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Dominion Diamond Corporation Reports Fiscal 2013 Fourth Quarter and Year-End Results.

TORONTO, April 4, 2013 /PRNewswire/ —

Dominion Diamond Corporation (TSX:DDC), (NYSE:DDC) (the
“Company”) today announced its fourth quarter and year-end
results for the period ending January 31, 2013.

Robert Gannicott, Chairman and Chief Executive Officer, stated:
“The last year, and this first quarter, has been a time of great
positive change for the Company, including changing its very identity to
“Dominion Diamond Corporation”. This change reflects a focus
on the production, sorting and sale of diamonds from Northern Canada, a
region that we know and understand well. The acquisition of the Ekati
Mine, and its operating team, is expected to close next week giving us
operational control of both a producing mine and development
opportunities in the large scale resources on the Ekati property.
Together with our exploration acreage adjacent to the Ekati and Diavik
properties, this positions us from grass-roots exploration through
development opportunities. We also become the largest supplier of
Canadian diamonds sold through an expert sorting and marketing chain
that we have perfected through the years of Diavik production.”

Fourth Quarter Highlights:

Corporate

* The sale of the Company’s Luxury Brand Segment, Harry
Winston, Inc., to The Swatch Group Ltd. was completed on March 26, 2013.
As part of the closing of the transaction, the Company’s name was
changed to Dominion Diamond Corporation, and its common shares now trade
on both the Toronto and New York stock exchanges under the symbol DDC.
As a result, the Company’s consolidated results from continuing
operations relate solely to its mining operations, which include the
production, sorting and sale of rough diamonds. The results of the
Luxury Brand Segment are treated as discontinued operations for
accounting and reporting purposes and current and prior period results
have been adjusted accordingly.

* During the quarter, the Company entered into share purchase
agreements with BHP Billiton to purchase all of BHP Billiton’s
diamond assets, including its controlling interest in the Ekati Diamond
Mine as well as the associated diamond sorting and sales facilities in
Yellowknife, Canada, and Antwerp, Belgium for an agreed purchase price
of $500 million. The transaction is currently expected to close on or
about April 10, 2013. In connection with this acquisition, the Company
has also arranged new secured credit facilities consisting of a $400
million term loan, a $100 million revolving credit facility (of which
$50 million will be available for purposes of funding the Ekati
acquisition) and a $140 million letter of credit facility (expandable to
$265 million in aggregate). These new facilities would replace the
Company’s current $125 million facility with Standard Chartered
Bank.

Diamond Market

* During the fourth quarter of fiscal 2013, the retail jewelry
market improved in almost all areas, led by Diwali and the wedding
season in India, followed closely by a positive US year-end holiday
season and improved consumer demand in China, which regained momentum in
advance of the Lunar New Year. Rough diamond supply was impacted by
delivery problems at certain diamond mines combined with lower than
expected Russian rough diamond supply. The tight supply coupled with a
more active polished market helped improve rough prices during the
quarter.

Q4 Results Highlights

* Consolidated sales from continuing operations increased 8% to
$110.1 million for the fourth quarter compared to $102.2 million for the
comparable quarter of the prior year. The increase in sales resulted
from an 11% increase in achieved rough diamond prices due to an improved
sales mix, partially offset by a 3% decrease in volume of carats sold
during the quarter.

* Operating profit from continuing operations decreased 12% to $21.0
million compared to an operating profit of $24.0 million in the
comparable quarter of the prior year. Consolidated EBITDA from
continuing operations decreased 6% to $45.3 million compared to $48.3
million in the comparable quarter of the prior year.

* Rough diamond production during the fourth calendar quarter
increased 19% to 1.9 million carats, compared to 1.6 million carats for
the fourth calendar quarter of last year (on a 100% basis). The increase
was primarily due to improved grades in each of the kimberlite
pipes.

* The Company had 0.5 million carats of rough diamond inventory with
an estimated current market value of approximately $65 million at
January 31, 2013, of which approximately $25 million represents rough
diamond inventory available for sale, with the remaining $40 million
currently being sorted.

