Rough diamond production and sales have all exceeded plan.
The company recorded a third quarter consolidated net income attributable to shareholders of $25.5 million or $0.30 per share. For the nine months ended October 31, 2014, consolidated net income attributable to shareholders totaled $66.7 million or $0.78 per share.
Brendan Bell, Acting Chief Executive Officer stated: "While we continue to focus on the strategic development of our future resources, we are also taking a very disciplined approach to executing on our current mine plan. This disciplined approach is apparent in these strong results."
The company is pleased to announce that it intends to initiate a dividend following the release of its year-end results in April with the amount to be determined at that time.
Dan Jarvis, Acting Chairman stated: "This decision by the board is based on our confidence that we can both fund our expansion plans for the business as well as sustain regular distributions to our shareholders."
The U.S. market for diamond jewelry represents 40% of global consumption and anecdotal evidence of sales in the important fourth calendar quarter has been very encouraging, the miner said. Underlying demand for wedding jewelry on Mainland China remains strong.
However the overall macro-economic challenges facing both China and Japan have dampened market expectations. Rough diamond prices moderated during the quarter but the company's average rough diamond prices remained approximately 4% higher to the end of the third fiscal quarter, the firm added.
The company continues to deliver enhanced value from the Ekati Diamond Mine (in which the company owns an 88.9% interest) and the Diavik Diamond Mine (in which the company owns a 40% interest.
Diamond production at the Ekati Diamond Mine continued to exceed plan, driven by both higher than expected grades and operational improvements to the processing plant.
The company estimates that process plant improvements to date at the Ekati Diamond Mine have increased the recovered grade during the nine months ended October 31, 2014 by approximately 15% compared to the mine plan. The resulting additional diamonds are not currently included in the company's reserve statement and mine plan, and are therefore incremental to production.
During the quarter, physical modifications to the plant were substantially completed with commissioning expected to take place before the company's fiscal year-end. Once the process improvements have been completed, the company intends to incorporate these higher recovery rates into an updated reserve statement.
During the third quarter, the consolidated EBITDA margin has increased to 52% driven by increased diamond recoveries, increased efficiencies and careful control of costs. The EBITDA margin in the third quarter of the prior year was only 25% primarily as a result of the cost of sales at Ekati reflecting the purchase of inventory at market value as part of the Ekati Diamond Mine acquisition.
Stripping at the Misery pipe pushback is proceeding according to plan. A total of approximately $100 million of capital expenditure remains to be spent before the first ore from the Misery Main pipe, estimated at 4.0 carats per tonne and $105 per carat (as of January 31, 2014), is put through the processing plant in early calendar 2016.