Dominion Diamond won’t ‘sit on the cash,’ says CEO
Canada’s Dominion Diamond Corporation (NYSE:DDC), the world’s largest diamond mining company by its $1.1 billion market cap, told investors on Thursday that it will look at expanding the mine life of its recently-acquired Ekati project.
Dominion plans on adding up to 15 years to the mine’s life by developing the Jay Pipe, a sub-lake deposit. Without the expansion, the mine would wind down operations by 2019.
“We’re certainly not going to just sit on the cash,” CEO Bob Gannicott told investors on Thursday, Reuters reports. “But we need to have confidence in our economic forecasts going forward through the Jay development.”
Gannicott was referring to an influx of cash from January when the miner sold its luxury jewellery division to Switzerland’s Swatch. Following the sale, the company changed its name from Harry Winston Diamond Corporation to Dominion.
Meanwhile, the company reported a second-quarter net loss of $16.3 million – 19 cents per share – due to restructuring costs and other expenses.
Excluding these items, Dominion says its net profit would have been $11.1 million.
The firm also recorded a boost in sales from its 40%-owned Diavik mine and its 80%-owned Ekati. Combined, the two projects sold $261 worth of rough diamonds, compared to $61.5 million in the comparable quarter of 2012.
Diavik sold 0.7 million carats for an average price per carat of $130, compared to 0.4 million carats for an average price per carat of $142 in Q2 2012. Earlier this year Rio Tinto tried to sell its 60% stake in the Diavik project but backed down on disappointing offers.
Ekati sold approximately 0.6 million carats for an average price of $289 per carat. The project is located 310km north-east of Yellowknife in Canada’s Northwest Territories.
Commenting on market conditions, the firm noted a “solid” US market, “significant growth” in jewellery demand from Japan but a drop-off in China.
Dominion was down 0.3% by noon on Thursday on the New York exchange after some earlier gains of up to 1%. The miner is currently trading at $12.70 per share.
Creative Commons image by: Steven Depolo