TORONTO (Reuters) - Dominion Diamond Corp DDC.TO, formerly known as Harry Winston Diamond Corp, on Thursday played down talk of possible acquisitions and said it is focused on developing promising assets around its newly acquired Ekati mine in northern Canada.
Shares of the miner, which reported a sharp increase in first-quarter profit late on Wednesday on the sale of its branded luxury business to Switzerland’s Swatch Group UHR.VX, rose 2.2 percent to C$15.66 by midday on Thursday.
Dominion has long been touted as a potential buyer of Rio Tinto’s (RIO.L) (RIO.AX) diamond business, including the company’s 60 percent stake in the Diavik diamond mine in the Northwest Territories, where Dominion owns the remaining share.
But Chief Executive Robert Gannicott made it clear on a conference call on Thursday that the company is only interested in a deal at the best possible price and on its terms.
“There’s no point in buying things just to have more diamonds,” he said. “If it’s not going to deliver profitability, then I‘m quite happy to stay where we are.”
Gannicott added that while Rio, which owns various diamond mines around the world, is looking to sell its diamond assets as a unit, Dominion is only interested in Diavik.
“We do not wish to purchase the entire unit, we’re very focused on the Northwest Territories - the place we know, the place we belong and the place we understand,” he said.
Dominion, which previously operated as a miner and retailer under the Harry Winston brand, struck a deal to buy Ekati from BHP Billiton (BLT.L) (BHP.AX) in November, betting that rising diamond prices could extend the life of that mine.
The company agreed in January to sell its jewelry business to Swatch and renamed itself Dominion Diamond.
Dominion said it is now reviewing the Ekati mine plan and budget as it looks to improve the performance of the asset.
The current mine plan calls for another seven years of production, but Dominion hopes to extend that with the development of the promising Jay deposit.
While the Jay pipe is large and very high-grade, it is located underneath a lake, making development economically and environmentally challenging.
For 2013, Dominion foresees production of some 1 million carats at the current Ekati mine.
Net profit was $500.2 million, or $5.82 per share, in the quarter ended April 30, the company said late Wednesday. The luxury group sale accounted for $497.6 million of that profit.
Excluding the sale and other one-time items, earnings were 3 cents a share, below analysts’ average forecast of 9 cents, according to Thomson Reuters I/B/E/S.
The company earned $11.6 million, or 14 cents a share, a year earlier. Sales rose 22 percent to $108.8 million with the addition of rough diamonds from the Ekati mine.
Dominion said prices have stabilized for both rough and polished diamonds as a result of improved market conditions. It said higher-quality, larger stones sold well at a recent show, with less demand for smaller stones used in watches.
Additional reporting by Allison Martell; Editing by John Wallace and Chris Reese