Robust project development pipeline, renewed
exploration focus and strong balance sheet support long-term value
creation strategy
Dominion Diamond Corporation (TSX: DDC, NYSE: DDC) (the
“Company” or “Dominion”) today reported its fourth quarter and full
year financial results for the fiscal year ending January 31, 2017,
and also provided an update on multiple projects within its robust
development pipeline, and exploration priorities. The Company
remains focused on continuing to optimize its existing operations,
is well-positioned to advance its portfolio of development projects
at both the Ekati Diamond Mine (“Ekati mine”) and the Diavik
Diamond Mine (“Diavik mine”), and is increasing exploration efforts
in the highly prospective Lac de Gras region. Unless otherwise
indicated, all financial information below is presented in US
dollars.
“We continue to execute on our long-term
strategy and create value for all shareholders. With the support of
our strong balance sheet, we are well-positioned to advance a
number of key development opportunities and begin reinvestment in
near-mine exploration at both Ekati and Diavik,” said Jim Gowans,
Chairman of the Board. “As an established operator, one of our
primary objectives is to leverage our infrastructure advantage in
one of the world’s most prospective diamond mining districts.”
Key Corporate Highlights
- Guidance for strong sales and
Adjusted EBITDA(1) in fiscal 2018: Financial and
operating guidance for fiscal 2018 remains unchanged; sales
expected to be between $875 and $975 million and Adjusted EBITDA
between $475 and $560 million.
- Delivering on development
projects
- A-21 project, Diavik mine - completion
of dike construction and the start of de-watering are on plan for
late calendar 2017.
- Sable project, Ekati mine - currently
below budget and approximately seven months ahead of schedule, with
pre-stripping expected to commence in July 2017.
- Misery Deep project, Ekati mine -
pre-feasibility study on track for completion by July 2017.
- Fox Deep project, Ekati mine -
indicated resource increased to 45.6 million tonnes and 16.5
million carats; completion of a pre-feasibility study expected late
this fiscal year.
- Jay project, Ekati mine - permitting
continues to advance, with a decision on the water licence expected
in summer 2017.
- Diavik mine life extension:
Recently-filed technical report(2) demonstrates improved economics
and supports an extension in the mine life to 2025 from 2023.
- Growth opportunities through
advanced exploration
- Renewed strategic focus on exploration
with a $9 million exploration budget for fiscal 2018 focused on
near-mine exploration and completion of pre-feasibility
studies.
- Identification of priority targets with
drilling at the Ekati and Diavik properties planned in fiscal
2018.
- Strong balance sheet supports
capital allocation strategy
- Maintained strong balance sheet with
$136.2 million total unrestricted cash resources, debt of $10.6
million and $210 million available under its revolving credit
facility as at January 31, 2017.
- Three-year outlook for strong Adjusted
EBITDA enables the Company to advance its suite of development
projects with internally-generated cash flows.
- Declared a dividend on April 12, 2017,
of $0.20 per share payable on June 5, 2017, to shareholders of
record at the close of business on May 17, 2017.
- Repurchased and retired approximately
3.4 million shares in fiscal 2017 as part of the Company’s normal
course issuer bid for a total value of C$40.9 million.
- In total, the company returned $65.1
million to shareholders in fiscal 2017 through a combination of
dividends and share repurchases.
Fiscal Fourth Quarter
Highlights
- Shift to higher-value ore blend at
Ekati positively impacting financial results
- Adjusted EBITDA was $62.7 million in Q4
fiscal 2017, an increase of 28% from $49.0 million in Q4 fiscal
2016, reflecting the contribution from the high value ore blend at
the Ekati mine in the last sale of the quarter following the
process plant fire in June 2016. Growth in Adjusted EBITDA is
expected to continue in fiscal 2018 as the contribution from the
high value ore blend increases.
- Delivering production growth
- Record carats recovered at the Ekati
mine coupled with solid performance at the Diavik mine.
- Driving efficiencies and lower
operating costs
- Efficiency improvements and cost
reduction initiatives have been successfully implemented at the
Ekati and Diavik mines; a recently-filed technical report(2) for
the Diavik mine demonstrated improved economics and supported an
extension in the mine life to 2025 from 2023.
- Renewed focus on exploration
- In the fourth quarter, planning and
analysis to support a renewed greenfield exploration program at the
Ekati mine was completed; drilling of priority kimberlites at Ekati
and Diavik properties planned in fiscal 2018.
- New labour agreement in place at
Ekati
- A new collective agreement has been
ratified by the union representing workers at the Ekati mine. The
new agreement expires in 2019.
“The much-anticipated ramp up of high value production at Ekati,
together with steady performance at Diavik, is driving significant
growth in gross margins and Adjusted EBITDA,” continued Mr. Gowans.
“We expect this momentum to continue, with significantly higher
sales and Adjusted EBITDA as highlighted in our guidance for fiscal
2018. We are confident in our ability to advance a number of
projects to production, enhancing our medium- to long-term cash
flow profile, while driving efficiencies across our operations and
maximizing the value of our product by leveraging our expertise in
sales and marketing.”
(1) The term EBITDA (earnings before interest, taxes,
depreciation and amortization) is a non-IFRS measure. Adjusted
EBITDA removes the effects of impairment charges, foreign exchange
gains (losses) and exploration costs from EBITDA.(2) Technical
report entitled “Diavik Diamond Mine, Northwest Territories,
Canada, NI 43-101 Technical Report” that has an effective date of
January 31, 2017 (“2017 Technical Report”).
Corporate and Strategic
Update
The guidance provided in this news release is qualified by the
“Forward-Looking Information” section of this news release.
Several projects are being advanced at the Ekati mine, in
addition to the A-21 project at the Diavik mine. This robust
project pipeline provides optionality in the mine plan and has the
potential to enhance the Company’s medium and longer-term
production profile. Given the existing infrastructure at the Ekati
and Diavik properties, the cost of developing new projects is
significantly lower than in a greenfield setting.
Development and Exploration Projects
Dominion is advancing a number of near-term and long-term
development projects and opportunities at the highly prospective
Ekati property in fiscal 2018. Planning and analysis were completed
during the fourth quarter to support an exploration program in
calendar 2017.
The Company is renewing its focus on exploration at its
extensive land package in the Lac de Gras region. This is a
relatively new and highly prospective diamond mining district,
which hosts some of the richest kimberlites in the world. No
greenfield exploration has taken place at the Ekati mine since
2006. There are 150 known kimberlites on the property,
approximately 110 of which have not been extensively tested.
