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Dominion Diamond Corporation reports First Quarter 2015 Sales and Production Update

May 20, 2014

TORONTO, May 20, 2014 /PRNewswire/ – Dominion Diamond Corporation (TSX: DDC,
NYSE: DDC) (the “Company”) reports that rough diamond production, sales
and pricing have all exceeded targets for the first quarter of fiscal
2015 (February through April) to the extent that the estimated value of
the Company’s production at current sales prices is ahead of
expectation by approximately $100 million.

Ekati Diamond Mine Production (100% basis)

        --  Production for the quarter is 24% ahead of target.

    For the three months ended April 30, 2014            

                    Pipe       Ore Processed   Carats       Grade
                               (000s tonnes)   (000s)   (carats/tonne)

    Fox(1)                               671      231             0.34

    Koala(2)                             152      172             1.13

    Koala North                           82       71             0.87

    Misery Satellites(3)                  56       86             1.52

    Coarse Ore Rejects ("COR")             -        -                -

    Total                                962      561             0.58

    (1)The full year mine plan for the Fox pipe envisaged the processing of
    1.7 million tonnes of mineral reserve producing 0.36 million carats at
    an average grade of 0.21 carats per tonne for fiscal 2015.

    (2)Production from Koala Underground ("U/G") was approximately 85% from
    mineral reserves and 15% from inferred mineral resources. The full year
    mine plan for Koala U/G envisaged the processing of 0.87 million tonnes
    of mineral reserve producing 0.51 million carats at an average grade of
    0.59 carats per tonne for fiscal 2015.

    (3)This material is not included in the reserves and is therefore
    incremental production.

Diavik Diamond Mine Production (40% basis)

        --  Production for the quarter is 13% ahead of target.

    For the three months ended April 30, 2014                        

                   Pipe       Ore Processed   Carats       Grade
                              (000s tonnes)   (000s)   (carats/tonne)

    A-154South                          120      420              3.5

    A-154North                          242      546             2.26

    A-418                               225      778             3.46

    Coarse Ore Rejects("COR")             4       93            23.25

    Total                               591    1,837          2.97(a)

    (a)Grade has been adjusted to exclude COR. COR is not included in the
    reserves and is therefore incremental production.

Ekati Mining Update

The decision in the autumn of 2013 to accelerate the mining capability
in the Fox pipe has resulted in an additional approximately 100,000
tonnes of material being mined from the open pit ahead of the spring
Freshet (snowmelt). This material was mined from a section of the ramp
which was in kimberlite but was not part of the original mine plan.
Mining at the Fox pipe was completed last week.

The development at the 1810 level at Koala Underground was completed at
the end of February and production drilling commenced in March.

During the quarter, the Company tested a small kimberlite pipe within
the Misery pit to the northeast of the main ore body which has been
excavated as part of the Misery pushback. As a result of a bulk sample
run on this material, approximately 30,000 tonnes of the Misery
Northeast material has been stockpiled and will be processed in the
second quarter. The characteristics of the diamonds in the satellite
pipe material appear to be very similar to the diamonds from the Misery
Main pipe.

Diavik Mining Update

Ore mined at the Diavik mine was 12% ahead of plan. This performance
results from higher production from A-418 and A-154 South due to
favorable ground conditions and improved availability of equipment.

Ekati Processing Update

The Company estimates that process plant improvements to date have
increased the recovered grade during the first quarter by approximately
15%. Most of this incremental recovery is in smaller diamonds not
currently included in reserves. Historically, Ekati has bypassed the
recrush circuit in order to maximize process plant throughput and has
not recovered the entrained diamonds within the coarse fraction of the
tail rejects. The recrush circuit will likely be re-established by
year-end to further improve diamond recovery. Once the process
improvements have been substantially completed the Company intends to
incorporate the higher recovery rate into an updated reserves
statement.

Diavik Processing Update

Ore processing was 18% ahead of plan predominately due to greater ore
availability as a result of higher mining rates and improved equipment
availability, equipment efficiencies and utilization of the processing
plant.

Q1 2015 Ekati and Diavik Rough Diamond Sales

The Company recorded total first quarter sales of $175.5 million.


    Q1 FY 2015 Summary               

    Sales in $ millions              

    Ekati rough (100% basis)     $92.8

    Diavik rough                 $82.7

    Total Sales                  $175.5

    Carats Sold ('000s)              

    Ekati rough (100% basis)       259

    Diavik rough                   582

    Total carats sold              841

Excluded from the Ekati sales recorded in the first quarter were carats
produced and sold from the processing of satellite material from the
Misery South and Southwest kimberlite pipes as this material was
excavated during the pre-stripping operations for the Misery Main pipe.
During the first quarter, the Company sold an estimated 0.1 million
carats of production from the Misery South & Southwest kimberlites for
estimated proceeds of $6.9 million for an average price per carat of
$75, which includes the recovery of small diamonds.