* The Company recorded a consolidated net profit attributable to
shareholders of $14.9 million or $0.18 per share for the quarter,
compared to a net profit attributable to shareholders of $16.6 million
or $0.20 per share in the fourth quarter of the prior year. Net profit
from continuing operations attributable to shareholders (which now
represents the “mining operations”) was $12.1 million or $0.14
per share compared to $12.7 million or $0.15 per share in the comparable
quarter of the prior year. Continuing operations includes all costs
related to the Company’s mining operations, including those
previously reported as part of the corporate segment.

Annual Results Highlights:

* Consolidated sales from continuing operations for the full
financial year increased 19% to $345.4 million, compared to $290.1
million for the prior year. The increase in sales resulted from a 49%
increase in volume of carats sold during the year, offset by a 20%
decrease in achieved rough diamond prices.

** Rough diamond production for the calendar year 2012 increased 8%
to 7.2 million carats compared to 6.7 million carats in the prior
calendar year (on a 100% basis). The increase was due primarily to
improved grades in each of the kimberlite pipes.

** The 49% increase in the quantity of carats sold was primarily the
result of the decision by the Company to hold back some lower priced
goods at October 31, 2011 due to an oversupply in the market at that
time and the subsequent sale of almost all of these lower priced
carryover goods during fiscal 2013.

** The 20% decrease in the Company’s achieved average rough
diamond prices during the fiscal year resulted from a combination of two
factors: first, the sale of the lower priced goods originally held back
in inventory by the Company at October 31, 2011; and second, a decrease
in the market price for rough diamonds from the peak achieved in the
prior year.

* Operating profit increased 27% to $47.7 million compared to an
operating profit of $37.6 million in the prior year. Included in the
operating profit for the prior year was a $13.0 million ($8.4 million
after tax) non-cash charge related to the de-recognition of certain
assets associated with paste production at the Diavik Diamond Mine,
which were no longer expected to be required for underground mining.
Consolidated EBITDA from continuing operations rose 10% to $127.9
million compared to $116.3 million in the prior year.

* The Company recorded a consolidated net profit attributable to
shareholders of $34.7 million or $0.41 per share for the year, compared
to a net profit attributable to shareholders of $25.5 million or $0.30
per share in the prior year. Net profit from continuing operations
attributable to shareholders was $22.3 million or $0.26 per share
compared to $17.3 million or $0.20 per share in the prior year.
Continuing operations includes all costs related to the Company’s
mining operations, including those previously reported as part of the
corporate segment.

Fourth Quarter and Fiscal 2013 Financial Summary from Continuing
Operations

(US$ in millions except Earnings per Share amounts)

                        Three months  Three months  Twelve months Twelve
months
                           ended         ended         ended
ended
                       Jan. 31, 2013 Jan. 31, 2012 Jan. 31, 2013 Jan.
31, 2012
    Sales                  110.1         102.2         345.4
290.1
    Operating Profit        21.0          24.0          47.7
37.6
    Net Profit
    attributable to
    shareholders            12.1          12.7          22.3
17.3
    Earnings per share     $0.14         $0.15         $0.26
$0.20 

Outlook

A new mine plan and budget for calendar 2013 has been approved by
Rio Tinto plc and the Company. The plan for calendar 2013 foresees
Diavik Diamond Mine production of approximately 6 million carats from
the mining and processing of approximately 1.6 million tonnes of ore
with a further 0.2 million tonnes processed from stockpile ore. Mining
activities will be exclusively underground with approximately 0.7
million tonnes expected to be sourced from A-154 North, approximately
0.5 million tonnes from A-154 South and approximately 0.4 million tonnes
from A-418 kimberlite pipes. Included in the estimated production for
calendar 2013 is approximately 0.6 million carats from RPR and 0.1
million carats from the improved recovery process for small diamonds.
These RPR and small diamond recoveries are not included in the
Company’s reserves and resource statement and are therefore
incremental to production.

The development of A-21, the last of the Diavik Diamond Mine’s
kimberlite pipes in the original mine plan, has been deferred due both
to the current diamond market conditions and the decreased urgency of
development following the identification of extensions to the existing
pipes. Although these extension areas cannot be categorized as ore at
this time due to insufficient definition work, the Company expects the
life of the existing developed pipes will be extended, thereby deferring
the need for production from A-21 to keep the processing plant full. The
A-21 pre-feasibility study currently being undertaken assumes that the
A-21 pipe will be mined with the open pit methods used for the other
pipes. A dike would be constructed similar to the two other pits but
smaller in size. Detailed plans are still being refined and optimized
although no underground mining is currently envisaged.