Dominion plans to progress multiple projects from the target
stage to execution. Targets are being identified through till
sampling, geophysics and drilling. Advanced exploration will focus
on delineation of kimberlite pipes and bulk sampling, and those
prospects warranting further investigation are expected to progress
to conceptual and engineering studies, and, if justified,
development.
The exploration program includes prioritization of the known
kimberlites pipes on the Ekati property, and planning for a
potential bulk sampling program in fiscal 2019. Diamond drilling is
planned on up to six identified priority targets in the Core and
Buffer Zones. At Diavik, drilling of three priority kimberlites is
planned in 2017.
Lynx
- Waste pre-stripping of the Lynx open
pit at the Ekati mine was substantially completed in fiscal 2017,
with first ore expected to be delivered to the process plant in the
second quarter of fiscal 2018.
Sable
- Construction of an all-season access
road to the Sable project site at the Ekati mine, and initial site
infrastructure works, were completed on schedule and below budget
by the end of fiscal 2017. The current estimate to complete Sable
infrastructure is approximately C$30 million below the
pre-feasibility estimate of $142 million. Pre-stripping is forecast
to commence in July 2017, approximately seven months ahead of
schedule.
Jay
- The Company announced its approval in
July 2016 to proceed with the development of the Jay project at the
Ekati mine, based on the results of the Jay Feasibility Study.
Permitting of the Jay project continues to advance, with a decision
on the project’s water licence expected in mid-calendar 2017.
Misery Deep
- The Company is in the process of
completing a pre-feasibility study on the potential development of
additional underground resources at the Misery kimberlite pipe
after completion of the current open pit. If the study is positive,
the project could result in the processing of additional high value
ore and the recovery of additional carats beyond fiscal 2020,
resulting in an enhanced production profile at the Ekati mine.
Completion of the pre-feasibility study is anticipated in the
second quarter of fiscal 2018.
Fox Deep
- Based on successful results from the
Fox Deep drilling program at the Ekati mine, indicated resources at
the Fox kimberlite pipe have increased to 45.6 million tonnes and
16.5 million carats, as at January 31, 2017, from the previous
estimates of 35.2 million tonnes and 11.6 million carats,
respectively. A pre-feasibility study on the Fox Deep underground
ore body is underway, and is expected to be completed in late
fiscal 2018. If successful, this project has the potential to
extend the life of the Ekati mine significantly.
A-21
- The development of the A-21 pipe at the
Diavik mine continues to progress on time and on budget with the
completion of the dike and the start of de-watering expected in
late calendar 2017. Following waste stripping, processing of ore
from the A-21 pipe is expected to commence in calendar 2018.
Strategic Review Process
On March 19, 2017, the Company disclosed that it had received an
unsolicited expression of interest from the Washington
Corporations. On March 27, 2017, the Company announced that its
Board of Directors had formed a Special Committee to explore,
review and evaluate a range of potential strategic alternatives
focused on maximizing shareholder value. Working with the Company’s
management team and advisors, the Special Committee will consider
alternatives that could include the sale of the Company, a
continuation of, or changes to, the current strategic plan, or
other strategic transactions.
The Board of Directors has not set a timetable for the strategic
review process, nor has it made any decisions related to strategic
alternatives at this time, and there can be no assurances that the
exploration of strategic alternatives will result in any
transaction or change in strategy. TD Securities Inc., Stikeman
Elliott LLP and Kingsdale Advisors are acting as financial, legal
and strategic advisors, respectively, to the Company. Paul, Weiss,
Rifkind, Wharton & Garrison LLP is acting as legal advisor to
the Special Committee and Board of Directors of the Company.
Fiscal Fourth Quarter
Review
Financial Summary
(in millions of US dollars except pershare
amounts and where otherwise noted)
Three months ended Jan
31,2017
Three months endedJan 31,2016
Twelve months endedJan
31,2017
Twelve months endedJan 31,2016
Sales
129.9 178.1
570.9 720.6 Gross margin
22.2 (13.7)
26.4 51.6 Operating profit (loss)
9.7 (24.5)
(56.6) 8.0 Profit (loss) before income
taxes
-
(27.9)
(40.7) (11.6) Adjusted EBITDA(1)
62.7 49.0
182.2 219.3 Free cash flow(2)
(19.6) 27.5
(165.8) (34.7) Earnings (loss) per share (“EPS”)
0.07
(0.41)
- (0.40)
(1) The term EBITDA (earnings before interest, taxes,
depreciation and amortization) is a non-IFRS measure. Adjusted
EBITDA removes the effects of impairment charges, foreign exchange
gains (losses) and exploration costs from EBITDA. See “Non-IFRS
Measures” for additional information.(2) The term “free cash flow”
does not have a standardized meaning according to IFRS. The Company
defines free cash flow as cash provided from (used in) operating
activities, less sustaining capital expenditures and less
development capital expenditures. See “Non-IFRS Measures” for
additional information.
The Company has filed its fiscal 2017 annual report on Form
40-F, including its audited financial statements for the year ended
January 31, 2017, with the SEC on EDGAR (www.sec.gov), and has
filed its audited financial statements and accompanying
Management’s Discussion and Analysis with the Canadian securities
authorities on SEDAR (www.sedar.com), on April 12, 2017.
Financial Review
Profit (Loss) Before Income Tax and Net Income
The Company reported Q4 fiscal 2017 income before income taxes
of nil, and consolidated net income attributable to shareholders of
$5.6 million, or $0.07 per share. During the fourth quarter,
foreign currency exchange rate fluctuations resulted in a decrease
of $7.1 million, or $0.09 per share, in the Company’s net income
tax expense. Relative to Q4 fiscal 2016, these measures were
impacted by:
- A reduction in the value of goods
available for sale during the quarter as a result of the process
plant fire at the Ekati mine, and the disruption in normal trading
activity following the demonetization of the Indian rupee in
November 2016.
- The sale, late in the quarter, of Ekati
mine goods from higher value Misery Main open pit and Koala
underground ore processed in late Q3 fiscal 2017, together with
higher processing volumes at the Diavik mine in the same period.
These factors resulted in a stronger consolidated gross
margin.
- An increase in depreciation associated
with the Misery Main pre-stripping asset as the related goods were
processed and sold.
- The strengthening of the Canadian
dollar relative to the US dollar which resulted in an income tax
recovery.
For the full fiscal year, the Company reported a loss before
income taxes of $40.7 million and consolidated net income
attributable to shareholders of $0.2 million or nil per share.
Relative to fiscal 2016, these measures were impacted by:
- The sale of a higher proportion of
lower value goods from both mines in fiscal 2017 which resulted in
an average price per carat sold in fiscal 2017 of $87 as compared
to $177 in fiscal 2016.
- The process plant fire at the Ekati
mine resulting in $44.5 million in mine standby costs.
