Dominion Diamond Corporation (TSX:DDC, NYSE:DDC) (the “Company”
or “Dominion”) reports that after further review of the repairs
required at the Ekati Diamond Mine process plant from the fire that
occurred on June 23rd, it continues to estimate that repairs will
take approximately three months from the date of the fire, and is
currently estimating the cost of repairs to be approximately CDN
$25 million. This cost estimate is very preliminary however, and
may change as the repair activities progress.
Repairs will include the replacement of degritting screen #3
with the associated rubber lined chutes, piping, pumps and motors,
as well as electrical cables and instrumentation. Most of these
items are already on hand while some others are currently being
procured, and will be flown to site. The Company has an insurance
policy on the Ekati diamond mine that includes a property damage
and business interruption component and it has commenced work with
its insurance claims adjusters.
The Company is reducing operating costs and deferring some
capital costs during the plant downtime. Mining activities continue
at the higher value Misery open pit and Koala underground, and have
been suspended at Pigeon and Lynx. The Misery and Koala material
will be stockpiled, with the intention of processing a blend of the
high value Misery Main and Koala ore when the process plant
restarts.
Updated production guidance for the Ekati Diamond Mine for
fiscal 2017, which takes into account the process plant downtime,
is included in the table below. Non-essential sustaining capital
projects including mobile equipment rebuilds and the expansion of
communication and automation systems have been postponed until
fiscal 2018. A temporary layoff of approximately three months has
already been implemented with an estimated impact on approximately
330 temporary and permanent contractors, and employees.
Brendan Bell, Chief Executive Officer, stated: “We continue to
actively manage this situation, and have implemented a prudent
strategy to minimize the impact of this incident on our cash flow.
We’ve planned mining activities to allow for the option to
prioritize higher value ore sources on startup, thereby minimizing
the impact on the value of our fiscal year production.”
Ekati Fiscal 2017 Revised Production Guidance (100%
basis)
Pipe Original FY17 production plan Revised full year
production forecast 2017 Carats (Millions) Tonnes Processed
(Millions) Carats (Millions) Tonnes Processed (Millions)
Koala underground operation 0.7 1.3 0.7 1.3 Pigeon open pit 0.4 0.9
0.2 0.4 Misery Main open pit 2.6 0.7 3.0 0.8 Total reserves (base
case)1 3.7 2.9 3.9 2.5 Misery South & Southwest kimberlite
pipes2 1.9 1.0 0.8 0.3 Total reserves and inferred resources
(operating case) 5.6 3.9 4.7 2.8
1 The Base and Operating Case do not include any impact of the
diamond liberation initiative.2 Misery South and Southwest pipes
are currently inferred resources. Mineral resources that are not
mineral reserves do not have demonstrated economic viability.
Inferred mineral resources are considered too speculative
geologically to have economic considerations applied to them that
would enable them to be categorized as mineral reserves. There is
no certainty that the Operating Case will be realized.
Conference Call and WebcastThe Company will host a
conference call on Wednesday, July 6th, at 1:30PM (ET) for
analysts, investors and other interested parties. Listeners may
access a live broadcast of the conference call on the Company's web
site at www.ddcorp.ca or by dialing 844-249-9383 within North
America or 270-823-1531 from international locations and entering
passcode 41899750.
An online archive of the broadcast will be available by
accessing the Company's web site at www.ddcorp.ca. A telephone
replay of the call will be available two hours after the call
through 11:00PM (ET), Wednesday, July 20, 2016, by dialing
855-859-2056 within North America or 404-537-3406 from
international locations and entering passcode 41899750.
Qualified PersonThe scientific and technical information
contained in this press release has been prepared and verified by
Dominion, operator of the Ekati Diamond Mine, under the supervision
of Peter Ravenscroft, FAusIMM, of Burgundy Mining Advisors Ltd., an
independent mining consultant, and a Qualified Person within the
meaning of National Instrument 43-101 of the Canadian Securities
Administrators. For further details and information concerning the
Company’s mineral reserves and resources at the Ekati Diamond Mine,
please refer to the technical report entitled “Ekati Diamond Mine,
Northwest Territories, Canada, NI 43-101 Technical Report” that has
an effective date of January 31, 2015, which can be found on the
Company’s profile at www.sedar.com and on the Company’s website at
www.ddcorp.ca.
Forward-Looking InformationCertain information included
herein that is not current or historical factual information,
including information about the estimated timeline to complete
repairs to the Ekati process plant, mining activities and other
plans at the Ekati Diamond Mine and estimated production from the
Ekati Diamond Mine constitute forward-looking information or
statements within the meaning of applicable securities laws.
Forward-looking information is based on certain factors and
assumptions including, among other things, management’s assessment
of the extent of damage to the Ekati process plant and the
estimated timeframe to complete the necessary repairs; mining,
production, construction and exploration activities at the Ekati
Diamond Mine; currency exchange rates; world and US economic
conditions; future diamond prices; and the level of worldwide
diamond production. These assumptions may prove to be incorrect.
Forward-looking information is subject to certain factors,
including risks and uncertainties, which could cause actual results
to differ materially from what the Company currently expects. These
factors include, among other things, the risk of delays in
completing the repairs to the Ekati process plant, the uncertain
nature of mining activities, including risks associated with
underground construction and mining operations, risks associated
with joint venture operations, risks associated with the remote
location of and harsh climate at the Company’s mining properties,
variations in mineral reserve and mineral resource estimates, grade
estimates and expected recovery rates, failure of plant, equipment
or processes to operate as anticipated, risks resulting from the
Eurozone financial crisis, risks associated with regulatory
requirements, the risk of fluctuations in diamond prices and
changes in US and world economic conditions, the risk of
fluctuations in the Canadian/US dollar exchange rate and cash flow
and liquidity risks. Actual results may vary from the
forward-looking information. Readers are cautioned not to place
undue importance on forward-looking information, which speaks only
as of the date of this disclosure, and should not rely upon this
information as of any other date. While the Company may elect to,
it is under no obligation and does not undertake to, update or
revise any forward-looking information, whether as a result of new
information, further events or otherwise at any particular time,
except as required by law. Additional information concerning
factors that may cause actual results to materially differ from
those in such forward-looking statements is contained in the
Company's filings with Canadian and United States securities
regulatory authorities and can be found at www.sedar.com and
www.sec.gov, respectively.
About Dominion Diamond CorporationDominion Diamond
Corporation is the world’s third largest producer of rough diamonds
by value. Both of its production assets are located in the low
political risk environment of the Northwest Territories in Canada
where the Company also has its head office. The Company is well
capitalized and has a strong balance sheet.
The Company operates the Ekati Diamond Mine and also owns 40% of
the Diavik Diamond Mine. Between the two mining operations,
diamonds are currently produced from a number of separate
kimberlite pipes providing a diversity of diamond supply as well as
reduced operational risk. It supplies premium rough diamond
assortments to the global market through its sorting and selling
operations in Canada, Belgium and India.
For more information, please visit
www.ddcorp.ca
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Dominion Diamond CorporationInvestor
RelationsMs. Kelley Stamm, 416-205-4380Manager, Investor
Relationskstamm@ddcorp.caorMedia
RelationsMs. Laura Worsley-Brown, 867-669-6105Senior
Advisor, External Relationslaura.worsley-brown@ekati.ddcorp.ca