Inventories

At April 30, 2014, the Company had inventory with an estimated market
value of approximately $285 million of which $65 million represents
discretionary inventory with the balance being work in progress.

Production Guidance

Production guidance at Ekati and Diavik, respectively, will be reviewed
at the end of the second quarter.

Pricing

Based on the average prices per carat achieved by the Company in the
latest sale which was held at the end of April / beginning of May 2014,
the Company has modeled the approximate rough diamond price per carat
for each of the Diavik and Ekati kimberlite process plant feed types
below. The Ekati prices do not reflect the increased recovery of small
diamonds from the improvements in processing so as to be consistent
with the Company’s current reserve estimates. The rough diamond price
of the additional recovered small diamonds at Ekati is estimated at
between $70 and $100 per carat.


    Diavik Ore      April/May 2014      Ekati Ore Type      April/May 2014
    Type            Average Price                           Average Price
                    per Carat                               per Carat
                    (in US dollars)                         (in US dollars)

    A-154 South     $145                Koala               $395

    A-154 North     $190                Koala North         $440

    A-418           $105                Fox                 $315

    Coarse Ore      $50                 Misery              $80 - 100
    Rejects                             Satellite Pipes

                                        Coarse Ore          $65 - 120
                                        Rejects

                                        Recovered Small     $70 - 100
                                        Diamonds

Overall pricing was up 7% since the beginning of the calendar year.

Jay Project Update

The winter drilling, environmental and engineering program has revealed
conditions that will accommodate a simplified design for the Jay
Project allowing a reduced environmental footprint and a shortened
construction timeline without sacrificing project economics.
Regulatory agencies have now been advised of the revised project design
and it will form the basis of the Developer’s Assessment Report to be
filed in September this year. It is this report that is the starting
point for the Environmental Assessment.

Cautionary Statement Regarding Preliminary Results

The Company cautions that the Company’s first quarter sales results
disclosed in this news release are preliminary and reflect expected
first quarter sales results as of the date of this news release. Actual
reported results are subject to final review and may vary from what is
currently expected because of a number of factors, including, without
limitation, additional or revised information and changes in accounting
standards or policies or in how those standards are applied. In
addition, the preliminary results contained in this news release do not
include all of the measures of financial performance that would be
disclosed in the Company’s interim financial statements. The Company
will provide additional financial information and related discussion
and analysis about its first quarter financial results when it reports
those actual results.

Forward-Looking Information

Certain information included herein, including information about mining
activities and estimated production from the Ekati Diamond Mine and the
Diavik Diamond Mine, constitutes forward-looking information or
statements within the meaning of applicable securities laws.
Forward-looking information is based on certain factors and assumptions
including, among other things, the current mine plan for the Ekati
Diamond Mine and the Diavik Diamond Mine; mining, production,
construction and exploration activities at the Company’s mining
properties; currency exchange rates; and world and US economic
conditions. Forward-looking information is subject to certain factors,
including risks and uncertainties, which could cause actual results to
differ materially from what the Company currently expects. These
factors include, among other things, the uncertain nature of mining
activities, including risks associated with underground construction
and mining operations, risks associated with joint venture operations,
risks associated with the remote location of and harsh climate at the
Company’s mining properties, risks resulting from the Eurozone
financial crisis, risks associated with regulatory requirements, the
risk of fluctuations in diamond prices and changes in US and world
economic conditions, the risk of fluctuations in the Canadian/US dollar
exchange rate and cash flow and liquidity risks. Actual results may
vary from the forward-looking information. Readers are cautioned not to
place undue importance on forward-looking information, which speaks
only as of the date of this disclosure, and should not rely upon this
information as of any other date. While the Company may elect to, it is
under no obligation and does not undertake to, update or revise any
forward-looking information, whether as a result of new information,
further events or otherwise at any particular time, except as required
by law. Additional information concerning factors that may cause actual
results to materially differ from those in such forward-looking
statements is contained in the Company’s filings with Canadian and
United States securities regulatory authorities and can be found at www.sedar.com and www.sec.gov, respectively.

Qualified person

The scientific and technical information contained in this press release
has been prepared under the supervision of Mats Heimersson, P. ENG, an
employee of the Company and a Qualified Person within the meaning of
National Instrument 43-101.

About Dominion Diamond Corporation

Dominion Diamond Corporation is a Canadian diamond mining company with
ownership interests in two major producing diamond mines. Both mines
are located in the low political risk environment of the Northwest
Territories in Canada.

The Company operates the Ekati Diamond Mine through its 80% ownership as
well as a 58.8% ownership in the surrounding areas
containing additional resources, and also owns 40% of the Ekati Diamond
Mine. It supplies rough diamonds to the global market through its
sorting and selling operations in Canada, Belgium and India and is the
world’s fourth largest producer of rough diamonds by value.

SOURCE Dominion Diamond Corporation


Source: PR Newswire



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