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Kimberley Diamonds Downgrades 2014 Guidance

May 12, 2014 2:52 AM   By Deena Taylor
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RAPAPORT... Kimberley Diamonds lowered its revenue forecast slightly for the fourth quarter and fiscal year that ends on June 30, 2014, following its unsuccessful negotiations to raise prices on its supply of fancy yellow diamonds to Tiffany & Co.

Kimberley Diamonds was seeking a price increase for its supply of fancy yellow diamonds that Tiffany's cutting and polishing subsidiary, Laurelton Diamonds, purchases. The increase was meant to help fund development at its Ellendale E9 pit and support  reopening  Ellendale E4 later this year.

As a result, the company lowered its fourth quarter guidance to revenue of $20 million from its previous guidance of $20.5 million. The forecast for earnings before tax and interest was lowered to $1.5 million from $5 million previously.

Kimberley Diamonds also said it will have to review its previous strategy and development plans beyond fiscal 2014, including recommissioning the Lerala diamond mine in Botswana, commencing alluvial operations at the Smoke Creek project and re-treatment of coarse tailings at Ellendale E9 between 2015 and 2017.

The company will also reconsider plans to cut and polish its rough diamond production in a move to help increase revenue and improve profit margins through value-added activity.  The company will update the market and provide guidance for 2015 in due course. 

Kimberley Diamonds suspended its shares on the Australian Stock Exchange on Thursday prior to the announcement. The shares fell 41 percent as trading resumed on Monday. 

Tags: Deena Taylor, Kimberley Diamonds, Laurelton Diamonds, Tiffany & CO., yellow diamonds
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