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LONDON, UK / ACCESSWIRE / April 18, 2017 / Active Wall St. announces its post-earnings coverage on Dominion Diamond Corp. (NYSE: DDC). The Company posted its fourth quarter and fiscal 2017 financial results on April 12, 2017. The diamond mining Company reiterated its outlook for FY18. Register with us now for your free membership at: http://www.activewallst.com/register/.
One of Dominion Diamond's competitors within the Nonmetallic Mineral Mining space, Alliance Holdings GP, L.P. (NASDAQ: AHGP), is expected to report its fiscal quarter ending March 2017 earnings results on May 01, 2017 before market open. AWS will be initiating a research report on Alliance Holdings GP following the release of its next earnings results.
For the three months ended January 31, 2017, Dominion reported revenue of $129.9 million as compared to revenue of $178.1 million in Q4 FY16.
Dominion reported Q4 FY17 income before income taxes of nil compared to loss of $27.9 million in Q4 FY16. The Company reported consolidated net income attributable to shareholders of $5.6 million, or $0.07 per share. During the reported quarter, foreign currency exchange rate fluctuations resulted in a decrease of $7.1 million, or $0.09 per share, in the Company's net income tax expense.
For the full fiscal year, the Company reported a loss before income taxes of $40.7 million compared to loss of $11.6 million in FY16 and consolidated net income attributable to shareholders of $0.2 million, or nil per share.
Mining Operations Review
During Q4 FY17, Dominion's Ekati mine recovered a record 2.3 million carats from 1.0 million tonnes processed compared to 1.2 million carats recovered from 0.9 million tonnes processed in Q4 FY16. Carat production increased by 93% in the reported quarter compared to the same period in the prior year, due to the positive impact of the processing of a large proportion of high grade Misery ore.
For the Ekati mine, commissioning of the fines dense media separation (Fines DMS) plant, which increases the recovery of smaller diamonds, was completed on budget and on schedule in Q4 FY17, and ramp up to full production is expected by the end of Q1 FY18. The Fines DMS plant has a design capacity of 1,800 tonnes per day, and is currently operating at a rate of over 1,000 tonnes per day. Dominion also stated that a new collective agreement has been ratified by the union representing workers at the Ekati mine. The new agreement expires in 2019.
During Q4 FY17, Dominion's Diavik mine processed volumes of 0.54 million tonnes, 16% higher than in the same quarter of the prior year due to the extended planned maintenance shutdown in the processing plant during Q4 FY15. 1.65 million carats were recovered at the Diavik mine in Q4 FY17, a 10% increase from the same quarter of the prior year, reflecting higher processing volumes that were partly offset by lower recovered grade.
Adjusted EBITDA, Cash Flow and Balance Sheet
For Q4 FY17, Dominion's adjusted EBITDA of $62.7 million increased by 28% on a y-o-y basis due to the availability for sale of diamonds from high-grade Misery Main ore. In FY17, the Company's adjusted EBITDA was $182.2 million, a decrease of 17% from FY16 and was negatively affected by the process plant fire at the Ekati mine in June 2016, and the carry-over of lower average value goods from fiscal 2016. Adjusted EBITDA includes $44.5 million in mine standby costs, which were expensed following the Ekati mine process plant fire, but does not include the impact of significant non-cash costs in the fourth quarter which impacted gross margins.
During Q4 FY17, Dominion's free cash flow was negative $19.6 million compared to positive free cash flow of $27.5 million in Q4 FY16. Free cash flow reflected capital expenditures of $67.2 million, partly offset by positive operating cash flow of $47.6 million. In the reported quarter, capital expenditures included significant investments in the Sable project at the Ekati mine and the A-21 project at the Diavik mine.
As at January 31, 2017, Dominion had total unrestricted cash and cash equivalents of $136.2 million, restricted cash of $65.7 million and an undrawn availability of $210 million under its corporate revolving credit facility. Debt was $10.6 million as of January 31, 2017.
On April 12, 2017, Dominion declared a dividend of $0.20 per share to be paid in full on June 05, 2017, to shareholders of record at the close of business on May 17, 2017.
Fiscal 2018 Guidance
For FY18, Dominion is forecasting sales to be in the range of $875 million and $975 million and is expected to benefit from the focus on high value ore processed from the Misery Main and Koala underground pipes at the Ekati mine. The Company is expecting adjusted EBITDA to be between $475 million and $560 million, reflecting a high margin ore mix, combined with ongoing cost containment and efficiency initiatives, including reduced energy consumption and continued implementation of the long haulage strategy at the Ekati mine, with the addition of two high capacity road trains.
The average price per carat sold is expected to range from $70 to $90 per carat. The upper end of the range reflects the potential for a larger proportion of sales of higher value diamonds, while the lower end of the range reflects the potential for a higher proportion of sales of lower quality stones.
On Monday, April 17, 2017, the stock closed the trading session at $12.68, slightly up 0.96% from its previous closing price of $12.56. A total volume of 295.41 thousand shares have exchanged hands. Dominion Diamond's stock price surged 43.76% in the last month, 26.93% in the past three months, and 42.79% in the previous six months. Furthermore, since the start of the year, shares of the Company have rallied 30.99%. The stock currently has a market cap of $1.06 billion and has a dividend yield of 3.15%.
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