Dominion Diamond beats estimates, trading volume soars

Dominion Diamond (TSE:DDC) (NYSE:DDC) shares rose on Thursday after the diamond producer posted better-than-expected results for its fiscal 2015 first quarter.

For the three months to April 30, the world's third largest producer of rough diamonds by value reported a net profit of $14.67 million, or 17 cents per share, compared to $506.16 million, or 4 cents per share a year ago.

The Thomson Reuters consensus was for earnings of 11 cents.

Revenue grew to $175.52 million from $108.84 million, well topping the consensus estimate of $108.8 million.

The company said the first quarter marks the anniversary of the sale of its Harry Winston luxury business to the Swatch Group and the acquisition of the Ekati diamond mine in the Northwest Territories, in which it holds an 80% stake. It also has a 40% interest in the Diavik diamond mine in the same region.

Production at both mines during the quarter was substantially ahead of expectations, according to Dominion's statement.

"A year on from our purchase of the Ekati operation, we continue to improve ore production and recoveries as we develop new ore sources," said chairman and chief executive, Robert Gannicott.

"The receipt of full operating permits for the Lynx open pit development in less than a year from application speaks better than words about the determination of a newly empowered Government of the Northwest Territories to effectively manage through this transition and to support well planned resource development."

The company also noted that market sentiment is reflecting optimism of the U.S. retail market, with demand for diamonds continuing to be steady from China and picking up in India.

Dominion said that stronger-than-expected production at Ekati was due to utilizing the processing plant capacity to a maximum, as well as higher than expected grades in the reserve feed and an increase in diamond recovery due to improvements to the processing plant implemented over the last eight months.

Ore processing at the Diavik mine was 11% ahead of plan, the diamond producer said, as a result of greater ore availability, higher mining rates and improved equipment.

Dominion, which supplies rough diamonds to the global market through its sorting and selling operations in Canada, Belgium and India. Analysts at Barclays last month initiated coverage on the stock, setting an “equal weight” rating and a $14.00 price target.

Shares edged up 0.3% to C$14.74 on Thursday. The stock attracted significant volumes today, with approximately 454,896 shares changing hands, compared to the 30-day average volume of 128,905 shares.

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