Dominion Reports Sharp Drop in Fiscal Q4 Sales, Hit by Ekati Fire, Demonetization
February 23, 17
(IDEX Online) – Dominion Diamond Corporation reports fourth fiscal quarter diamond sales of $129.9 million from the sale of 1.4 million carats compared with $178.1 million from the sale of 1.1 million carats in the year-earlier quarter.
"Total rough diamond sales decreased 27% in the fourth fiscal quarter compared to the same period in the prior year. This was due primarily to a reduction in the goods available for sale following the process plant fire at the Ekati Diamond Mine. Sales in the quarter were also negatively affected by the disruption in normal trading activity following the demonetization of the Indian rupee in November 2016.
"Total carats sold in the fourth fiscal quarter increased by 24% from the same period in the prior year, due primarily to the availability for sale of rough diamonds from high grade Misery Main ore. Total carats sold in the fourth fiscal quarter of the prior year were negatively impacted by the decision to hold back lower-than-average priced inventory due to a weakened diamond market. Three rough diamond sales were held during the quarter. The company plans to hold two rough diamond sales in the first quarter of fiscal 2018.
"The market ended the year on a positive note despite the divergence between the resilient market for larger better goods and the more challenging situation for the smaller cheaper goods. The Christmas season in the U.S. 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.
"The Indian retail market has started to recover from the jewelers' strike in the middle of the year and the impact of demonetization of the Indian rupee towards year-end. The latter is expected to continue to have a dampening effect on the Indian retail jewelry market in the short-term, with demand expected to return to normal in this sector by the fall of 2017. Much of the manufacturing sector that focuses on lower price rough diamonds was brought to a standstill by the demonetization. However, the segment of the manufacturing sector that focuses on higher priced rough diamonds, and produces primarily for the export market, has been less disrupted."
During the fourth fiscal quarter (November through January), the Ekati Diamond Mine recovered a record 2.3 million carats from 1.0 million tonnes processed (Q4 fiscal 2016 - 1.2 million carats from 0.9 million tonnes processed).
Carat production increased by 93% compared to the same period in the prior year due to the positive impact of processing of a large proportion of high grade Misery ore, the firm said in a statement.
During fiscal 2018, the company plans to produce 6.3 to 7.0 million carats from the processing of 3.7 to 4.0 million tonnes (fiscal 2017: 5.2 million carats from the processing of 2.9 million tonnes).
The company expects to process primarily high value ore from the Koala underground and Misery Main pipes during the first quarter fiscal 2018, with an increased proportion of ore from the Pigeon and Lynx pipes during the remainder of the fiscal year.
The fines dense media separation (Fines DMS) plant, which increases the recovery of diamonds smaller than 1.2 millimetres, continues to ramp up through the first fiscal quarter, and is expected to be fully operational during the second fiscal quarter, the firm added.