- Foreign exchange impacts on income tax
resulting in an income tax recovery of $14.4 million.
- The sale of the Company’s downtown
Toronto office building for C$84.8 million. The Company recognized
a pre-tax gain on sale of $44.8 million, or $0.46 per share after
tax, in the third quarter.
Adjusted EBITDA, Cash Flow and Balance Sheet
- Q4 fiscal 2017 adjusted EBITDA of $62.7
million increased by 28% over the comparable period of the prior
year due to the availability for sale of diamonds from high-grade
Misery Main ore. In fiscal 2017, adjusted EBITDA was $182.2
million, a decrease of 17% from fiscal 2016, and was negatively
affected by the process plant fire at the Ekati mine in June 2016,
and the carry-over of lower average value goods from fiscal 2016.
Adjusted EBITDA includes $44.5 million in mine standby costs, which
were expensed following the Ekati mine process plant fire, but does
not include the impact of significant non-cash costs in the fourth
quarter which impacted gross margins. See “Non-IFRS Measures”
below.
- Free cash flow was negative $19.6
million in Q4 fiscal 2017, compared to positive free cash flow of
$27.5 million in Q4 fiscal 2016. Free cash flow reflected capital
expenditures of $67.2 million, partly offset by positive operating
cash flow of $47.6 million. In Q4 fiscal 2017, capital expenditures
included significant investments in the Sable project at the Ekati
mine and the A-21 project at the Diavik mine.
- As at January 31, 2017, the Company had
total unrestricted cash and cash equivalents of $136.2 million,
restricted cash of $65.7 million and an undrawn availability
of $210 million under its corporate revolving credit facility. Debt
was $10.6 million as of January 31, 2017.
Mining Operations Review
Ekati
- During Q4 fiscal 2017, the Ekati mine
recovered a record 2.3 million carats from 1.0 million tonnes
processed, compared to 1.2 million carats recovered from 0.9
million tonnes processed in Q4 fiscal 2016.
- Carat production increased by 93% in Q4
fiscal 2017 compared to the same period in the prior year, due to
the positive impact of the processing of a large proportion of high
grade Misery ore.
- Commissioning of the fines dense media
separation (Fines DMS) plant, which increases the recovery of
smaller diamonds, was completed on budget and on schedule in Q4
fiscal 2017, and ramp up to full production is expected by the end
of Q1 fiscal 2018. The Fines DMS plant has a design capacity of
1,800 tonnes per day, and is currently operating at a rate of over
1,000 tonnes per day.
- A new collective agreement has been
ratified by the union representing workers at the Ekati mine. The
new agreement expires in 2019.
Diavik
- Processing volumes of 0.54 million
tonnes in Q4 of calendar 2016 were 16% higher than in the same
quarter of the prior year due to the extended planned maintenance
shutdown in the processing plant during Q4 of calendar 2015.
- 1.65 million carats were recovered at
the Diavik mine in Q4 of calendar 2016, a 10% increase from the
same quarter of the prior year, reflecting higher processing
volumes that were partly offset by lower recovered grade.
- The 2017 Technical Report for the
Diavik mine was filed on March 31, 2017. Highlights of the 2017
Technical Report:
- After-tax net present value of
approximately C$2.6 billion at a 7% discount rate, based on the
assumptions and analysis contained in the 2017 Technical
Report(1).
- 46.0 million carats recovered between
2017 and 2025, an increase of 6.3 million carats or 16%, from the
previous estimate for the comparable period(2).
- Forecast total revenue of approximately
C$9.0 billion and total operating cash flow(3) of approximately
C$3.7 billion between 2017 and 2025, an increase of 22% and 32%,
respectively, from the previous estimates for the comparable
period(2).
- Total operating costs between 2017 and
2025 are consistent with the previous estimate for the comparable
period(2), as the impact of cost escalation and the increase in
mine life and reclamation are offset by efficiency
improvements.
- Total capital expenditures between 2017
and 2025 are consistent with the previous estimate for the
comparable period(2), as lower expected capital expenditures at the
A-21 pipe are offset by higher sustaining capital expenditures
related to cost escalation and the increase in mine life.
(1) Refer to the 2017 Technical Report for the assumptions used
in the calculation of the operating cash flow and net present
value. The cash flow analysis, from which operating cash flow and
net present value are derived, is solely for the purpose of
demonstrating economic viability of the mineral reserve at the
Diavik mine, and does not represent the business plans or cash
flows of either participant of the Diavik Joint Venture.(2)
Comparable period for the previous estimate refers to years
2017-2023 in the 2015 Technical Report, “Diavik Diamond Mine,
Northwest Territories, Canada, NI 43-101 Technical Report” with an
effective date of March 18, 2015.”).(3) Operating cash flow is
defined, for the purpose of this discussion, as revenue less
operating expenses and taxes.
Dividend Declaration
On April 12, 2017, Dominion declared a dividend of $0.20 per
share to be paid in full on June 5, 2017, to shareholders of record
at the close of business on May 17, 2017. The dividend will be an
eligible dividend for Canadian income tax purposes.
Diamond Market
- The market ended the year on a positive
note despite the divergence between the resilient market for
larger, higher quality goods and the more challenging situation for
smaller, relatively cheaper goods. The Christmas season in the US
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.
- Prices decreased in the quarter by an
average of 7% from Q3 fiscal 2017, reflecting the disruption in
normal trading activity following the demonetization of the Indian
rupee in November 2016. Much of the manufacturing sector that
focuses on lower priced rough diamonds was brought to a standstill
by the demonetization. However, the segment of the manufacturing
sector in India that focuses on higher priced rough diamonds, and
produces primarily for the export market, has been less disrupted.
Demonetization was expected to have a significant adverse impact on
the Indian retail jewelry market, however demand has proven to be
more resilient and a return to normal business conditions is
expected in the second quarter of calendar 2017.
Fiscal 2018 Guidance
The financial and operating guidance for fiscal 2018 remains
consistent with that provided on March 16, 2017.
