Aber Diamond earnings sparkle (March 21, 2005)

Vancouver — Accelerated 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 higher output, coupled with a buoyant rough-diamond market and strong jewelry sales, enabled Aber to generate US$385.4 million in revenue in the fiscal year ended Jan. 31, 2005, compared with US$95.6 million in the previous year.

Earnings for 2004 totalled US$53.1 million (or US92 per share), compared with US$27.7 million (US50 per share) in 2003.

In fiscal 2004, Diavik produced 7.6 million carats, or 98% more than in the previous year.

The remaining 60% of Diavik is owned by Rio Tinto (RTP-N), which is also the operator.

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, and mining of the upper-level benches is now under way.

Throughput is scheduled to increase, with production for 2005 pegged at 8.5-9 million carats. About 70% of the ore will be supplied from A154 South, with the remainder coming from A154 North.

An updated estimate suggests that open-pit and underground mining reserves at Diavik are 37% higher than indicated in the 2000 feasibility report. 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, or 95.6 million carats in total. The increase reflects an expansion of the resource from pipe A154 North. There are also inferred resources of 7.6 million tonnes averaging 3.1 carats per tonne, or 23.4 million carats in total.

In early 2004, the company bought 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 a third of Aber’s annual revenue in 2004.

Also, late in the year, Tiffany & Co. sold its 8-million-share position in Aber to several financial institutions.

With 57.6 million shares outstanding, Aber has a $2.3-billion market capitalization at its recent trading level of $40 per share.