Dia Met shines
Earnings help company pay down Ekati debt
Yellowknife (May 08/00) - A full year of production at Ekati diamond mine has put quite a shine on Dia Met Minerals.
The Kelowna, B.C.-based company has reported net earnings of $47.5 million on its share of sales of diamonds produced at Ekati, located 280 kilometres northeast of Yellowknife. Dia Met owns 29 per cent of Ekati.
That translates to earnings of $1.56 per share compared to a loss of 21 cents a share in 1998.
In total, Ekati produced 2.51 million carats of diamonds for the fiscal year that ended Jan. 31, 2000. Sales of 2.24 million carats of diamonds, at an average price of $168.05 per carat. Carat value was 29 per cent higher than the amount forecast in the mine's 1997 feasibility study.
After deductions from Dia Met's share of total diamond sales, $161.2 million, the company realized equity in earnings of $99.8 million.
The strong earnings are partly due to the value of the diamonds produced at the mine.
"If you compare Ekati with almost any other hard-rock diamond mine worldwide, the value per carat we achieved is clearly at the high end of the scale," said Dia Met president and CEO James Eccott in a statement announcing the earnings.
The gems produced at the mine have excellent clarity, colour and size and distribution in the kimberlite from which they are mined.
With a strong world market for diamonds continuing, the company expects good things to continue into 2001.
Instead of using the earnings for other purposes, Dia Met is pumping its net after-tax cash from the mine into paying down its share of the Ekati debt.
As a result, that debt has been cut by more than one-quarter, $71.5 million. Since the year end, Dia Met has made a further repayment of $24.1 million toward its debt obligation.
"It's a conservative approach but we feel it's the right approach," said Dia Met vice-president of corporate development Gerald Prosalendis.
He said the company now expects to extinguish its debt on the mine in three years.
Eccott said the earnings are a solid base for the company to grow into the future.
"With many years of profitable production ahead, Ekati ... provides us with a solid foundation for long-term growth.
"We intend to lay out a clear and aggressive plan to build on this foundation in the months ahead," said Eccott in a statement announcing the earnings.
That includes continuing to explore its Ekati holdings as well as new site on Victoria Island, Nunavut, in Mauritania (Africa) and other sites around the world.