Dominion sees improving market in Q4

Dominion Diamond’s (DDC-T, DDC-N) fourth-quarter and year-end results for fiscal 2013 reveal an improving diamond market in the final quarter of last year, with rough prices increasing by 11%.

Sales from Dominion’s 40% stake in the Diavik diamond mine, in the Northwest Territories, increased to US$110.1 million in the fourth quarter, up 8% from the year-earlier period.

Operating profit slid 12% to US$21 million, although rough production for the period was up 19% to 1.9 million carats, due mostly to higher grades across the operation.

Net profit from continuing operations (excluding the retail division) attributable to shareholders came to US$12.1 million or US14¢ a share, compared with US$12.7 million or US15¢ per share in the year-earlier quarter.

For the full year, sales from Diavik increased 19% to US$345 million, up from US$290.1 million the previous year. The increase was due to a 49% increase in carats sold, although Dominion saw a 20% decline in achieved rough diamond prices for the year to US$109 per carat. That decline was attributed to the sale of lower-value diamonds that were held back from sale the year before and to a softer diamond market.

For the year, net profit from continuing operations attributable to shareholders was US$22.3 million or US26¢ per share compared to US$17.3 million or US20¢ a share the year before.

Dominion had an inventory of 500,000 carats of rough diamonds as of Jan. 31, 2013, worth an estimated US$65 million.

This year, Diavik is expected to produce a total of 6 million carats from underground operations at the A-154 North kimberlite, A-154 South and A-418 pipe, plus stockpiled ore. That guidance may be revised upwards, however, as first-quarter production was ahead of plan by 39% due to higher grades. In the first quarter, Diavik produced 1.9 million carats from 500,000 tonnes grading 3.87 carats per tonne.

Total proven and probable reserves at the mine, which is 60% owned by Rio Tinto (RIO-N, RIO-L) were recently updated to 18.3 million tonnes grading 2.9 carats per tonne for 53.5 million carats.

The development of the A-21 kimberlite has been deferred because of current market conditions and because existing pipes have been extended at depth. A-21 is the final kimberlite in the current mine plan, which extends to 2025.