December 13, 2007 / 6:22 PM / 11 years ago

UPDATE 1-Harry Winston shares sink as posts loss, cuts div

(Adds stock performance. In U.S. dollars unless noted)

TORONTO, Dec 13 (Reuters) - Harry Winston Diamond Corp HW.TOHWD.N reported a loss for the third quarter due to the stronger Canadian dollar, and also slashed its dividend, prompting a drop in the stock on Thursday to its lowest level in four years.

The company, which until recently was known as Aber Diamond, cut its quarterly dividend to 5 cents a share from 25 cents a share.

It said it took a $40.6 million hit from a revaluation of future income taxes due to the Canadian currency’s 13 percent rise in the third quarter.

This pulled Harry Winston to a net loss of $7.4 million, or 13 cents a share, for the three months ended Oct. 31, compared with a profit of $18.8 million, or 32 cents a share, in the same period the year before. The results were released late on Wednesday.

The shares fell as much as 20 percent after the market opened on Thursday, before rebounding a bit.

Just after midday, the stock was down C$3.14, or 8 percent, at C$36.20 on the Toronto Stock Exchange.

In New York, where the stock began trading last month, Harry Winston was down 8.6 percent at $35.44.

Stripping out the foreign exchange loss, the company would have earned $33.2 million, or 57 cents per share, it said.

Harry Winston is 40-percent owner of the Diavik diamond mine in Canada’s Northwest Territories, and also owns the diamond retailer of the same name, which the former Aber bought last year.

The rest of Diavik is owned by Rio Tinto (RIO.AX), which operates the mine. Diavik produces around 10 percent of the global supply of rough diamonds.

Sales for the quarter rose 21.6 percent to $176.5 million, due largely to a 35 percent rise in mining revenues.

“As the diamond production from the Diavik mine increases, we are poised to take advantage of the growing global demand against a backdrop of diminishing world diamond supply,” Chief Executive Robert Gannicott said in a statement.

The company said that Rio had approved a two-year capital spending program to extend the mine underground and secure its life beyond 2020.

Harry Winston said it has extended it existing debt facilities to pay its remaining $218 million contribution to the project, having already paid $77 million. It said its dividend would stay at 5 cents a share for the duration of the construction period.

$1=$1.02 Canadian Reporting by Cameron French; Editing by Peter Galloway

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