Fiscal 2018 Financial Guidance
(millions of US dollars, except per carat amounts) Ekati
(100%) Diavik (40%) Combined Sales(1) 575 – 645
300 – 330 875 – 975 Adjusted EBITDA(2) 315 – 370 180
– 210
475 – 560(3)
Depreciation and Amortization 225 – 265 85 – 100 310 – 365 Average
Price per Carat Sold 60 – 80 90 – 110 70 – 90 Growth Capital 90 –
110 25 – 30 115 – 140 Sustaining Capital(4) 140 – 170 13 –
15 160 – 190(5)
(1) Sales guidance for fiscal 2018 includes production from the
Misery Southwest pipe, which is currently an inferred resource. The
mine plan for fiscal 2018 foresees between 1.3 and 1.4 million
carats recovered from Misery Southwest, with an estimated market
value of approximately $50 million. 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.(2) The term
“Adjusted EBITDA” does not have a standardized meaning according to
IFRS. See “Non-IFRS Measures” for additional information.(3)
Combined Adjusted EBITDA includes corporate G&A. EBITDA
(earnings before interest, taxes, depreciation and amortization) is
a non-IFRS measure. Adjusted EBITDA removes the effects of
impairment charges, foreign exchange gains (losses) and exploration
costs from EBITDA.(4) Planned sustaining capital expenditures
include capitalized production stripping.(5) Combined sustaining
capital includes corporate capital expenditures.
Sales are expected to be between $875 and $975 million and are
expected to benefit from the focus on high value ore processed from
the Misery Main and Koala underground pipes at the Ekati mine in
the latter part of fiscal 2017 and the first quarter of fiscal
2018. Sales are also expected to benefit from the ramp up of ore
from the Pigeon and Lynx pipes at the Ekati mine during the
remainder of the year and strong production from the Diavik mine.
The diamond market continues to show signs of recovery from the
impact of demonetization in India, however the lower value segment
of the diamond market is expected to recover at a slower pace than
the higher value segment. The guidance for fiscal 2018 foresees the
sale of a higher volume of lower value diamonds that were
previously held back from sale and remained in inventory due to the
weaker market conditions following the demonetization. This is
expected to affect the average price per carat sold as well as the
number of carats sold.
Adjusted EBITDA is expected to be between $475 and $560 million,
reflecting a high margin ore mix, combined with ongoing cost
containment and efficiency initiatives, including reduced energy
consumption and continued implementation of the long haulage
strategy at the Ekati mine, with the addition of two high capacity
road trains.
The average price per carat sold is expected to range from $70
to $90 per carat. The upper end of the range reflects the potential
for a larger proportion of sales of higher value diamonds, while
the lower end of the range reflects the potential for a higher
proportion of sales of lower quality stones.
Sales, Adjusted EBITDA and the average price per carat sold in
any given quarter are impacted by seasonal trends in the diamond
industry, the number of sales in a quarter, ore mix, opening period
inventory levels of goods available for sale, the sale of very high
value special stones via a limited number of special tenders during
the year, and other factors.
The Ekati mine contains a greater number of kimberlite sources,
each with different average price per carat and grade profile
compared to those at the Diavik mine. In the first fiscal quarter,
the combined average price per carat sold is expected to be near
the low end of the guidance range for the full fiscal year, partly
due to a significant volume of lower value goods in inventory from
recent Misery Main production, and a slower recovery in the lower
value segment of the diamond market relative to higher value goods
after the demonetization in India. This is expected to reverse
later in the year with the processing of ore containing diamonds
with a higher average price per carat.
Three-Year Outlook
The three-year outlook includes the Company’s current
expectations for revenue, Adjusted EBITDA, unit cash costs of
production and capital expenditures for fiscal years 2018 to 2020
for the Ekati and Diavik mines. The revenue and Adjusted EBITDA
estimates are based on, among other things, the current mine plans
at each of the Ekati and Diavik mines for those periods.
In the three-year outlook scenario presented, sales and Adjusted
EBITDA are expected to increase significantly in fiscal 2018
compared to fiscal 2017, and to remain robust through fiscal 2019
and fiscal 2020.
Demonetization in India has had a negative impact on the Indian
retail jewelry market, but a return to normal business conditions
is expected in the second quarter of fiscal 2018. The higher end of
the outlook for revenue and Adjusted EBITDA reflects a scenario
where prices increase gradually over the latter half of fiscal
2018, reaching mid-calendar 2016 pricing levels by the start of
fiscal 2019, and increasing by approximately 2% annually
thereafter. The lower end of the outlook reflects a scenario where
revenue and Adjusted EBITDA increase more gradually as a result of
a slower improvement in prices, with production towards the lower
end of the guidance range.
At the Ekati mine, production is forecast, on a 100% basis, to
be between 6.4 and 7.1 million carats in fiscal 2019, and between
5.1 and 5.6 million carats in fiscal 2020, from the processing of
approximately 4.0 million tonnes per year. Misery Main production
is forecast to contribute approximately 60% to 65% of carat
production in fiscal 2019 and fiscal 2020, with Sable contributing
approximately 20% of recovered carats in fiscal 2020.
At the Diavik mine, production is forecast, on a 100% basis, to
be between 7.0 and 7.4 million carats in calendar 2018 and between
6.5 and 6.9 million carats in calendar 2019, from the processing of
over 2 million tonnes per year. The A-21 pipe is expected to start
delivering ore to the processing plant in calendar 2018, and to
account for approximately 15% of tonnes processed in calendar
2019.
Cash cost per tonne processed reflects relatively stable
production costs, and cash cost per carat produced increases
modestly in fiscal 2020 due to depletion of the high grade Misery
Main pipe at the Ekati mine.
Sales, Adjusted EBITDA and the average price per carat sold in
any given quarter are impacted by seasonal trends in the diamond
industry, the number of sales in a quarter, ore mix, opening period
inventory levels of goods available for sale, the sale of very high
value special stones via a limited number of special tenders during
the year, and other factors.
