Included in the consolidated net loss attributable to shareholders for the quarter were $5.4-million in after-tax restructuring costs for the Antwerp, Belgium, office and $10.6-million of expenses related to cancelling the credit facilities that had been previously arranged in connection with the Ekati diamond mine acquisition.
Excluding these two items and the impact of the sale of opening acquisition inventory, which was included at market value in Ekati's cost of sales, the company's estimated consolidated net profit attributable to shareholders for the quarter would have been $11.1-million, or $0.13 a share, below Wall Street analysts’ expectations of $0.18 a share.
For the quarter ended July 31, diamond sales exceeded expectations in a market the company said had “held its ground” during the last six months, despite the financial troubles facing India and China, which are significant diamond consumers.
Consolidated rough diamond sales from the Diavik and Ekati diamond mines, in Canada’s Northwest Territories, totalled $261.8-million, a sharp rise on the $61.5-million in revenues earned during the comparable quarter of the previous year.
Dominion recorded an operating profit of $12.4-million.
The miner said diamond market sentiment was mixed during the period.
The US remained a solid market and showed potential for stronger growth in the second half of the financial year. Demand from the US retail market remained focused on the mid-range of polished diamonds, where prices remained stable throughout the quarter.
Japan also saw significant growth in jewellery demand as economic stimulus bolstered retail activity. However, restricted demand for higher-end polished diamonds, especially from China, had led to discounting in these ranges.
Nevertheless, levels of retail diamond stock in China were low and the diamond market expected an improvement in the third financial quarter as the market fundamentals return to more normal levels.
Further, the market remained cautious owing to continued concerns about macroeconomic uncertainty combined with worsening economic conditions in India related to the weakening of the rupee and tightened liquidity.
Dominion said the rough diamond market had mirrored the polished diamond market with activity centered on lower price ranges, while the market for higher-end diamonds remained flat. Towards the end of the quarter, it was evident that there was a shortage of supply in the lower price ranges of rough diamond inventory and it was expected that there would be upward pressure on the price of these goods as polishers restock.
The rough diamond market expected the second half of the year to see a return to more normal trading conditions and anticipated a resurgence in demand in the lead-up to the Asian wedding and year-end holiday seasons.
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