Dominion Diamond Corporation (TSX: DDC, NYSE: DDC) (the
“Company” or “Dominion”) reports Ekati Diamond Mine and Diavik
Diamond Mine fourth fiscal quarter 2017 (November through January)
sales and Ekati Diamond Mine production results. Unless otherwise
specified, all financial information is presented in U.S.
dollars.
Highlights
- Sales:
- Fourth fiscal quarter diamond sales1
were $129.9 million from the sale of 1.4 million carats (Q4 fiscal
20162 - $178.1 million from the sale of 1.1 million carats).
- Ekati Production (100% basis):
- During the fourth fiscal quarter 2017,
the Ekati Diamond Mine recovered a record 2.3 million carats from
1.0 million tonnes processed (Q4 fiscal 2016 - 1.2 million carats
from 0.9 million tonnes processed).
- Carat production increased by 93%
compared to the same period in the prior year due to the positive
impact of processing of a large proportion of high grade Misery
ore.
- Ekati Fiscal 2018 Mine Plan
- During fiscal 2018, the Company plans
to produce 6.3 to 7.0 million carats from the processing of 3.7 to
4.0 million tonnes (fiscal 2017: 5.2 million carats from the
processing of 2.9 million tonnes).
- The Company expects to process
primarily high value ore from the Koala underground and Misery Main
pipes during the first quarter fiscal 2018, with an increased
proportion of ore from the Pigeon and Lynx pipes during the
remainder of the fiscal year.
- The fines dense media separation (Fines
DMS) plant, which increases the recovery of diamonds smaller than
1.2 millimetres, continues to ramp up through the first fiscal
quarter, and is expected to be fully operational during the second
fiscal quarter.
- Fox Deep Drilling Program
- Based on encouraging results from a
reverse circulation drilling campaign this winter, including an
average bulk sample grade of 0.38 carats/tonne, a prefeasibility
study on Fox Deep is now underway, and is expected to be completed
in late fiscal 2018.
(1) Excluded from the Ekati sales recorded in the fourth quarter
of fiscal 2017 were $5.1 million from the sale of pre-commercial
production from the Misery Main open pit.(2) Excluded from the
Ekati sales recorded in the fourth quarter of fiscal 2016 were $2.5
million from the sale of pre-commercial production from the Misery
Northeast pipe.
SalesEkati and Diavik
Rough Diamond SalesThe Company recorded total fourth quarter
fiscal 2017 sales of $129.9 million from the sale of 1.4 million
carats. Total rough diamond sales decreased 27% in the fourth
fiscal quarter compared to the same period in the prior year. This
was due primarily to a reduction in the goods available for sale
following the process plant fire at the Ekati Diamond Mine. Sales
in the quarter were also negatively affected by the disruption in
normal trading activity following the demonetization of the Indian
rupee in November 2016. Total carats sold in the fourth fiscal
quarter increased by 24% from the same period in the prior year,
due primarily to the availability for sale of rough diamonds from
high grade Misery Main ore. Total carats sold in the fourth fiscal
quarter of the prior year were negatively impacted by the decision
to hold back lower-than-average priced inventory due to a weakened
diamond market. Three rough diamond sales were held during the
quarter. The Company plans to hold two rough diamond sales in the
first quarter of fiscal 2018.
Q4 FY 2017 SummarySales in millions
of US dollars
Three monthsended Jan 31, 2017
Twelve monthsended Jan 31, 2017
Three months endedJan 31, 2016
Twelve months endedJan 31, 2016
Ekati Rough (100% basis) $
51.9
$
295.2
$
111.6
$
464.8
Diavik Rough (40% basis) $
78.0
$
275.7
$
66.5
$
255.7
Total Sales(1) $
129.9
$
570.9
$
178.1
$
720.6
Carats Sold (000s) Ekati Rough (100% basis) 671 3,411 636
2,337 Diavik Rough (40% basis) 698 3,140 469
1,740
Total Carats Sold (1) (2) 1,369
6,552 1,105 4,077
(1) Excluded from the Ekati sales recorded in fiscal 2017 is
pre-commercial production from the Misery Main, Misery Northeast
and Pigeon pipes. During the fourth quarter of fiscal 2017, the
Company sold pre-commercial production from the Misery Main open
pit for proceeds of $5.1 million (Q4 fiscal 2016 - $2.5 million
from the sale of pre-commercial production from Misery Northeast).