Ekati Outlook Fiscal 2018
Fiscal 2019 Fiscal 2020 Production (100%
basis) Tonnes Processed millions 3.7 – 4.0 3.7 – 4.0 3.7 – 4.0
Carats Recovered (Base Case) millions 5.0 – 5.6 5.0 – 5.6 5.0 – 5.6
Carats Recovered(1) (Operating Case) millions 6.3 – 7.0 6.4 – 7.1
5.0 – 5.6
Financial (100% basis) Sales(2) $ millions 575 –
645 555 – 620 575 – 640 Adjusted EBITDA(3) $ millions 315 – 370 290
– 340 310 – 370 Cash Cost per Tonne Processed(4) $/tonne 60 – 70 65
– 75 60 – 70 Cash Cost per Carat Produced(4) $/carat 35 – 40 35 –
40 45 – 50
Capital Expenditures(5) (100%
basis) Growth Capital $ millions 90 – 110 Sustaining Capital(6)
$ millions 140 – 170 Total Capital Expenditures(6) $ millions 230 –
280 280 – 300 210 – 235
Diavik Outlook
Fiscal 2018 Fiscal 2019 Fiscal 2020
Production (100% basis) Tonnes Processed millions 2.0 – 2.2
2.1 – 2.3 2.1 – 2.3 Carats Recovered millions 7.1 – 7.6 7.0 – 7.5
6.5 – 7.0
Financial (40% basis) Sales $ millions 300 – 330
325 – 360 325 – 360 Adjusted EBITDA(3) $ millions 180 – 210 220 –
250 210 – 245 Cash Cost per Tonne Processed(4) $/tonne 120 – 130
115 – 125 120 – 130 Cash Cost per Carat Produced(4) $/carat 35 – 40
35 – 40
40 – 45
Capital Expenditures(5) (40% basis) Growth
Capital $ millions 25 – 30 Sustaining Capital $ millions 13 – 15
Total Capital Expenditures(6) $ millions 38 – 45 30 – 40 20 – 25
Combined Outlook(7)
Fiscal 2018 Fiscal 2019 Fiscal 2020
Production Tonnes Processed millions 4.5 – 4.9 4.5 – 4.9 4.5
– 4.9 Carats Recovered(1, 8) millions 9.1 – 10.0 9.2 – 10.1 7.6 –
8.4
Financial Sales(2) $ millions 875 – 975 880 – 980 900 –
1,000 Adjusted EBITDA(3, 9) $ millions 475 – 560 490 – 580 500 –
600 Cash Cost per Tonne Processed(4) $/tonne 70 – 80 70 – 80 70 –
80 Cash Cost per Carat Produced(4) $/carat 35 – 40 35 – 40 45 – 50
Capital Expenditures(5) Growth Capital $ millions 115
– 140 Sustaining Capital(6, 10) $ millions 160 – 190 Total Capital
Expenditures(6, 10) $ millions 275 – 330 310 – 340 230 – 260
(1) Reflects the Operating Case at Ekati mine; this includes the
Misery Southwest pipe which 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.(2) Sales guidance for fiscal 2018
and fiscal 2019 includes production from the Misery Southwest pipe
(this is the Operating Case). Misery Southwest pipe is currently an
inferred resource. The mine plan for fiscal 2018 foresees between
1.3 and 1.4 million carats recovered from Misery Southwest, with an
estimated market value of between $48 and $52 million. The mine
plan for fiscal 2019 foresees between 1.4 and 1.5 million carats
recovered from the Misery Southwest with an estimated market value
of between $56 and $60 million. 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.(3) The term
EBITDA (earnings before interest, taxes, depreciation and
amortization) is a non-IFRS measure. Adjusted EBITDA removes
the effects of impairment charges, foreign exchange gains (losses)
and exploration costs from EBITDA.(4) Cash cost per tonne processed
and cash cost per carat produced are non-IFRS measures, and are
calculated by dividing cash cost of production by total tonnes
processed and total carats produced, respectively. Cash cost of
production is a non-IFRS measure, and includes mine site operating
costs such as mining, processing and administration, but is
exclusive of amortization, capital, and exploration and development
costs. Total cost is comprised of cash cost plus depreciation and
amortization.(5) For additional information on capital expenditures
at the Ekati and Diavik mines, refer to the technical report
entitled “Ekati Diamond Mine, Northwest Territories, Canada, NI
43-101 Technical Report” with an effective date of July 31, 2016,
and to the 2017 Technical Report for Diavik.(6) Planned sustaining
capital expenditures include capitalized production stripping.(7)
Combined figures include 100% of Ekati and 40% of Diavik.(8)
Combined production includes 100% of Ekati production in Fiscal
2018 and 40% of Diavik production in calendar 2017.(9) Combined
Adjusted EBITDA includes corporate G&A. EBITDA (earnings before
interest, taxes, depreciation and amortization) is a non-IFRS
measure. Adjusted EBITDA removes the effects of impairment
charges, foreign exchange gains (losses) and exploration costs from
EBITDA.(10) Combined sustaining capital includes corporate capital
expenditures.
It is expected that processed ore and recovered carats will be
sourced from the following kimberlite pipes in the approximate
proportions noted below:
Ekati Kimberlite Pipes
Fiscal 2019
Fiscal 2020
Percentage ofTonnes
Processed
Percentage ofCarats
Recovered
Percentage ofTonnes
Processed
Percentage ofCarats
Recovered
Koala Underground 10% 4% 1% 1% Pigeon 45% 10% 30% 10% Misery Main
25% 65% 14% 60% Lynx 5% 1% 15% 9%
Sable
- - 40% 20%
Total (Base Case only) 85% 80% 100% 100% Misery
Southwest(1) 15% 20% -
-
Total (Operating Case) 100% 100% 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.(2) The Company is the operator of
the Ekati mine, and has a participating interest of 88.9% in the
Core Zone, and 72.0% in the Buffer Zone. The Lynx pipe is in the
Buffer Zone; the other pipes are in the Core Zone.
Diavik Kimberlite Pipes Calendar 2018
Calendar 2019
Percentage ofTonnes
Processed
Percentage ofCarats
Recovered
Percentage ofTonnes
Processed
Percentage ofCarats
Recovered
A-154 South 15% 15% 10% 10% A-154 North 35% 25% 40% 30% A-418 40%
50% 35% 40% A-21 10% 10% 15% 20%
Total 100% 100% 100% 100%
Business Overview
The Company has ownership interests in two established mines,
and the associated processing plants, in the Lac de Gras region.
The Ekati mine consists of the Core Zone, which includes the
current operating mine and other permitted kimberlite pipes, as
well as the Buffer Zone, an adjacent area hosting kimberlite pipes
having both development and exploration potential, such as the Jay
kimberlite pipe and the Lynx kimberlite pipe.
The Company is the operator of the Ekati mine, and has a
participating interest of 88.9% in the Core Zone, and 72.0% in the
Buffer Zone.
The Company has a 40% interest in the Diavik mine; Rio Tinto plc
has a 60% interest and operates the mine.
Non-IFRS Measures
The terms Adjusted EBITDA, Adjusted EBITDA margin, free cash
flow, cash cost of production, cash cost per tonne processed, cash
cost per carat produced and working capital do not have
standardized meanings according to International Financial
Reporting Standards. See “Non-IFRS Measures” in the Company’s
fiscal 2017 Annual Report Management’s Discussion and Analysis for
additional information.
The term EBITDA (earnings before interest, taxes, depreciation
and amortization) is a non-IFRS measure. Adjusted EBITDA
removes the effects of impairment charges, foreign exchange gains
(losses), exploration costs and the gain on sale of the Toronto
office building from EBITDA.
The following table provides a reconciliation of consolidated
EBITDA and Adjusted EBITDA for the fourth quarter and the full year
for each of fiscal 2017 and fiscal 2016.
