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Dominion Diamond lifts Q4 sales as global demand improves

4th April 2013

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – Canadian miner Dominion Diamond late on Wednesday reported increased diamond sales during the fourth quarter ended January 31, as global demand increased and prices were also higher.

The company, which recently changed its name from Harry Winston Diamond after it sold its luxury goods segment to Swiss watchmaker Swatch Group, reported consolidated sales from continuing operations increased 8% to $110.1-million for the quarter, compared with  $102.2-million for the comparable quarter of the prior year.

The increase in sales resulted from an 11% increase in achieved rough diamond prices as a result of an improved sales mix, partially offset by a 3% decrease in the volume of carats sold during the quarter.

Dominion Diamond said during the fourth quarter, the retail jewellery market improved in almost all areas, led by Diwali and the wedding season in India, followed closely by a positive US year-end holiday season and improved consumer demand in China, which regained momentum in advance of the Lunar New Year.

Rough diamond supply was impacted by delivery problems at certain diamond mines, coupled with lower-than-expected Russian rough diamond supply. The tight supply combined with a more active polished market helped improve rough prices during the quarter.

The company recorded a consolidated net profit attributable to shareholders of $14.9-million or 18c a share for the quarter, 10.24% lower than a net profit attributable to shareholders of $16.6-million or 20c a share in the fourth quarter of the prior year.

Net profit from continuing operations attributable to shareholders, which now represented the mining operations, was $12.1-million or 14c a share, compared with $12.7-million or 15c a share in the comparable quarter of the previous year.

Continuing operations included all costs related to the company's mining operations, including those previously reported as part of the corporate segment.

Operating profit from continuing operations decreased by 12% to $21-million, compared with an operating profit of $24-million in the comparable quarter of the prior year. Consolidated earnings before interest, taxes, depreciation, and amortisation from continuing operations decreased by 6% to $45.3-million, compared with $48.3-million in the comparable quarter a year earlier.

Dominion said rough diamond production during the fourth calendar quarter increased by 19% to 1.9-million carats, compared with 1.6-million carats for the same period last year, on a 100% basis, mainly owing to improved grades in each of the kimberlite pipes.

The company said it had 500 000 ct of rough diamond inventory with an estimated current market value of about $65-million at January 31, of which about $25-million represented rough diamond inventory available for sale, with the remaining $40-million currently being sorted.

Together with joint venture partner Rio Tinto, a new mine plan and budget for the year had been approved, and Dominion said it expected the Diavik diamond mine, in which it holds a 40% interest, to produce about six-million carats of diamonds this year.

However, the company put the development of A-21, the last of the Diavik mine’s kimberlite pipes in the original mine plan, on ice, owing to the current diamond market conditions and the decreased urgency of development following the identification of extensions to the existing pipes.

Dominion was also in the process of buying an 80% interest in the Ekati diamond mine from BHP Billiton, also located in the Northwest Territories of Canada, as well as a controlling interest in surrounding areas containing significant prospective resources. The $500-million transaction was expected to close on April 10.

Dominion Diamond’s TSX-listed shares on Thursday morning traded at C$16.08 apiece.

Edited by Creamer Media Reporter

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