Dominion Diamond Corporation (TSX: DDC, NYSE: DDC) (the
“Company” or “Dominion”) reports Ekati Diamond Mine and Diavik
Diamond Mine third fiscal quarter 2017 (August 1, 2016 to October
31, 2016) sales and Ekati Diamond Mine production results. Unless
otherwise specified, all financial information is presented in U.S.
dollars.
Highlights
- Ekati and Diavik Rough Diamond Sales:
- Third fiscal quarter diamond sales1
were $102.7 million from the sale of 1.2 million carats (Q3 fiscal
20162 – $145.0 million from the sale of 0.8 million carats).
- Ekati Production (100% basis):
- During Q3 fiscal 2017, the Ekati
Diamond Mine recovered 1.0 million carats from 0.4 million tonnes
of ore processed (Q3 fiscal 2016 – 0.8 million carats recovered
from 0.9 million tonnes processed).
- During the quarter, tonnes of ore
processed were significantly reduced as a result of the fire at the
Ekati process plant that occurred on June 23, 2016 and the
subsequent shutdown of the process plant.
- The Ekati process plant resumed
operations at full capacity on September 21, 2016 and prioritized
processing of higher value ore from Misery Main open pit and Koala
underground operations.
- Carat production was positively
impacted during the quarter from the processing of a high
proportion of high grade Misery Main ore.
(1) Excluded from the Ekati sales recorded in the third fiscal
quarter of 2017 is $9.3 million from the sale of 61,000 carats from
the processing of material from the Misery Main open pit produced
during the pre-commercial production period.(2) Excluded from the
Ekati sales recorded in the third fiscal quarter of 2016 is $1.8
million from the sale of 30,000 carats from the processing of
material from the Misery Northeast pipe produced during the
pre-commercial production period.
SalesEkati and Diavik Rough Diamond
SalesThe Company recorded total third fiscal quarter sales of
$102.7 million from the sale of 1.2 million carats. Total carats
sold increased by 56% and rough diamond sales decreased 29% in the
third fiscal quarter versus the prior year primarily as a result of
both the process plant fire at the Ekati Diamond Mine, which
resulted in a reduction in the value of goods available for sale in
the quarter, and the carryover of lower average value goods from
both the Ekati and Diavik Diamond Mines in the second quarter of
fiscal 2017 for sale in the current period. Two rough diamond sales
were held during the quarter. The Company plans to hold three rough
diamond sales in the fourth fiscal quarter of 2017.
Sales Summary
Sales ($ millions)
Three monthsended Oct 31,2016
Three monthsended Oct 31,2015
Nine monthsended Oct 31,2016
Nine months endedOct 31,2015
Ekati Rough (100% basis) $54.8 $88.2 $243.2 $353.3 Diavik Rough
(40% basis) $47.9 $56.8 $197.7 $189.1
Total Sales(1) $102.7
$145.0 $440.9 $542.4
Carats Sold (000s)
Ekati Rough (100% basis) 527 480 2,741 1,701 Diavik Rough (40%
basis) 715 315 2,442 1,271
Total Carats Sold(1) 1,242 795
5,183 2,972
(1) Excluded from the Ekati sales recorded are carats from the
processing of material during a pre-commercial production period.
During the third quarter for fiscal 2017, the Company sold 61,000
carats of such production for proceeds of $9.3 million (Q3
fiscal 2016 – $1.8 million from the sale of 30,000 carats of Misery
Northeast). For the nine months ended October 31, 2016, the Company
sold 210,000 carats of such production for proceeds of $22.0
million (YTD Q3 fiscal 2016 - $7.3 million from the sale of 104,000
carats of Misery Northeast).
The Diamond MarketThe
positive market condition of the first half of calendar 2016 was
followed in the third quarter by more muted demand as the rough
diamond cutting and polishing industry approached the annual
shutdown period for Diwali in India. Caution prevailed in the
diamond pipeline as polished diamond stocks built up through the
quarter, but stable US retail demand has built expectations for a
good holiday season beginning in earnest after the presidential
election. The market for lower priced rough diamonds was
particularly subdued in the third quarter but demand for these
goods is cyclical, with decreased demand being typical at this time
of year. Demand for these lower priced rough diamonds is expected
to return in the fourth quarter.
The retail jewelry market in China was noticeably more active as
evidenced by a positive Hong Kong trade show in September. Mainland
based jewelers are more upbeat than their Hong Kong based
counterparts who are still suffering from subdued demand in the
local market. The retail jewelry market in India showed signs of a
return to normality in the Diwali period, however local currency
restrictions have caused unease amongst jewelry retailers in the
run up to the wedding season.
