It’s been a turbulent year for Dominion Diamond
(TSX: DDC; NYSE: DDC).
2015 was always expected to be a transitional year for the miner: At its 88.9% owned Ekati mine, the company knew it would be mining lower grade ore before starting to mine the extremely rich Misery Main pipe in 2016 (Dominion’s fiscal 2017).
But a slide in diamond prices combined with lower than expected quality diamond production from the Misery Southwest Extension at Ekati, and demands by activist shareholders near the end of the year all ramped up the challenges for the miner.
The company reported a net loss of US$34.9 million or 41¢ per share in its fiscal fourth quarter, ended Jan. 31, 2016, compared with a loss of US$2.2 million in the same quarter a year earlier.
Part of the wider loss was due to rough diamond prices. For the year, prices were down 10% for Dominion – in the fourth quarter alone, they dropped by 5%.
Adding to the loss was a US$19.8 million inventory impairment recorded on “work in progress” inventory at Ekati, due to lower than expected quality of material being mined from Misery Southwest. Estimated prices for goods from the Misery Southwest Extension were lowered to US$40-55 per carat from a modeled price of US$70.
Read the entire story at www.NorthernMiner.com/stock-markets-investing/tough-year-tests-dominion