Dominion Diamond Corporation reported a loss of $1.0 million for its first fiscal quarter of 2017 (February through April 2016) compared with a profit of $12 million in the year-earlier quarter. Both measures were impacted by a lower value product mix at Ekati prior to the initial sale of diamonds recovered from Misery Main later in the fiscal year. Inventory impairment, or reduced value of the stock, in the amount of $19.6 million was recorded on available for sale inventory at the Ekati mine. The impairment resulted from first quarter production having a relatively high proportion of Misery South and Southwest material.
"Sales were positively impacted by improved diamond prices from the beginning of the year and a successful tender held in February, which also resulted in a sales mix favoring lower priced diamonds," the miner said in a statement. "After lowering prices by 5% in the company’s January sale, in line with the market, prices quickly recovered and ended the first quarter on average approximately 8% higher than they started the fiscal year.
"Market conditions in the rough diamond market during the first quarter improved significantly as inventories were replenished by manufacturers in response to a positive retail season at the end of 2015. Consequently the downward pressures on prices faced last year were reversed which bodes well for more stable market conditions in fiscal 2017. The U.S. jewelry market was at the forefront of demand growth during the period and, despite the impact of uncertain economic growth on sentiment, sales in mainland China remained reasonably steady, conversely the Hong Kong and Macau markets faced considerable headwinds. Other major retail markets were mixed with some more resilient in local currency terms, but adversely impacted by the strong U.S. dollar."