Dominion Diamond Sees Diamond Price Increase, Has Eyes on Diavik



Dominion Diamond Corp., formerly known as Harry Winston, has seen diamond prices rise over the last few months, and predicts they will continue to increase over the next year. 

While the company saw overall diamond prices decrease this year, it also found that prices rose 9 percent since August, and 6 percent in the current quarter, according to James R. W. Pounds, the company’s executive vice president, in a conference call following the release of its financial results.

He said he expects prices to plateau over the next couple of months, and then possibly increase again by the end of the year.

He noted that diamond demand remains uneven in India and China, but said the company is seeing “upbeat trends” in the United States, with strong indications that the American distribution channels were consolidating.

“Larger players now dominate what was once a fragmented market,” he said.

Company executives also dropped numerous hints they have their eyes on buying the rest of the Diavik mine, after purchasing nearby Ekati. The company currently owns 40 percent of Diavik, and the remainder is currently being offered for sale by owner Rio Tinto.

CEO Bob Gannicott talked at one point about possible benefits that could occur if Ekati and Diavik “were to come under common ownership.” Later, he added that it “was not clear at this time” whether Dominion would acquire Diavik.

The company completed the sale of its Harry Winston luxury brand division to Swatch this month. “That sales transaction brought us closer to the Swatch Group,” Gannicott said. “We contemplate a diamond supply relationship going forward.” 

Dominion said it expects to close its purchase of the Ekati diamond mine by April 10.

The company also reported mixed financial results.

Results from the fourth quarter of fiscal 2012 (ended Jan. 31):

  • Consolidated sales from continuing operations: Up 8 percent, to $110.1 million
  • Operating profit from continuing operations: Down 12 percent to $21.0 million
  • Consolidated EBITDA from continuing operations: Down 6 percent to $45.3 million 
  • Rough diamond production: Up 19 percent to 1.9 million carats

Results from the 2012 fiscal year:

  • Consolidated sales from continuing operations: Up 19 percent to $345.4 million
  • Rough diamond production: Up 8 percent to 7.2 million carats  
  • Operating profit: Up 27 percent to $47.7 million   
  • Consolidated EBITDA from continuing operations: Up 10 percent to $127.9 million  

JCK News Director