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Dominion Sales Fall After Ekati Fire

Feb 23, 2017 4:33 AM   By Rapaport News
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Annual sales at Dominion Diamond Corporation slumped 21 percent due to a fire at one of its mines and sluggish demand for smaller rough stones, the company said Wednesday.

Revenue slid to $570.9 million in the fiscal year that ended January 31, the Canada-based miner said in a statement. By volume, rough sales increased 61 percent to 6.6 million carats, with the average selling price plummeting 51 percent to $87 per carat.

Fewer goods were available for sale because of the blaze at the Ekati mine in June, which led to the processing plant shutting down for three months. Revenue slid 29 percent in the third quarter and 27 percent in the fourth quarter, largely as a result of the disruption.

Demand for lower-quality rough was also negatively affected by the Indian government’s decision to invalidate INR 500 and INR 1,000 currency notes in November, sapping liquidity from medium-size and smaller diamond companies.

“Much of the manufacturing sector that focuses on lower-price rough diamonds was brought to a standstill by demonetization,” Dominion explained.

The company expects the policy will continue to strain the Indian retail jewelry market in the short term, but has projected that demand will return to normal in this sector by fall of this year.

Production at Ekati rose 40 percent to 5.2 million carats during the year, exceeding the company’s projection of 4.7 million carats following the fire. Wednesday’s statement forecast that the mine’s output would rise to between 6.3 million and 7 million carats in the fiscal year ending January 31, 2018.

Dominion owns the Ekati mine outright and also holds a 40-percent share in the Diavik mine in Canada in a joint venture with Rio Tinto. Production at Diavik is projected to increase by up to 14 percent, for a total of 7.1 million to 7.6 million carats in 2017, Dominion said last month.

The results come as Dominion chief executive officer Brendan Bell prepares to leave his position by June 30. For personal reasons, Bell chose not to join the company in its head-office move to Calgary from Yellowknife.
Tags: Brendan Bell, Canada, Diavik, Dominion, Dominion Diamond Corporation, ekati, mining, Rapaport News, Rio Tinto, Rough Diamonds, Rough Production
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