(in thousands of US dollars)
Q4 2017
Q4 2016
2017 2016 Net
income (loss) $ 5,299 $ (37,763) $ (12,757) $ (38,798) Finance
expense 5,832 2,123 14,573 9,742 Income tax (recovery) expense
(5,297) 9,896 (27,926) 27,245 Depreciation and amortization
50,469 53,647 210,286 191,448 EBITDA 56,303
27,903 184,176 189,637 Foreign exchange loss (gain) 5,254 2,022
9,734 2,771 Exploration costs 1,140 (734) 7,084 7,026 Impairment
losses on inventory – 19,838 26,017 19,838 Gain on sale of building
– – (44,792) – Adjusted EBITDA $ 62,697
$ 49,029 $ 182,219 $ 219,272
The term “free cash flow” is a non-IFRS measure, which is
defined as cash provided from (used in) operating activities, less
sustaining capital expenditure and less development capital
expenditure.
The following table provides a reconciliation of free cash flow
for the fourth quarter and the full year for each of fiscal 2017
and fiscal 2016.
(in thousands of US dollars)
Q4 2017
Q4 2016
2017 2016
Cash provided from (used in)operating
activities
$ 47,552 $ 83,625 $ 116,825 $ 167,987 Sustaining capital
expenditure(1) (50,414) (8,014) (150,345)
(52,622) Free cash flow before development $ (2,862) $
75,611 $ (33,520) $ 115,365 Development and exploration
capitalexpenditure(2) (16,756) (48,129)
(132,300) (150,042) Free cash flow $ (19,618) $ 27,482 $
(165,820) $ (34,677)
(1) Sustaining capital expenditure includes production
stripping.(2) Development capital expenditure is net of proceeds
from pre-production sales.
Conference Call and
Webcast
Beginning at 11:00 AM (ET) on Thursday, April 13, 2017, the
Company will host a conference call for analysts, investors and
other interested parties. Listeners may access a live broadcast of
the conference call on the Company's website at www.ddcorp.ca or by
dialing 844-249-9383 within North America or 270-823-1531 from
international locations and entering the conference ID
89945848.
An online archive of the broadcast will be available by
accessing the Company's website at www.ddcorp.ca. A telephone
replay of the call will be available two hours after the call
through 2:00 PM (ET), Thursday, April 27, 2017, by dialing
855-859-2056 within North America or 404-537-3406 from
international locations and entering the conference ID
89945848.
Mineral Reserve and Resource
Statements
As of December 31, 2016, the Diavik mine had 16.3 million tonnes
of proven and probable mineral reserves containing 46.0 million
carats of diamonds, compared to 18.7 million tonnes of proven and
probable mineral reserves containing 52.8 million carats as of
December 31, 2015. The updated mineral reserves and mineral
resources statement reflects a decrease of 2.4 million tonnes
containing approximately 6.8 million carats, attributable almost
entirely to depletion.
As of January 31, 2017, the Ekati mine, on a 100% basis, had
68.9 million tonnes of proven and probable mineral reserves
containing 105.4 million carats of diamonds, compared to 70.4
million tonnes of proven and probable mineral reserves containing
109.6 million carats as of July 31, 2016. The updated mineral
reserves and mineral resources statement reflects a decrease of 1.5
million tonnes containing approximately 4.2 million carats. Mineral
resources at the Fox pipe increased as a result of a successful
drilling campaign below the previously mined pit.
Diavik Diamond Mine Mineral Reserve and Mineral Resource
StatementAS OF DECEMBER 31, 2016 (UNAUDITED) (100% BASIS)
Mineral Reserves Proven Probable
Proven and Probable Kimberlite pipes Type Million tonnes
Carats /tonne
Millioncarats
Million tonnes Carats /tonne
Millioncarats
Million tonnes Carat /tonne Million carats
A-154 South
UG
0.3 3.2 1.0 0.7 3.7 2.8 1.1 3.6 3.8 A-154 North UG 3.6 2.4 8.5 4.6
2.3 10.8 8.2 2.3 19.3 A-418 UG 1.8 4.1 7.5 1.9 3.1 6.0 3.7 3.6 13.4
A-21
OP
3.3 2.8 9.4
–
–
– 3.3 2.8 9.4 Stockpile N/A 0.03 2.9 0.1 – – – 0.03 2.9 0.1
Sub-total – Underground 5.7 3.0 17.0 7.3 2.7 19.5 13.0 2.8
36.5 Sub-total – Open Pit 3.3 2.8 9.4 – – – 3.3 2.8 9.4
Sub-total – Stockpile 0.03 2.9 0.1 – – – 0.03 2.9 0.1 Total
Mineral Reserves 9.1 2.9 26.4 7.3 2.7 19.5 16.3 2.8 46.0
Note: Totals may not add up due to rounding.Mineral reserves
estimates reflect a bottom screen size of +1.0 mm.
Mineral Resources Measured Resources
Indicated Resources
Inferred Resources
Kimberlite pipes Type Million tonnes Carats /tonne
Millioncarats
Million tonnes Carats /tonne
Millioncarats
Million tonnes Carat /tonne Million carats A-154
South UG
–
–
– – – – 0.4 2.8 1.2 A-154 North UG – – – – – – 0.5 2.3 1.1 A-418 UG
– – – – – – 0.2 2.5 0.5 A-21 OP – – – 0.4 2.4 0.9 0.8 3.5 2.7 Total
Mineral Resources – – – 0.4 2.4 0.9 1.9 2.9 5.5
Note: Totals may not add up due to rounding.Mineral resources
are exclusive of mineral reserves.Mineral resources estimates
reflect a bottom screen size of +1.0 mm.
Cautionary Note to United States Investors Concerning
Disclosure of Mineral Reserves and Resources: The Company is
organized under the laws of Canada. The mineral reserves and
resources described herein are estimates, and have been prepared in
compliance with National Instrument 43-101 (“NI 43-101”). The
definitions of proven and probable reserves used in NI 43-101
differ from the definitions in the United States Securities and
Exchange Commission (“SEC”) Industry Guide 7. In addition, the
terms “mineral resource,” “measured mineral resource,” “indicated
mineral resource” and “inferred mineral resource” are defined in
and required to be disclosed by NI 43-101; however, these terms are
not defined terms under SEC Industry Guide 7, and normally are not
permitted to be used in reports and registration statements filed
with the SEC. Accordingly, information contained in this financial
report containing descriptions of the Diavik Diamond Mine’s mineral
deposits may not be comparable to similar information made public
by US companies subject to the reporting and disclosure
requirements under the United States federal securities laws and
the rules and regulations thereunder. United States investors
are cautioned not to assume that all or any part of Measured or
Indicated Mineral Resources will ever be converted into Mineral
Reserves. United States investors are also cautioned not to assume
that all or any part of an Inferred Mineral Resource exists, or is
economically or legally mineable.
