Dominion Diamond's Q3 Sales Tumble 29% Despite Surge in Volume Sold

Mining and Exploration
18/11/2016 12:51

Dominion Diamond Corporation reports that third fiscal quarter sales 2017 (three monthds ended Oct. 31, 2016) of rough diamonds from the Ekati Diamond Mine and Diavik Diamond Mine fell 29% to $102.7 million from $145.0 million despite the total volume of carats sold increasing by 56% to 1.2 million carats from 0.8 million carats. The main culprits for the downturn, the company explains, were, "The process plant fire at the Ekati Diamond Mine, which resulted in a reduction in the value of goods available for sale in the quarter, and the carryover of lower average value goods from both the Ekati and Diavik Diamond Mines in the second quarter of fiscal 2017 for sale in the current period. Two rough diamond sales were held during the quarter." For the first nine months of the year, sales are down 19% from $542.4 in 2015 to $440.9 this year. This decline as well is despite a sharp 74% increase from 2,972 to 5,183 carats sold. 

At the Ekati Mine, during Q3 2016 (fiscal 2017) Dominion recovered 1.0 million carats from 0.4 million tons of ore processed, compared to 0.8 million carats recovered from 0.9 million tons processed in Q3 a year ago. The number of tons of ore processed were significantly reduced as a result of the fire at the Ekati process plant that occurred on June 23, 2016 and the subsequent shutdown of the process plant. The Ekati process plant resumed operations at full capacity on September 21, 2016 and prioritized processing of higher value ore from Misery Main open pit and Koala underground operations. Carat production was positively impacted during the quarter from the processing of a high proportion of high grade Misery Main ore.

Concerning the diamond market, the company writes: "The positive market condition of the first half of calendar 2016 was followed in the third quarter by more muted demand as the rough diamond cutting and polishing industry approached the annual shutdown period for Diwali in India. Caution prevailed in the diamond pipeline as polished diamond stocks built up through the quarter, but stable US retail demand has built expectations for a good holiday season beginning in earnest after the presidential election. The market for lower priced rough diamonds was particularly subdued in the third quarter but demand for these goods is cyclical, with decreased demand being typical at this time of year. Demand for these lower priced rough diamonds is expected to return in the fourth quarter.

The retail jewelry market in China was noticeably more active as evidenced by a positive Hong Kong trade show in September. Mainland based jewelers are more upbeat than their Hong Kong based counterparts who are still suffering from subdued demand in the local market. The retail jewelry market in India showed signs of a return to normality in the Diwali period, however local currency restrictions have caused unease amongst jewelry retailers in the run up to the wedding season." The Company plans to hold three rough diamond sales in the fourth fiscal quarter of 2017.