Dominion Diamond Corporation Reports Fiscal 2014 Fourth Quarter and Year-End Results

April 02,2014

TORONTO, April 2, 2014 – Dominion Diamond Corporation (TSX: DDC, NYSE: DDC) (the “Company”) today announced its Fiscal 2014 Fourth Quarter and Year-End results for the period ended January 31, 2014.

Robert Gannicott, Chairman and Chief Executive Officer stated: “Our early experience at Ekati continues to exceed our expectations while Diavik also outperforms its planned targets. The diamond market has improved, both in pricing and volume of demand, as the important diamond consuming economies, led by the US, maintain momentum.”

Corporate

Fiscal 2014 was a year during which the Company transitioned into one of the world’s largest pure play diamond mining companies. During this period, the Company completed the sale of the Harry Winston luxury brand segment at an enterprise value of $1 billion (including the assumption of $250 million of pro forma net debt) and the acquisition of the Ekati Diamond Mine from a global mining company for whom diamonds were non longer a core asset. The Company paid a total of $553 million, for its interest in the Ekati Diamond Mine, which included $62 million of cash, $154 million of rough diamond inventory and $165 million of supplies (fuel, cement and other mining supplies).

The Diavik Diamond Mine, which is one of the highest grade diamond mines in the world, continues to deliver excellent results.

The Company’s senior management is completely focused on delivering value from the Ekati Diamond Mine, and the benefits of having the senior management team on hand in Yellowknife are already being demonstrated. Grade recovered is ahead of plan, and cash cost of production for the period from April 10, 2013, to January 31, 2014, which were originally forecast at $320 million, came in at $303 million.

At the beginning of calendar year 2016, the capital spending on the pushback at the Misery Main Pipe will be completed and this pipe will come into production; at over 4 carats per tonne at an average price of approximately $105 per carat, Misery Main is one of the richest kimberlite ore bodies in the world.

During this fiscal year the Company has expensed $10.1 million on the Jay Project which involves the development of the largest diamondiferous resource in North America. It has the potential to extend the operating life of the Ekati Diamond Mine in the order of 10 to 20 years beyond the currently scheduled closure in 2019. The development and mining of this kimberlite is the cornerstone of the Company’s strategy for building a long-term, sustainable Canadian diamond business.

We are pleased to welcome Fiona Perrot-Humphrey to our board of directors. Dr Perrot-Humphrey has a long history as a mining equity analyst in both South Africa and then London. She is currently a senior advisor to N.M. Rothschild in London.

Diamond Market

The first three months of calendar 2014 has seen an upturn in rough diamond prices of just over 7%. This growth is primarily the result of restocking in the US, the world’s largest market for diamond jewelry, following strong demand in the important US holiday season and strong demand in China, the world’s second largest consumer of diamond jewelry, in the period running up to Chinese New Year. Evidence suggests that jewelry sales are also increasing in India, another major consumer of diamond jewelry where sales had been weak in the past two years.

Fourth Quarter Summary

For the fourth quarter, Ekati recorded sales of $114.0 million, and incurred cash costs of production of $101.3 million. Total cost of sales for Ekati for the fourth quarter were $114.3 million.
For the fourth quarter, Diavik recorded sales of $119.2 million, and incurred cash costs of production of $43.3 million. Total cost of sales for Diavik for the fourth quarter were $87.7 million.

As at January 31 2014, the Company held cash and cash equivalents of $224.8 million and restricted cash of $113.6 million.

NT3