SOMBA K'E/YELLOWKNIFE
Dominion Diamond Corporation reported a pre-tax loss of US$11.6 million Wednesday in its year-end report, in part due to a weak demand for the gem.

An aerial view of Ekati Diamond Mine. Dominion Diamond, which has majority ownership of the mine, reported an US$11.6 million loss in its year-end report over lower value ore extracted from the mine and weak global demand for diamonds. - NNSL file photo

The loss is a sharp decline from a reported profit of US$170.3 million the previous fiscal year.

Dominion faced lower profits in the fiscal year ending Jan. 31 due to the lower value ore extracted at the Ekati mine northeast of Yellowknife, the company stated in a news release.

It expects that to change once work starts at its Misery Main kimberlite pipe in the second half of the fiscal year, CEO Brendan Bell stated in the report. That pipe is considered to have the richest ore body at the mine.

"Misery Main development remains on schedule and will provide significant cash flow," Bell stated.

Overall, the company reported US$720.6 million in sales over the fiscal year, down from US$915.8 million the year before.

As of Jan. 31, the company had about two million carats of rough diamond inventory ready for sale, with an estimated market value of US$106 million.

Looking ahead, the company noted it plans to publish a feasibility study in May of its Jay kimberlite pipe, following an environmental review by the Mackenzie Valley Environmental Impact Review Board that recommended the government approve the project. Production is expected to start in 2019 and is projected to extend mine operations by a decade to 2030.

The company also reported a nine per cent drop in processing volume in the final quarter of the fiscal year at Diavik Diamond Mine compared to the same time the year before as a result of maintenance shutdowns. Dominion noted its A-21 kimberlite project at Diavik remains on schedule. Diavik, a joint venture between Rio Tinto and Dominion, is expected to cease production in 2023.

The financial results come as Dominion and De Beers report improving market prices for rough diamonds. In December, De Beers Canada announced it would cease production at its unprofitable Snap Lake mine northeast of the city, laying off more than 430 people.

According to a news release Tuesday from De Beers, the price of polished diamonds had "firmed" in February compared to earlier sales because of retailers in the United States restocking on supplies and a shortage of cutting centres.

"So far, 2016 has seen significantly stronger rough diamond demand than that experienced at the end of 2015," stated Philippe Mellier, CEO of De Beers Group.

Tom Hoefer, with the NWT and Nunavut Chamber of Mines, stated in an e-mail there's been a slight uptick in rough diamond prices that's encouraging but it's hard to say if it represents a turnaround.

"We have had many surprises in the marketplace over the past year, and so it's a little dangerous to say for sure that this marks the turnaround, although we remain ever optimistic," Hoefer stated.

Gowans appointed as chairperson

The same day as it reported its financial results, Dominion announced the appointment of Jim Gowans as chairperson of the board of directors. He had been elected to the board Jan. 13.

"Jim's extensive knowledge of the global diamond industry and mining, coupled with his operating experience of working in Canada's North will complement the management team as we continue to realize the full potential of Dominion's world-class diamond assets," Bell stated.