The reserve and resource information for the Diavik Diamond Mine
was prepared and verified by or under the supervision of Calvin G.
Yip, P. Eng., an employee of Diavik Diamond Mines (2012) Inc.
and a Qualified Person within the meaning of NI 43-101. For further
details and information concerning the Company’s mineral reserves
and mineral resources, readers should refer to the technical report
entitled “Diavik Diamond Mine, Northwest Territories, Canada, NI
43-101 Technical Report” that has an effective date of January 31,
2017, and the Company’s most recently filed Annual Information
Form, which can be found on the Company’s profile at www.sedar.com
and on the Company’s website at www.ddcorp.ca.
Ekati Diamond Mine Mineral Reserve and Mineral Resource
StatementAS OF JANUARY 31, 2017 (UNAUDITED) (100% BASIS)
Mineral Reserves
Proven
Probable
Proven and Probable
Kimberlite pipes Zone location Type Million tonnes Carats
/tonne
Millioncarats
Million tonnes Carats /tonne
Millioncarats
Million tonnes Carats /tonne Million carats Koala
Core UG
–
–
– 1.6 0.6 0.9 1.6 0.6 0.9 Misery Main Core OP – – – 2.1 5.4 11.2
2.1 5.4 11.2 Pigeon Core OP – – –
6.6 0.5 3.2 6.6 0.5 3.2 Sable Core OP – – – 12.0 0.8 10.1 12.0 0.8
10.1 Jay Buffer OP – – – 44.7 1.8 78.6 44.7 1.8 78.6 Lynx Buffer OP
– – – 1.0 0.8 0.8 1.0 0.8 0.8 Stockpile Core N/A – – – 1.0 0.6 0.6
1.0
0.6 0.6 Sub-total Core Zone – – – 23.2 1.1 26.0 23.2
1.1 26.0 Sub-total Buffer Zone – – – 45.7 1.7 79.4
45.7 1.7 79.4 Total Mineral Reserves – – – 68.9 1.5
105.4 68.9 1.5 105.4
Note: Totals may not add up due to rounding.Mineral reserves are
reported at +1.0 mm (diamonds that would be recovered using
1.0 mm width slot de-grit screens and inclusive of incremental
small diamonds recovered by the Fines Dense Media Separator
circuit which was commissioned in the fourth quarter of fiscal
2017).
Mineral Resources Measured Resources
Indicated Resources Inferred Resources Kimberlite pipes
Zone location Type
Milliontonnes
Carats /tonne
Millioncarats
Million tonnes Carats /tonne
Millioncarats
Million tonnes Carats /tonne
Millioncarats
Koala
Core
UG
–
– – 4.1 1.0 3.9 0.3 1.7 0.6 Fox Core UG – – – 45.6 0.4 16.5 5.4 0.4
2.2 Misery Main Core OP – – – 2.6 5.5 14.1 0.8 3.5 2.8 Misery
Southwest Core OP – – – – – – 0.5 3.0 1.6 Pigeon Core OP – – – 11.0
0.5 5.5 1.7 0.4 0.8 Sable Core OP – – – 15.4 0.9 14.3 0.3 1.0 0.3
Jay Buffer OP – – – 48.1 1.9 89.8 4.2 2.1 8.7 Lynx Buffer OP – – –
1.3 0.8 1.1 0.2 0.8 0.2 Stockpile Core N/A – – – 1.0 0.8 0.8 7.2
0.4 2.8 Sub-total Core Zone – – – 79.7 0.7 55.0 16.2 0.7
10.9 Sub-total Buffer Zone – – – 49.5 1.8 90.9 4.4 2.0 8.9
Total Mineral Resources – – – 129.1 1.1 145.9 20.6 1.0 19.8
Note: Totals may not add up due to rounding.Mineral resources
are inclusive of mineral reserves.Mineral resources are reported at
+0.5 mm (diamonds recovered using a 0.5 mm width slot de-grit
screen and retained on a 1.0 mm circular aperture screen).
Cautionary Note to United States Investors Concerning
Disclosure of Mineral Reserves and Resources: The Company is
organized under the laws of Canada. The mineral reserves and
resources described herein are estimates, and have been prepared in
compliance with National Instrument 43-101 (“NI 43-101”). The
definitions of proven and probable reserves used in NI 43-101
differ from the definitions in the United States Securities and
Exchange Commission (“SEC”) Industry Guide 7. In addition, the
terms “mineral resource,” “measured mineral resource,” “indicated
mineral resource” and “inferred mineral resource” are defined in
and required to be disclosed by NI 43-101; however, these terms are
not defined terms under SEC Industry Guide 7, and normally are not
permitted to be used in reports and registration statements filed
with the SEC. Accordingly, information contained in this financial
report containing descriptions of the Ekati Diamond Mine’s mineral
deposits may not be comparable to similar information made public
by US companies subject to the reporting and disclosure
requirements under the United States federal securities laws and
the rules and regulations thereunder. United States investors
are cautioned not to assume that all or any part of Measured or
Indicated Mineral Resources will ever be converted into Mineral
Reserves. United States investors are also cautioned not to assume
that all or any part of an Inferred Mineral Resource exists, or is
economically or legally mineable.
The reserve and resource information for the Ekati Diamond Mine
was prepared and verified by or under the supervision of Peter
Ravenscroft, FAusIMM, of Burgundy Mining Advisors Ltd., an
independent mining consultancy. Mr. Ravenscroft is a Qualified
Person within the meaning of NI 43-101. For further details
and information concerning the Company’s mineral reserves and
mineral resources, readers should 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, and the Company’s most recently filed Annual Information
Form, which can be found on the Company’s profile at www.sedar.com
and on the Company’s website at www.ddcorp.ca.
Financial Statements
Complete Management’s Discussion and Analysis and Financial
Statements can be found on Dominion’s website at:
http://www.ddcorp.ca/investors/reports/quarterly-reports.
