SOMBA K'E/YELLOWKNIFE
Dominion Diamond Corporation's fourth-quarter and 2016 earnings are a mixed bag of success and underwhelming numbers from the Ekati and Diavik mines.

Overall, from November to January, the company sold 1.4 million carats, up from 1.1 million carats the year before, mainly thanks to rough diamonds from Misery Main ore on the Ekati property. But the monetary value of those diamonds fell - sales dropped by US$48.2 million.

The amount of carats recovered - especially at Ekati - soared. During the fourth fiscal quarter, the mine recovered a record 2.3 million carats from one million tonnes of ore, nearly double the amount recovered last year.

The fiscal results were released on Feb. 22.

Despite the growth in sales, Dominion stated in a news release the fire at the Ekati processing plant last summer left the company with fewer goods for the market. Dominion also blamed the demonetization of the Indian rupee in November for lackluster margins. The move led to a cash shortage in one of the biggest diamond markets in the world, bringing demand for lower priced, rough diamonds to a "standstill," which isn't expected to rebound until fall. The market for higher priced rough diamonds, however, has been less disrupted.

Dominion CEO Brendan Bell declined to comment.

Tom Hoefer, executive director of the NWT & Nunavut Chamber of Mines, called the changing market for diamonds a challenge for the industry.

"We know that we're in a fragile situation right now," he said. "We've had sort of balls coming at us from left field for the last few years, with surprises in the global economy."

Hoefer told Yellowknifer that diamonds are a unique product, as demand will spike for higher quality diamonds while at other times, people flock to the lower value variety.

"So you're kind of juggling this variable product with quite a variable marketplace that is quite unlike gold or base metals," he said.

Dominion will also adjust products on offer to reflect demand. Last year, for example, Dominion held back lower-than-average priced diamonds due to a "weakened diamond market." This ended up artificially lowering the carat-sold figures for last year.

"I think they're like wheat farmers," explained Hoefer. "If the prices are down, the farmers put their grain in silos and wait till the next year, hoping that the market will change. When you've got a supply of diamonds, you have an ability to decide when and where you sell them."

Looking forward, Dominion estimates it has approximately 0.3 million tonnes of ore from Ekati's Misery Main and Koala pits in stockpiles currently, which could positively affect the outcome for the first fiscal quarter of 2018.

As well, the Fox Deep Drilling Program feasibility study is also expected to be completed in 2018.

"What's encouraging is they're continuing to explore on it, deeper down, which says that they're getting some value out of it. If they weren't, they would not do it," said Hoefer. "So the more value they can sort of wring out of all of these deposits the better it is for the mine, the better it is for the NWT."

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