Ekati Production
- During the period, the Ekati Diamond
Mine recovered 1.0 million carats from 0.4 million tonnes of ore
processed (Q3 fiscal 2016 - 0.8 million carats from 0.9 million
tonnes).
- The Ekati process plant resumed
operations at full capacity on September 21, 2016 and began
processing high value ore from Misery Main open pit and Koala
underground operations.
- Carat production was positively
impacted during the quarter from the processing of a high
proportion of high grade Misery Main ore.
- Approximately 0.7 million tonnes of
Misery Main and Koala ore remained in stockpiles at the end of the
third fiscal quarter and a blend of ore from these high value
sources will continue to be prioritized for processing through the
remainder of fiscal 2017.
- Mining operations continued during the
third fiscal quarter with strong performance from both the Koala
underground and Misery Main open pit operations.
- Mining resumed in late September 2016
at the Pigeon and Lynx open pits. Mining had been paused at these
pits in the second fiscal quarter as a cost reduction measure
following the process plant fire.
Ekati Diamond Mine Production (100%
basis)
For the three months ended Oct 31, 2016 For the three
months ended Oct 31, 2015 Pipe Ore Processed(000s tonnes)
Carats(1)(000s) Grade(1)(carats/tonne) Ore
Processed(000s tonnes) Carats(1)(000s)
Grade(1)(carats/tonne) Misery Main 200 900 4.50 - - - Pigeon 1 0.4
0.41 - - - Fox - - - 68 18 0.27 Koala 207 123 0.59 289 216 0.75
Koala North - - - - - - Misery Satellites(2) - - - 218 405 1.85
Coarse Ore Rejects(“COR”) (3) - - - 313 199 0.64 Total(4) 408 1,024
2.51 888 838 0.94
For the nine months ended Oct 31, 2016
For the nine months ended Oct 31, 2015 Pipe Ore
Processed(000s tonnes) Carats(1)(000s)
Grade(1)(carats/tonne) Ore Processed(000s tonnes)
Carats(1)(000s) Grade(1)(carats/tonne) Misery Main 409 1,563
3.82 - - - Pigeon 407 174 0.43 - - - Fox - - - 86 24 0.28 Koala 725
436 0.60 741 618 0.83 Koala North - - - 97 53 0.55 Misery
Satellite(2) 440 784 1.78 770 1,236 1.61 COR(3) - - - 1,008 638
0.63 Total(4) 1,981 2,957 1.49 2,702 2,568 0.95
(1) As different ore sources are blended during processing,
carats and grade per pipe are estimated using the block models for
the ore processed from each pipe, adjusted for the overall
reconciliation of total carats recovered against the model. The
total carats produced include all incremental production arising as
a result of the changes made to the Ekati process plant to improve
diamond liberation.(2) The Misery Satellites include the Misery
South and Southwest satellite pipes, which are inferred resources,
and Misery Northeast material. Approximately 2,500 tonnes of
Northeast material was processed during the nine months ended
October 31, 2016, at an average grade of 0.98 carats per tonne. The
Northeast material is not included in the reserves or resources and
is therefore incremental production.(3) This material is not
included in the reserves or resources and is therefore incremental
production.(4) Figures may not add due to rounding.
Diavik ProductionThe Diavik
Diamond Mine production results for the third calendar quarter of
2016 were released on October 19, 2016. Diavik reports to the
calendar year ending December 31, and Ekati reports to the fiscal
year ending January 31. The Company does not report Diavik
production results to the fiscal year ending January 31.
Cautionary Statement Regarding Preliminary ResultsThe
Company cautions that the Company’s third fiscal quarter sales
results disclosed in this news release are preliminary and reflect
expectations as of the date of this news release. Actual reported
results are subject to final review and may vary from what is
currently expected because of a number of factors, including,
without limitation, additional or revised information and changes
in accounting standards or policies or in how those standards are
applied. In addition, the preliminary results contained in this
news release do not include all of the measures of financial
performance that would be disclosed in the Company’s interim
financial statements. The Company will provide additional financial
information and related discussion and analysis about its third
fiscal quarter financial results when it reports those actual
results.
Forward-Looking InformationCertain information included
herein, including information about mining activities, estimated
production from the Ekati Diamond Mine and expectations concerning
the diamond industry, constitutes 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, the current mine plan
for the Ekati Diamond Mine; mining, production, construction and
exploration activities at the Company’s mining properties; currency
exchange rates; world and US economic conditions; future diamond
prices; and the level of worldwide diamond production.
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 remote location of
and harsh climate at the Company’s mining properties, 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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version on businesswire.com: http://www.businesswire.com/news/home/20161117006332/en/
Dominion Diamond CorporationMs. Kelley Stamm,
416-205-4380Manager, Investor Relationskstamm@ddcorp.ca
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