Doug Ashbury
Northern News Services

Yellowknife (Jun 28/00) - First-quarter carat values and carats sold were up, says Ekati diamond mine part owner Dia Met Minerals.

"It is extremely gratifying that Ekati's initial healthy performance has been maintained," Dia Met president James Eccott.

Dia Met owns 29 per cent of the mine at Lac de Gras.

"The mine has now established itself as a world-class asset by any standards with gross margin for the quarter of 69 per cent and a pre-tax profit margin of 60 per cent," he said.

In the first frame, Ekati produced 619,000 carats and sold 727,000 at an average price of $168 US. In the same quarter in the prior year, Ekati produced 576,000 carats with 463,000 carats sold at $145 US per carat.

The per carat rate is up 16 per cent from first- quarter 1999 to first-quarter 2000 and up 29 per cent from $130 US in the 1997 feasibility study.

Eccott adds the latest per carat values are among the highest for any kimberlite mine in the world.

"Ekati production has a number of very favourable characteristics. It includes a wide range of sizes and qualities of gem diamonds, making it less vulnerable to market fluctuations which can affect certain categories," he said.

"The bulk of the value is in white, commercial goods. Typically, these are I+ in colour and SI1+ in clarity. When polished, these are easily sold and are in high demand in the North American market."

In the quarter ended April 30, 2000, Dia Met share of the 727,000 carats sold translated to $52.3 million, of which $16 million covered cost of sales and $4.8 million went to depreciation and amortization. Equity in earnings was $31.5 million.

In first-quarter 1999, Dia Met's profit was $3.2 million. Quarter per share earnings were 43 cents compared to 11 cents.

At April 30, Dia Met's Ekati debt obligations were $183.4 million, down from $204.7 million three months earlier. Dia Met continues to apply its entire share of net after-tax cash flows to debt repayment -- a move practised since Ekati went into production in October 1998.

A change in accounting practices -- related to the timing of exploration expenses -- shaved $1.4 million off Dia Met's after tax earnings for the quarter.

Dia Met reorganized its Ekati investment under Dia Met Minerals (NWT) Ltd., a wholly-owned NWT subsidiary of Dia Met on June 2. This separates the company's investment in Ekati from other activities. As well as its stake in Ekati core zone, Dia Met is exploring in Mauritania, Greenland, Finland and other parts of Northern Canada.

By midday Monday, Dia Met stock was up 45 cents or 2.5 per cent to $18.20 in Toronto.