For the year ended January 31, 2017, the Company sold
pre-commercial production for proceeds of $27.2 million (year ended
January 31, 2016 - $9.5 million from the sale of pre-commercial
production from Misery Northeast).(2) Figures may not add up due to
rounding.
The Diamond MarketThe market
ended the year on a positive note despite the divergence between
the resilient market for larger better goods and the more
challenging situation for the smaller cheaper goods. The Christmas
season in the U.S. failed to meet market expectations, but this was
balanced out by renewed retail activity over the Chinese New Year,
resulting in an anticipated rise in polished demand from China in
the first quarter of 2017.
The Indian retail market has started to recover from the
jewelers’ strike in the middle of the year and the impact of
demonetization of the Indian rupee towards year-end. The latter is
expected to continue to have a dampening effect on the Indian
retail jewelry market in the short-term, with demand expected to
return to normal in this sector by the fall of 2017. Much of the
manufacturing sector that focuses on lower price rough diamonds was
brought to a standstill by the demonetization. However, the segment
of the manufacturing sector that focuses on higher priced rough
diamonds, and produces primarily for the export market, has been
less disrupted.
Ekati Production
- During the fourth fiscal quarter 2017,
the Ekati Diamond Mine recovered a record 2.3 million carats from
1.0 million tonnes of ore processed (Q4 fiscal 2016 - 1.2 million
carats from 0.9 million tonnes processed).
- Carat production was positively
impacted during the quarter by the processing of a large proportion
of high grade Misery Main ore, resulting in a 93% increase in carat
production compared to the same quarter of the prior year.
- Approximately 0.3 million tonnes of
Misery Main and Koala ore remained in stockpiles at the end of the
fourth fiscal quarter, and a blend of ore from these high value
sources will continue to be prioritized for processing in the first
fiscal quarter 2018.
- Waste stripping continues at the Lynx
pipe with first ore expected to be delivered to the process plant
in the second fiscal quarter 2018.
Ekati Diamond Mine Production (100% basis)
For the three months ended January 31, 2017 For the
three months ended January 31, 2016 Pipe Ore Processed(000s
tonnes) Carats(1)(000s) Grade(1)(carats/tonne) Ore
Processed(000s tonnes) Carats(1)(000s)
Grade(1)(carats/tonne) Koala 451 213 0.47 293 266 0.91 Misery Main
507 2,038 4.02 - - - Pigeon 1 0.4 0.39 39 24 0.60 Misery
Satellites(2) - - - 377 706 1.87 COR(3) - - - 208 168 0.81 Total(4)
959 2,252 2.35 917 1,164 1.27
For the twelve months ended
January 31, 2017 For the twelve months ended January 31,
2016 Pipe Ore Processed(000s tonnes) Carats(1)(000s)
Grade(1)(carats/tonne) Ore Processed(000s tonnes)
Carats(1)(000s) Grade(1)(carats/tonne) Koala 1,176 649 0.55
1,034 883 0.85 Misery Main 916 3,601 3.93 - - - Pigeon 408 174 0.43
39 24 0.60 Misery Satellites(2) 440 784 1.78 1,146 1,941 1.69 Koala
North - - - 97 53 0.55 Fox - - - 85 24 0.28 COR(3) - - - 1,216 807
0.66 Total(4) 2,940 5,208 1.77 3,618 3,732 1.03
(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 mineral
resources, and Misery Northeast material. Approximately 2,500
tonnes of Northeast material was processed during the year ended
January 31, 2017, at an average grade of 0.98 carats per tonne. The
Northeast material is not included in the mineral reserves or
mineral resources, and is therefore incremental production.(3) This
material is not included in the mineral reserves or mineral
resources and is therefore incremental production.(4) Figures may
not add due to rounding.
Diavik ProductionThe Diavik
Diamond Mine production results for the fourth calendar quarter of
2016 were released on January 16, 2017. 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 fiscal
production results.
