Dominion Diamond Announces Fiscal 2018 Guidance: Strong Sales and Adjusted EBITDA Driven by High Value Ekati Production and Solid Performance at Diavik
16 March 2017
YELLOWKNIFE, NT (March 16, 2017) – Dominion Diamond Corporation (TSX: DDC, NYSE: DDC) (the “Company” or “Dominion”) today released its guidance for sales, Adjusted EBITDA(1), unit operating costs, and capital and exploration expenditures for fiscal 2018 (ending January 31, 2018). All amounts are in US dollars unless otherwise noted. An exchange rate of 1.33 CDN$/US$ was used for costs denominated in Canadian dollars.
- Sales are expected to be between $875 and $975 million, an increase of 62% compared to fiscal 2017 sales, assuming the mid-point of fiscal 2018 guidance is achieved.
- Adjusted EBITDA is forecast to be between $475 and $560 million, reflecting a high margin ore mix, combined with ongoing cost containment and efficiency initiatives.
- The cash cost of production(2) is expected to be between $70 and $80 per tonne processed and between $35 and $40 per carat produced.
- Growth capital expenditures are expected to total between $115 and $140 million, demonstrating a commitment to investment in growth. Sustaining capital expenditures, including capitalized production stripping, are expected to total between $160 and $190 million.
- The production guidance released earlier this year is reaffirmed for the Ekati Diamond Mine and Diavik Diamond Mine. Combined production at the Ekati mine (100% basis, fiscal 2018) and the Diavik mine (40% share, calendar 2017) is expected to be between 9.1 and 10.0 million carats.
- Opportunities exist to enhance the medium and longer-term production profile at Ekati, including the potential development of the Misery Deep and Fox Deep projects, for which pre-feasibility studies are currently underway.
“We continue to execute on our long-term strategic plan and to deliver results. Our strong sales and Adjusted EBITDA forecasts for fiscal 2018 are driven by high value production from Koala and Misery Main, as Ekati moves to the first full year of the new phase of the mine plan,” said Jim Gowans, Chairman of the Board of Directors. “The cash flow generated by Ekati and Diavik during this period is expected to be ample to fund our pipeline of attractive growth projects and a renewed focus on exploration.”
The Company continues to deliver on its production plan and to advance several projects at Ekati, in addition to the A-21 project at Diavik. The Jay project is in the final stage of permitting, with the water license expected this summer. In addition to the Jay project and greenfield exploration, a number of near- term and longer term development opportunities are being advanced in fiscal 2018 at the highly prospective Ekati property.
- Lynx project: Commercial production of high value carats is expected in fiscal 2018.
- Sable project: First production of high value carats is anticipated in fiscal 2020.
- Misery Deep project: A pre-feasibility study is being completed on the development of an underground operation below the final profile of the planned open pit. The study is focused on the processing of additional high value ore from the Misery pipe, and a positive outcome could lead to the recovery of carats beyond fiscal 2020, enhancing the production profile at Ekati. Completion of the pre-feasibility study is expected in the second quarter of fiscal 2018.
- Fox Deep project: As disclosed in the news release of February 22, 2017, based on encouraging bulk sample results from the previously-mined Fox open pit, a pre-feasibility study is underway to examine the economics of an underground mine below the large open pit. As of July 31, 2016, the Fox kimberlite pipe had an indicated resource of 35.2 million tonnes containing 11.6 million carats. A resource update is expected in the current fiscal quarter. The pre-feasibility study is scheduled to be completed in late fiscal 2018.