-million, helped by 62% higher prices and a 17% increase in the volume of carats sold.

A year earlier, production at Diavik had been curtailed to match the soft rough diamond market at the time.

Harry Winston's share of production in the three months ended July 31, 2010, increased 14% year-on-year, to 650 000 ct.

"This quarter has demonstrated the continued recovery in the international diamond business and it has also shown additional improvement from our own business segments,” CEO Robert Gannicott said in a statement.

“Both mine production and rough diamond sales increased in parallel with the growth in retail sales from our network of international stores, particularly at the high end.”

Last week, Harry Winston bought back a 9% indirect interest in the Diavik joint venture from Kinross Gold for $220-million in cash, shares and debt. The gold miner bought the stake from Harry Winston in 2009.

Harry Winston now owns 40% of Diavik again, and Rio Tinto, which is the operator, owns the balance.

Harry Winston sold the mine stake and shares in itself to Kinross for cash to help pay off debt and fund its share of capital spending at Diavik, as the company battled weak demand and prices for rough diamonds, as well as difficult conditions in its high-end jewellery retail business.

The company also suspended dividend payments at around the same time.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.