(IDEX Online) - Dominion Diamond Corporation reported a 17 percent rise in carats recovered to 2.15 million carats in the first quarter of fiscal 2018 from 1.83 million carats a year before.
This was largely due to production from the high-grade Misery Main pipe at the Ekati mine, with stable production at the Diavik mine for the three month period ending April 30.
A higher-value ore blend at Ekati continues to have positive impact on financial results, the firm said.
"The significant year-over-year improvement in sales, gross margin and Adjusted EBITDA is the result of our transition to high-value production at Ekati, and continued solid performance at Diavik," said Jim Gowans, Chairman of the Board.
"We are building upon the strong momentum that started at the beginning of this year, while advancing our project pipeline to support longer-term value generation. With Misery Deep now approved for construction, we will benefit from an enhanced mid-term production and cash flow profile, while continuing to optimize our operations and maximize the value of the diamonds we sell."
In diamond market outlook comments, the miner said it has "become more positive than in recent months and overall prices have improved from early fiscal 2018 levels after a slight dip associated with the residual effects of the November 2016 demonetization of the Indian rupee. In India, there has been a recovery of demand in the retail jewelry market following demonetization, and a noticeable rise in activity in the lower-end price ranges, notably from the larger jewelry chains. It is expected there will be a full return to normal trading activity as work resumes at the Indian diamond polishing factories after the May break. This is the most active time of year for purchases by the jewelry manufacturing segment, as it prepares for the end of year sales season.
"The diamond jewelry retail industry in the United States failed to meet market expectations in the first quarter of calendar 2017. The level of optimism in the market has since increased, except with regards to the outlook for the larger retailers. Traffic is less buoyant in the cheaper diamond ranges than at calendar year-end 2016, however, bridal goods have been more resilient, and the higher end of the market, while slow, is improving.
"The improvement in mainland Chinese demand early in the quarter has persisted and there is increased activity in Hong Kong and Macau, both of which had suffered a retail downturn in recent months.
"Between the February 2017 sale and the May 2017 sale, average prices have increased by 3 percent and 1 percent for the Ekati mine and Diavik mine, respectively. The increase in average prices reflects some recovery in demand for lower-priced rough diamonds following the Indian demonetization. Prices for higher-value goods were not as significantly impacted by demonetization and have remained relatively stable. While prices have not recovered as quickly for the smaller white goods, there has been more marked improvement in prices for brown goods, leading to a greater average price increase for the Ekati segment."