Dominion Diamond Corporation yesterday made several announcements including those regarding its Jay Project, trial production at the Misery Main, company financials and the departure of its Chief Financial Officer, Ron Cameron.

 Jay Project

The Company announced that it would be moving ahead with the development of the Jay Project “based on the positive results of a feasibility study”. Subsequent to the study, a revised project schedule and life-of-mine plan had been drawn up, Dominion said.

The Jay Project is seen as “the most significant undeveloped kimberlite pipe deposit at Dominion’s majority-owned Ekati mine in Canada’s Northwest Territories”.

The Jay Project will use the existing Ekati mine infrastructure and the total development capital cost stands at US$ 647 million. “Development is expected to be funded from existing cash and internal cash flow,” the Company declared.

Further, this development would serve as a platform for future growth at Ekati, the Company averred, pegging the mine life extension to calendar 2033. This will open up further development opportunities.

“The Jay Feasibility Study has confirmed the economic and technical viability of the large-scale, high grade Jay Project, which is the most significant undeveloped deposit at the Ekati mine,” commented Brendan Bell, Chief Executive Officer. “With a revised project schedule and updated mine plan, this positive feasibility study sets out a clear long-term plan for Ekati.”

He added:  “Our strategy for the Ekati Mine is to develop new deposits in tandem with existing mining operations in order to increase the total value of the property. The decision to proceed with Jay, combined with our earlier decision to proceed with the Sable project where construction of infrastructure has begun, are major steps towards the execution of this strategy.” 

Misery Main Production Trial

Meanwhile, the production trial of the Misery Main, conducted in late May and early June, resulted in the recovery of approximately 130,000 carats. Upon sorting and valuation, the Company estimates the market price for the sample production at US$ 72 per carat. 

“We are extremely pleased with the results of the production trial at Misery Main, the highest value ore body on the Ekati property,” Bell remarked. “Confirmation of the average carat values for Misery Main, combined with additional confidence and definition on the development capital programme, has confirmed the strength of our mid-term cash flow.”

Capital Allocation Strategy

Dominion’s Board of Directors had undertaken a review “of possible initiatives to maximize shareholder value”, which was completed with its decision to proceed with the development of the Jay Project.

“After careful consideration, the Board has determined to continue to focus on the development opportunities at the Company’s core assets, including the Sable and Jay projects at Ekati and the A-21 pipe at Diavik, and to prioritise return of capital to shareholders,” the Company announced.  “The Company is therefore pleased to announce an update on its capital allocation strategy, which includes allocating capital to development projects and returning capital to shareholders through a share buyback programme. The company will also pursue the divestment of its Toronto office building.”

Commented Bell: “Our business is generating consistent and reliable cash flows which are strong enough to both fund our development opportunities and support a share buyback programme, and in the future, an enhanced dividend strategy.”

At the same time, the Company announced its intention to commence a normal course issuer bid (NCIB), subject to approval from the Toronto Stock Exchange (TSX). “The Company intends to apply for the right to purchase up to 6,150,010 of its common shares, representing approximately 7.2% of the currently issued and outstanding shares and 10% of the current public float, over a one-year period through the NCIB. All shares purchased through the NCIB will be subsequently cancelled,” Dominion said.

The sale of the Company’s 100 per cent owned office building located in downtown Toronto   is expected to occur in the third quarter of fiscal 2017.

Management Changes

Dominion also announced that the Company’s Chief Financial Officer, Ron Cameron, will leave Dominion effective July 15, 2016.  Cara Allaway, currently the Company’s Vice-President Group Controller, will fill the role on an acting basis till Dominion recruits a new CFO.