Fiscal 2018 Mine Plan – Ekati Diamond
Mine
Run of Mine Production – Fiscal 2018
Ekati Diamond Mine (100% basis)
Tonnes Mined(millions)
Tonnes Processed(millions)
Carats(millions) Mine Plan for Fiscal 2018 27 - 30
3.7 – 4.0 6.3 -7.0
Open pit mining will take place at all pipes, with the exception
of Koala, where mining is underground. Processed ore and recovered
carats will be sourced from the following kimberlite pipes in the
approximate proportions noted below:
Ekati Kimberlite Pipes
Percentage of
TonnesProcessed
Percentage of
CaratsRecovered
Mineral Reserves Only Base Case Koala Underground 30% 10%
Pigeon 30% 5% Misery Main 20% 60% Lynx 5% 5%
Total (Base Case
only) 85% 80% Misery Southwest(1) 15% 20%
Total
(Operating Case) 100% 100%
(1) Misery Southwest pipe is currently an inferred mineral
resource. Mineral resources that are not mineral reserves do not
have demonstrated economic viability. Inferred mineral resources
are considered too speculative geologically to have economic
considerations applied to them that would enable them to be
categorized as mineral reserves. There is no certainty that the
Operating Case will be realized.
Mine Plan Key Timeline
- A high-value blend of primarily Misery
Main and Koala underground ore will continue to be prioritized for
processing in the first fiscal quarter.
- The processing of significant amounts
of Pigeon and Lynx ore is expected to begin in the second fiscal
quarter, with a corresponding reduction in Misery Main and Koala
underground ore.
- Lynx ore is planned to be processed
primarily during the second and third quarters of fiscal 2018, and
will be replaced by Misery Southwest material in the fourth fiscal
quarter while waste stripping is being completed for the second
phase of mining at the Lynx open pit.
- The Fines DMS plant continues to ramp
up through the first fiscal quarter, and when fully operational in
the second fiscal quarter, is expected to result in the recovery of
a higher proportion of small diamonds.
Fox Deep Drilling ProgramThe
Company has received the results of a reverse circulation drilling
campaign conducted this winter at the Fox pipe, below the
previously-mined open pit. Three holes, with a drill hole diameter
of approximately 24 inches, were drilled to depths ranging from 448
metres to 600 metres, producing a sample of approximately 1,000 dry
tonnes. The Saskatchewan Research Council processed the drill hole
interval samples, and a total of 378 carats were recovered at a 1.0
millimetre bottom cut-off, for an average bulk sample grade of 0.38
carats per tonne. Based on these encouraging results, a
prefeasibility study is now underway at Fox Deep, and is expected
to be completed in late fiscal 2018.
Qualified PersonThe scientific and technical information
contained in this press release has been prepared and verified by
Dominion, operator of the Ekati Diamond Mine, under the supervision
of Peter Ravenscroft, FAusIMM, of Burgundy Mining Advisors Ltd., an
independent mining consultant, and a Qualified Person within the
meaning of National Instrument 43-101 of the Canadian Securities
Administrators. For further details and information concerning the
Company’s mineral reserves and mineral resources at the Ekati
Diamond Mine, please refer to the technical report entitled “Ekati
Diamond Mine, Northwest Territories, Canada, NI 43-101 Technical
Report” that has an effective date of July 31, 2016, which can be
found on the Company’s profile at www.sedar.com and on the
Company’s website at www.ddcorp.ca.
Cautionary Statement Regarding Preliminary ResultsThe
Company cautions that the Company’s fourth quarter and year-end
sales results disclosed in this news release are preliminary and
reflect expected fourth quarter year-end sales results 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 annual financial statements. The Company
will provide additional financial information and related
discussion and analysis about its fourth quarter and year-end
financial results when it reports those actual results.
Forward-Looking InformationCertain information included
herein, including information about mining activities and other
plans at the Ekati Diamond Mine, 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 Ekati Diamond Mine; 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, variations in mineral reserve and mineral
resource estimates, grade estimates and 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 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 a Canadian diamond mining company with ownership
interests in two major producing diamond mines. Both mines are
located in the low political risk environment of the Northwest
Territories in Canada. The Company operates the Ekati Diamond Mine,
in which it owns a controlling interest, and also owns 40% of the
Diavik Diamond Mine. 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
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170222006681/en/
Dominion Diamond CorporationMs. Jacqueline Allison,
416-205-4371Vice-President, Investor
Relationsjacqueline.allison@ddcorp.ca
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