Aber Diamond earnings sparkle (March 09, 2005)

Vancouver – Continued ramp-up of production from Aber Diamond’s (ABZ-T) 40%-owned Diavik mine, in the Northwest Territories, has delivered soaring revenue and earnings for the diamond supplier.

The jump in Diavik output, since commencement of commercial production in mid-2003, coupled with a buoyant rough diamond market and strong jewelry sales saw Aber realize revenues of US$385.4 million for the year ending January 31, 2005, up over 300% from the US$95.6 million in the prior year.

Net earnings for 2004 were US$53.1 million, or US92 per share, almost double the US$27.7 million (US50 per share) seen in 2003.

Diavik mine production for fiscal 2004 came in at about 7.6 million carats, on a 100%-basis, a 98% increase over 2003. Processed ore averaged 3.88 carats per tonne for the year.

The effect of the low-grade mud unit in the upper-levels of the A154 South pipe was largely diminished as mining of deeper benches encountered higher-grade ore. Development of the A154 North pipe proceeded through the year with stripping completed and mining of its upper level benches now underway.

A revised mining plan tabled in 2004 will see increased through-put in 2005, with anticipated production of 8.5-9 million carats. About 70% of the ore will be supplied from A154 South, with the remainder coming from A154 North, mostly later in the year.

The Diavik mine is 60% owned by Rio Tinto (RTP-N) who is also operator.

An updated estimate of open pit and underground mining reserves at Diavik has shown a 37% increase over the 2000 feasibility report figures. Proven and probable reserves for the A154 South, A154 North and A418 kimberlites now stand at 29.8 million tonnes grading 3.2 carats per tonne, a total of about 95.6 million carats contained. The increase is primarily due to upgrading of resource from pipe A154 North. There are also additional inferred resources of 7.6 million tonnes averaging 3.1 carats per tonne, giving 23.4 million carats.

In early-2004, the company purchased a 51% controlling interest in diamond retailer Harry Winston for US$85 million, garnering some exposure in the downstream market for the gemstones. Jewelry sales of US$132.7 million by the retailer accounted for about one-third of Aber’s annual revenues in 2004.

Additionally, late in the year the company saw major shareholder Tiffany & Co. sell its 8-million share position in Aber to a number of financial institutions.

With 57.6 million shares outstanding, Aber posts a $2.3-billion market capitalization at its recent trading level of $40.25 per share.