April 4, 2013
Dominion Diamond Corporation (TSX:DDC), (NYSE:DDC) (the "Company") today announced its fourth quarter and year-end results for the period ending
January 31, 2013
, Chairman and Chief Executive Officer, stated:
"The last year, and this first quarter, has been a time of great positive change for the Company, including changing its very identity to "Dominion Diamond Corporation".
This change reflects a focus on the production, sorting and sale of diamonds from
, a region that we know and understand well. The acquisition of the Ekati Mine, and its operating team, is expected to close next week giving us operational control of both a producing mine and development opportunities in the large scale resources on the Ekati property. Together with our exploration acreage adjacent to the Ekati and Diavik properties, this positions us from grass-roots exploration through development opportunities. We also become the largest supplier of Canadian diamonds sold through an expert sorting and marketing chain that we have perfected through the years of Diavik production.
Fourth Quarter Highlights:
- The sale of the Company's Luxury Brand Segment, Harry Winston, Inc., to The Swatch Group Ltd. was completed on March 26, 2013. As part of the closing of the transaction, the Company's name was changed to Dominion Diamond Corporation, and its common shares now trade on both the Toronto and New York stock exchanges under the symbol DDC. As a result, the Company's consolidated results from continuing operations relate solely to its mining operations, which include the production, sorting and sale of rough diamonds. The results of the Luxury Brand Segment are treated as discontinued operations for accounting and reporting purposes and current and prior period results have been adjusted accordingly.
- During the quarter, the Company entered into share purchase agreements with BHP Billiton to purchase all of BHP Billiton's diamond assets, including its controlling interest in the Ekati Diamond Mine as well as the associated diamond sorting and sales facilities in Yellowknife, Canada, and Antwerp, Belgium for an agreed purchase price of $500 million. The transaction is currently expected to close on or about April 10, 2013. In connection with this acquisition, the Company has also arranged new secured credit facilities consisting of a $400 million term loan, a $100 million revolving credit facility (of which $50 million will be available for purposes of funding the Ekati acquisition) and a $140 million letter of credit facility (expandable to $265 million in aggregate). These new facilities would replace the Company's current $125 million facility with Standard Chartered Bank.
- During the fourth quarter of fiscal 2013, the retail jewelry market improved in almost all areas, led by Diwali and the wedding season in India, followed closely by a positive US year-end holiday season and improved consumer demand in China, which regained momentum in advance of the Lunar New Year. Rough diamond supply was impacted by delivery problems at certain diamond mines combined with lower than expected Russian rough diamond supply. The tight supply coupled with a more active polished market helped improve rough prices during the quarter.
Q4 Results Highlights
- Consolidated sales from continuing operations increased 8% to $110.1 million for the fourth quarter compared to $102.2 million for the comparable quarter of the prior year. The increase in sales resulted from an 11% increase in achieved rough diamond prices due to an improved sales mix, partially offset by a 3% decrease in volume of carats sold during the quarter.
- Operating profit from continuing operations decreased 12% to $21.0 million compared to an operating profit of $24.0 million in the comparable quarter of the prior year. Consolidated EBITDA from continuing operations decreased 6% to $45.3 million compared to $48.3 million in the comparable quarter of the prior year.
- Rough diamond production during the fourth calendar quarter increased 19% to 1.9 million carats, compared to 1.6 million carats for the fourth calendar quarter of last year (on a 100% basis). The increase was primarily due to improved grades in each of the kimberlite pipes.
- The Company had 0.5 million carats of rough diamond inventory with an estimated current market value of approximately $65 million at January 31, 2013, of which approximately $25 million represents rough diamond inventory available for sale, with the remaining $40 million currently being sorted.
- The Company recorded a consolidated net profit attributable to shareholders of $14.9 million or $0.18 per share for the quarter, compared to a net profit attributable to shareholders of $16.6 million or $0.20 per share in the fourth quarter of the prior year. Net profit from continuing operations attributable to shareholders (which now represents the "mining operations") was $12.1 million or $0.14 per share compared to $12.7 million or $0.15 per share in the comparable quarter of the prior year. Continuing operations includes all costs related to the Company's mining operations, including those previously reported as part of the corporate segment.
Annual Results Highlights:
Fourth Quarter and Fiscal 2013 Financial Summary from Continuing Operations
- Consolidated sales from continuing operations for the full financial year increased 19% to $345.4 million, compared to $290.1 million for the prior year. The increase in sales resulted from a 49% increase in volume of carats sold during the year, offset by a 20% decrease in achieved rough diamond prices.
- Rough diamond production for the calendar year 2012 increased 8% to 7.2 million carats compared to 6.7 million carats in the prior calendar year (on a 100% basis). The increase was due primarily to improved grades in each of the kimberlite pipes.
- The 49% increase in the quantity of carats sold was primarily the result of the decision by the Company to hold back some lower priced goods at October 31, 2011 due to an oversupply in the market at that time and the subsequent sale of almost all of these lower priced carryover goods during fiscal 2013.
- The 20% decrease in the Company's achieved average rough diamond prices during the fiscal year resulted from a combination of two factors: first, the sale of the lower priced goods originally held back in inventory by the Company at October 31, 2011; and second, a decrease in the market price for rough diamonds from the peak achieved in the prior year.
- Operating profit increased 27% to $47.7 million compared to an operating profit of $37.6 million in the prior year. Included in the operating profit for the prior year was a $13.0 million ( $8.4 million after tax) non-cash charge related to the de-recognition of certain assets associated with paste production at the Diavik Diamond Mine, which were no longer expected to be required for underground mining. Consolidated EBITDA from continuing operations rose 10% to $127.9 million compared to $116.3 million in the prior year.
- The Company recorded a consolidated net profit attributable to shareholders of $34.7 million or $0.41 per share for the year, compared to a net profit attributable to shareholders of $25.5 million or $0.30 per share in the prior year. Net profit from continuing operations attributable to shareholders was $22.3 million or $0.26 per share compared to $17.3 million or $0.20 per share in the prior year. Continuing operations includes all costs related to the Company's mining operations, including those previously reported as part of the corporate segment.
(US$ in millions except Earnings per Share amounts)
Three months Three months Twelve months Twelve months
ended ended ended ended
Jan. 31, 2013 Jan. 31, 2012 Jan. 31, 2013 Jan. 31, 2012
Sales 110.1 102.2 345.4 290.1
Operating Profit 21.0 24.0 47.7 37.6
shareholders 12.1 12.7 22.3 17.3
Earnings per share $0.14 $0.15 $0.26 $0.20