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RAPAPORT... Dominion Diamond Corporation reported that revenue improved 61 percent year on year to $175.5 million in the first quarter that ended on April 30. Cost of sales jumped 69 percent to $137.7 million and gross margin slipped to 21.6 percent compared with 25.1 percent one year earlier. During the quarter, the company sold 259,000 carats of rough diamonds from the Ekati diamond mine for $92.8 million, while it sold 582,000 carats from the Diavik mine for $82.7 million. The company reported profit of $10.7 million during the quarter, compared with $505.8 million one year earlier, which was higher due to the sale of Harry Winston Inc. Demand for rough diamonds during the period maintained strong momentum and rough diamond prices held steady, according to the company. The diamond market has also overcome earlier concerns about liquidity in the Indian diamond manufacturing industry and it has become increasingly evident that tighter credit will lead to more sustainable growth in both market demand and diamond pricing, the company noted. Polished sales have remained healthy with shortages still evident in the lower price ranges. The major retail jewelry markets remain upbeat with solid growth in the U.S. and in the market for jewelry in China, according to Dominion Diamond. The market in Japan was strong prior to the introduction of a new consumption tax in April. Robert Gannicott, the CEO and chairman of Dominion Diamond, said, "A year on from our purchase of the Ekati operation, we continue to improve ore production and recoveries as we develop new ore sources. The receipt of full operating permits for the Lynx open pit development in less than a year from application speaks better than words about the determination of a newly empowered government of the Northwest Territories to effectively manage through this transition and to support well planned resource development." During the first three month of the calendar year, Diavik produced 1.9 million carats, or the same volume as one year earlier. Processing, however, was 17 percent higher year on year due to improvements in mining rates as the underground ramp up progressed to full production from all three kimberlite pipes. It is anticipated that Diavik will produce 6.1 million carats of diamonds in 2014. The Ekati diamond mine produced about 400,000 carats during Dominion's fiscal quarter that ended on April 30. Activity centered upon the Fox open pit, Koala underground and pre-stripping operations at the Misery pushback open pit. The company recovered 100,000 carats from the Koala North and Koala underground mines and an additional 100,000 carats from the Misery South pipe and southwest extension. Those diamond recoveries were not included and are therefore incremental to production. The Ekati diamond mine anticipates producing approximately 900,000 carats during the fiscal year. But Dominion noted that production guidance will be reviewed at the end of the second quarter of fiscal 2015.
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