Dominion Diamond Corporation (TSX: DDC, NYSE: DDC) (the
“Company” or “Dominion”) is pleased to announce an updated capital
allocation strategy and the sorting results of a recent production
trial of Misery Main ore. Dominion also announces the departure of
its Chief Financial Officer, Ron Cameron.
Misery Main Production
Trial
The Misery Main production trial, which consisted of only Misery
Main ore feed, was conducted in late May and early June. The trial
resulted in the recovery of approximately 130,000 carats. These
carats have now been sorted and valued, and the Company’s average
estimated market price for this sample is $72 per carat, which
includes the impact of the Company’s strategy for liberation of
additional small diamonds. This confirms the Company’s previous
estimate of diamond values for Misery Main.
Brendan Bell, Chief Executive Officer stated, “We are extremely
pleased with the results of the production trial at Misery Main,
the highest value ore body on the Ekati property. Confirmation of
the average carat values for Misery Main, combined with additional
confidence and definition on the development capital program, has
confirmed the strength of our mid-term cash flow. Strong existing
and future cash flows, coupled with the strength of our balance
sheet and cash position, allows us to implement a capital
allocation strategy that supports the growth of Dominion while also
returning additional value directly to shareholders."
Capital Allocation
Strategy
With the approval of a construction decision for Jay, the Board
of Directors has now also completed the review that it undertook,
with the assistance of its financial advisor, of possible
initiatives to maximize shareholder value. After careful
consideration, the Board has determined to continue to focus on the
development opportunities at the Company’s core assets, including
the Sable and Jay projects at Ekati and the A-21 pipe at Diavik,
and to prioritize return of capital to shareholders. The Company is
therefore pleased to announce an update on its capital allocation
strategy, which includes allocating capital to development projects
and returning capital to shareholders through a share buyback
program. The company will also pursue the divestment of its Toronto
office building.
“We are very pleased to provide clear direction on our capital
allocation strategy,” said Mr. Bell. “Our business is generating
consistent and reliable cash flows which are strong enough to both
fund our development opportunities and support a share buyback
program, and in the future, an enhanced dividend strategy.”
The Company announces its intention to commence a normal course
issuer bid (“NCIB”), subject to approval from the Toronto Stock
Exchange (“TSX”). The Company intends to apply for the right to
purchase up to 6,150,010 of its common shares, representing
approximately 7.2% of the currently issued and outstanding shares
and 10% of the current public float, over a one-year period through
the NCIB. All shares purchased through the NCIB will be
subsequently cancelled.
Purchases under NCIB may be made through the facilities of the
TSX, the New York Stock Exchange or other published markets by
means of open market transactions or by such other means as may be
permitted by the TSX and applicable U.S. securities laws. The price
the Company will pay for any common shares will be the market price
at the time of purchase or such other price as may be permitted by
applicable regulatory requirements. The actual number of common
shares that may be repurchased under the program and the timing of
any such repurchases will be determined at the discretion of the
Company.
The Company believes that from time to time the underlying value
of its assets is not reflected in the market price of its common
shares, and therefore purchases of the Company’s common shares may
represent the best use of shareholder’s capital. Such purchases are
expected to increase the equity interest of all remaining
shareholders.
Dominion has also entered into a process to dispose of a
non-core asset. The asset is the Company’s 100 per cent owned
office building located in downtown Toronto and the sale is
expected to occur in the third quarter of fiscal 2017.
The current dividend policy of US $0.40 annually per common
share, paid semi-annually, will represent the minimum level of the
dividend for the current fiscal year. The Company intends to look
at options to enhance the dividend, based on the strength of the
Company’s cash flow. However, the current dividend policy will not
be changed until the Company has more visibility on the short-term
impacts of the June 23 fire in the Ekati process plant.
Management Changes
Ron Cameron, Chief Financial Officer, will leave Dominion
effective July 15. Mr. Cameron has been critical in building a
successful Yellowknife-based corporate headquarters for the
Company. Cara Allaway will fill the role on an acting basis as
Dominion conducts recruitment for a new CFO. Ms. Allaway is
currently the Company’s Vice-President Group Controller.
Conference Call and
Webcast
The Company will host a conference call today 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.
Forward-Looking InformationCertain information included
herein that is not current or historical factual information,
including information about the Company’s future capital allocation
strategy, the Company’s intention to change its current dividend
policy and commence a share repurchase program and the anticipated
sale of the Company’s office building, constitute forward-looking
information or statements within the meaning of applicable
securities laws. Forward-looking information can generally be
identified by the use of terms such as “may”, “will”, “should”,
“could”, “expect”, “plan”, “anticipate”, “foresee”, “appears”,
“believe”, “estimate”, “predict”, “continue”, “modeled”, “hope”,
“forecast” or other similar expressions concerning matters that are
not historical facts. Forward-looking information is based on
certain factors and assumptions including, among other things, the
current mine plan for each of the Ekati Diamond Mine and Diavik
Diamond Mine; mining, production, construction and exploration
activities at the Company’s mineral properties; the timely receipt
of required regulatory approvals; mining methods; currency exchange
rates; estimates related to the capital expenditures related to
bring the Jay and A-21 pipe into production, required operating and
capitals costs; labour and fuel costs; 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 uncertain nature of mining
activities, including risks associated with underground
construction and mining operations, risks associated with joint
venture operations, risks associated with the recent process plant
fire at the Ekati Mine and the remote location of and harsh climate
at the Company’s mineral property sites, risks resulting from the
Eurozone financial crisis, variations in mineral resource and
mineral reserve estimates, grade estimates or expected recovery
rates, failure of plant, equipment or processes to operate as
anticipated, 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, uncertainty as to whether dividends will be
declared by the Company’s board of directors or the Company’s
dividend policy will be maintained 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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version on businesswire.com: http://www.businesswire.com/news/home/20160706005635/en/
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