Aber Posts $27.7 Million Profits After First Full Mining Year
March 14, 04
Aber Diamond Corporation ended its first year of production at its Diavik mine with a handsome net earnings of $27.7 million on diamond sales of $114.8 million. Fourth quarter net earnings stood at $3.2 million.
“We are very proud of our achievements to date and we applaud the success of our partner, Rio Tinto, in bringing this extraordinary mine to production without delays or cost overruns”, said Robert Gannicott, President and CEO of Aber.
“We look forward to playing an expanded role in a robust diamond market and delivering the benefits of our success to our shareholders.”
The company reported cash flow from operations of $51.2 million for the year and $22.8 million for the fourth quarter and significantly improved diamond values for the A154 North kimberlite pipe.
The company says its move to profitability is primarily a result of the commencement of commercial production in the third quarter and therefore the realization of profits from its diamond sales.
Aber was aided by a foreign exchange gain of $13.3 million due to the strengthening of the Canadian dollar.
However, fourth quarter decrease in earnings, compared to the third quarter, is attributed to mining and processing mixed lake bottom sediment and low-grade kimberlitic mud from the tops of both A154 South and North.
The processing of this low-grade material, says the company, delivered only minor amounts of diamonds. Also, increased mining costs were incurred as compared to the third quarter as a result of the stripping of A154 North.
In addition, there were two sales during the fourth quarter, compared to three sales held during the third quarter. This quarterly sales variance reflecting 2 or 3 sales, resulting from the 10 times per year sales cycle, will have an ongoing impact on Aber’s quarterly earnings.
Finally, accelerated amortization of deferred financing costs related to the previous Project Loan Facility reduced fourth quarter earnings by $2.2 million.
The company expects the Diavik mine to produce 8.2 million carats of diamonds during calendar 2004, of which 8 million carats are expected to be delivered to the joint venture partners during the year.
Low diamond production occurred during the fourth calendar quarter of 2004, resulting from the processing of low-grade stockpiles. The company revealed that that was what stood behind the cancellation of the February 2004 diamond sale in Antwerp. Aber does not believe this will adversely impact production for the year.