Dominion Diamond Corporation reporting its operational and financial results for the three and six months ended July 31, 2017 (H1 fiscal 2018 and Q2 fiscal 2018 respectively), at the outset stated that the strategic review undertaken by the Company was completed; and at the end of this, it had entered into an agreement to be acquired by The Washington Companies (Washington).

“An entity affiliated with Washington will acquire all of the Company’s outstanding common shares for $14.25 per share in cash pursuant to a plan of arrangement (the Arrangement) under the Canada Business Corporations Act,” Dominion announced.

Turning to its financial results, the Company noted that a “rebound in demand for lower-value diamonds” had contributed to the improvement in its financial performance.

Sales for Q2 fiscal 2018 amounted to US$ 239.8 million as compared to sales worth US$ 160.0 million for the same period of the previous year. Sales for the six months ended July 31, 2017 amounted to US$ 450.8 million as against sales worth US$ 338.2 million notched in the same period of the previous year.

Consolidated net income attributable to shareholders in Q2 fiscal 2018, amounted to US$ 31.9 million, or US$ 0.39 per share. In the same period of the prior fiscal, the Company had reported a net loss amounting to US$ 37.9 million.

Dominion declared an adjusted EBITDA  of US$ 115.2 million and free cash flow of US$ 42.8 million in Q2 fiscal 2018, compared to US$ 38.6 million and (US$ 20.9) million, respectively, in Q2 fiscal 2017.

The Company reported a production increase of 72% to 2.6 million carats in Q2 fiscal 2018 from 1.5 million carats in Q2 fiscal 2017. This was “due to higher tonnes processed and a focus on high-grade Misery Main ore at the Ekati mine, with steady performance at the Diavik Diamond Mine (Diavik mine)”, the Company said.

The average price per carat sold fell to US$ 66 in Q2 fiscal 2018 compared to US$ 119 in Q2 fiscal 2017,  reflecting the improved demand for smaller diamonds and a higher proportion of diamonds sold from the Misery Main pipe at the Ekati mine, which has a relatively low price per carat yield  of diamonds.

“The sale of diamonds from higher-value kimberlite pipes at the Ekati mine, and an auction of approximately $19 million of high-value fancy coloured and large diamonds, contributed to a 50% increase in sales to $239.8 million and an increase of $36.8 million in gross margin to $37.7 million,” the Company said.  Dominion holds 10 sales per year and there were three sales in each of Q2 2018 and Q2 2017.

As at July 31, 2017, the Company had total unrestricted cash and cash equivalents of US$ 199.4 million, no debt and US$ 157.4 million available under its revolving credit facility.

“As expected, we continue to see the benefit of our transition to high-value production at Ekati, and stable performance at Diavik,” said Jim Gowans, Chairman of the Board. “The transaction that we announced in July with The Washington Companies will support continued mine development and operation, benefitting Dominion’s stakeholders over the long-term.”

 Fiscal 2018 sales are expected to be between US$ 895 and US$ 955 million.                    

“In connection with the Arrangement, the Company suspended the declaration and payment of dividends, and terminated the normal course issuer bid on July 15, 2017,” the Company said.