Consolidated Balance Sheets
(in thousands of US dollars)
January 31, 2017
January 31, 2016 ASSETS Current assets Cash and cash
equivalents (note 4) $ 136,168 $ 320,038 Accounts receivable (note
5) 13,946 11,528 Inventory and supplies (note 6) 412,227 416,146
Other current assets 29,765 21,584 Income taxes receivable
17,720 – 609,826 769,296 Property, plant and equipment (note
7) 1,295,584 1,305,143 Restricted cash (note 4) 65,742 63,312 Other
non-current assets (note 9) 21,362 22,752 Deferred income tax
assets (note 12) 11,362 4,327 Total assets $
2,003,876 $ 2,164,830 LIABILITIES AND EQUITY Current
liabilities Trade and other payables (note 10) $ 108,866 $ 114,589
Employee benefit plans (note 11) 1,192 3,142 Income taxes payable
(note 12) 54,710 51,195 Current portion of loans and borrowings
(note 18) 10,556 21,849 175,324 190,775 Loans and
borrowings (note 18) – 11,922 Deferred income tax liabilities (note
12) 155,380 209,826 Employee benefit plans (note 11) 15,911 14,319
Provisions (note 13) 328,356 344,658 Total
liabilities 674,971 771,500 Equity Share capital
(note 15) 478,526 509,506 Contributed surplus 31,667 29,020
Retained earnings 718,298 752,028 Accumulated other comprehensive
loss (9,622) (10,027) Total shareholders’ equity
1,218,869 1,280,527 Non-controlling interest 110,036
112,803 Total equity 1,328,905 1,393,330 Total
liabilities and equity $ 2,003,876 $ 2,164,830
Consolidated Statements of Income (Loss)
(in thousands of US dollars except per share amounts and where
otherwise noted)
2017 2016 Sales $
570,855 $ 720,568 Cost of sales (note 16) 544,450
668,921 Gross margin 26,405 51,647 Selling, general and
administrative expenses (note 16) 36,843 43,661 Mine standby costs
(note 16 and 25) 44,475 – Restructuring costs (note 16 and 26)
1,698 – Operating (loss) profit (56,611) 7,986
Finance expenses (14,573) (9,898) Exploration costs (7,084) (7,026)
Gain on sale of building (note 19) 44,792 – Finance and other
income 2,527 156 Foreign exchange loss (9,734)
(2,771) Loss before income taxes (40,683) (11,553) Current income
tax expense (note 12) 32,697 47,466 Deferred income tax recovery
(note 12) (60,623) (20,221) Net loss $ (12,757) $
(38,798) Net income (loss) attributable to: Shareholders $ 190 $
(33,956) Non-controlling interest (12,947) (4,842)
Earnings (loss) per share (note 17) Basic – (0.40) Diluted –
(0.40) Basic weighted average number of shares outstanding
84,471,547 85,240,395
Consolidated Statement of Cash Flows
(in thousands of US dollars)
2017 2016
Cash provided by (used in)
OPERATING Net loss $ (12,757) $
(38,798) Depreciation and amortization 210,286 191,447 Deferred
income tax recovery (60,623) (20,221) Current income tax expense
32,697 47,466 Finance expenses 14,573 9,898 Stock-based
compensation 2,696 3,323 Other non-cash items (3,250) 4,085
Unrealized foreign exchange gain 5,533 (3,738) Gain on disposition
of assets (44,853) (426) Impairment losses on inventory 26,017
19,838 Interest paid (2,678) (3,088) Income and mining taxes paid
(51,134) (99,821) Change in non-cash operating working capital,
excluding taxes and finance expenses 317 58,022
Net cash from operating activities 116,824
167,987
FINANCING Repayment of interest-bearing loans and
borrowings (1,873) (740) Repayment of promissory note (21,514)
(10,556) Transaction costs relating to financing activities –
(3,054) Dividends paid (33,920) (51,133) Distributions to and
contribution from minority partners, net 2,232 3,248 Issue of
common shares, net of issue costs 178 542 Share repurchase
(31,158) –
Cash used in financing activities
(86,055) (61,693)
INVESTING Decrease (increase) in
restricted cash 2,392 (33,047) Net proceeds from pre-production
sales 25,100 7,668 Purchase of property, plant and equipment
(309,149) (210,333) Net proceeds from sale of property, plant and
equipment 63,932 911 Add back of non-cash expenditures 1,404
466
Cash used in investing activities
(216,321) (234,335) Foreign exchange effect on cash balances
1,682 (9,855) Decrease in cash and cash equivalents (183,870)
(137,896) Cash and cash equivalents, beginning of period
320,038 457,934 Cash and cash equivalents, end of period $
136,168 $ 320,038 Change in non-cash operating working capital,
excluding taxes and finance expenses Accounts receivable 4,101
(1,486) Inventory and supplies 21,874 52,525 Other current assets
(8,940) 1,498 Trade and other payables (17,263) 6,436 Employee
benefit plans 545 (951) $ 317 $ 58,022
Qualified PersonThe mine plan for the Ekati Diamond Mine
for fiscal 2018 was prepared and verified by Dominion, operator of
the Ekati 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, and
the mine plan for the Diavik Mine for calendar 2017 was prepared
and verified by DDMI, operator of the Diavik Mine, under the
supervision of Calvin Yip, P.Eng., Principal Advisor,
Strategic Planning of DDMI, who is a Qualified Person within the
meaning of National Instrument 43-101 of the Canadian
Securities Administrators. The other scientific and technical
information contained in this press release has been prepared and
verified by Dominion, operator of the Ekati mine, under the
supervision of Chantal Lavoie, P. Eng., Chief Operating Officer of
Dominion, and President of Dominion Diamond Ekati Corporation
(DDEC), 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 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. For further details and
information concerning the Company’s mineral reserves and resources
at the Diavik Mine, please refer to the technical report entitled
“Diavik Diamond Mine, Northwest Territories, Canada, NI 43-101
Technical Report” that has an effective date of January 31, 2017.
These technical reports can be found on the Company’s profile at
www.sedar.com and on the Company’s website at www.ddcorp.ca.
Forward-Looking InformationThe guidance information
included herein, including information about expected sales,
Adjusted EBITDA, costs, capital expenditures and diamond pricing,
estimated production from, and development activities at, the Ekati
mine and the Diavik 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 each of the Ekati
mine and the Diavik Mine; mining, production, construction and
exploration activities at the Ekati mine and the Diavik 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, cash flow and
liquidity risks, and uncertainties related to the Company’s
strategic review process. 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 mining company and one of the
world’s largest producers and suppliers of premium rough diamond
assortments to the global market. The Company operates
the Ekati Diamond Mine, in which it owns a controlling
interest, and owns 40% of the Diavik Diamond Mine, both of
which are located in the low political risk environment of
the Northwest Territories in Canada. It also has
world-class 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/20170412006235/en/
Investors:Dominion Diamond CorporationJacqueline Allison,
416-205-4371Vice-President, Investor
Relationsjacqueline.allison@ddcorp.caorCanadian Media Contact:Ian
Hamilton, 416-206-0118 x222DFH Public AffairsorUS Media Contact:Dan
Gagnier, 646-569-5897Gagnier Communications
DDC Enterprise L (NYSE:DDC)
Historical Stock Chart
From Dec 2024 to Jan 2025
DDC Enterprise L (NYSE:DDC)
Historical Stock Chart
From Jan 2024 to Jan 2025