Conference Call and Webcast

Beginning at 8:30AM (ET) on Thursday, April 4th, the Company will
host a conference call for analysts, investors and other interested
parties. Listeners may access a live broadcast of the conference call on
the Company’s investor relations web site at http://www.ddcorp.ca
or by dialing 800-299-8538 within North America or 617-786-2902 from
international locations and entering passcode 80556554.

An online archive of the broadcast will be available by accessing
the Company’s investor relations web site at http://www.ddcorp.ca A
telephone replay of the call will be available one hour after the call
through 11:00PM (ET), Thursday, April 18th, 2013 by dialing 888-286-8010
within North America or 617-801-6888 from international locations and
entering passcode 39398597.

About Dominion Diamond Corporation

Dominion Diamond Corporation is focused on the mining and marketing
of rough diamonds to the global market from attractive operating mine
assets that present low political risk. Our business encompasses 40% of
the Diavik Diamond Mine in Canada’s Northwest Territories and rough
diamond sorting and sales operations in Canada, Belgium and India. The
Company is in the process of purchasing an 80% interest in the Ekati
Diamond Mine, also located in the Northwest Territories of Canada, as
well as a control interest in surrounding areas containing significant
prospective resources. The Company expects the closing of the
transaction will occur on or about April 10, 2013.

For more information, please visit http://www.ddcorp.ca

FOURTH QUARTER RESULTS

During the quarter, Dominion Diamond Corporation (the
“Company”) announced that it had entered into an agreement to
sell its luxury brand diamond jewelry and timepiece division, Harry
Winston, Inc. (the “Luxury Brand Segment”) to The Swatch Group
Ltd. (“Swatch Group”). The sale transaction was completed on
March 26, 2013. As a result of the sale, the Company’s corporate
group underwent name changes to remove references to “Harry
Winston”. The Company’s name has now been changed to
“Dominion Diamond Corporation” and its common shares trade on
both the Toronto and New York stock exchanges under the symbol
“DDC”. See “Discontinued Operations”. Accordingly,
the Company’s consolidated results are supported from continuing
operations, which no longer include the operations of the Luxury Brand
Segment and the results of this segment are now treated as discontinued
operations for reporting purposes. Current and prior period results have
been restated to reflect this change.

The Company recorded a consolidated net profit attributable to
shareholders of $14.9 million or $0.18 per share for the quarter,
compared to a net profit attributable to shareholders of $16.6 million
or $0.20 per share in the fourth quarter of the prior year. Net profit
from continuing operations attributable to shareholders (which now
represents the “mining operations”) was $12.1 million or $0.14
per share compared to $12.7 million or $0.15 per share in the comparable
quarter of the prior year. Continuing operations includes all costs
related to the Company’s mining operations, including those
previously reported as part of the corporate segment.

Consolidated sales from continuing operations were $110.1 million
for the fourth quarter compared to $102.2 million for the comparable
quarter of the prior year, resulting in an operating profit of $21.0
million compared to an operating profit of $24.0 million in the
comparable quarter of the prior year. Gross margin increased 6% to $31.1
million from $29.5 million in the comparable quarter of the prior year.
Consolidated EBITDA from continuing operations was $45.3 million
compared to $48.3 million in the comparable quarter of the prior
year.

The increase in sales resulted from an 11% increase in achieved
rough diamond prices, partially offset by a 3% decrease in volume of
carats sold during the quarter. Rough diamond production during the
fourth calendar quarter was 19% higher than the comparable quarter of
the prior year. The Company had 0.5 million carats of rough diamond
inventory with an estimated current market value of approximately $65
million at January 31, 2013, of which approximately $25 million
represents rough diamond inventory available for sale, with the
remaining $40 million currently being sorted.

The net earnings from discontinued operations of $2.8 million are
presented separately in the consolidated income statements, and
comparative periods have been adjusted accordingly.

ANNUAL RESULTS

The Company recorded a consolidated net profit attributable to
shareholders of $34.7 million or $0.41 per share for the year, compared
to a net profit attributable to shareholders of $25.5 million or $0.30
per share in the prior year. Net profit from continuing operations
attributable to shareholders was $22.3 million or $0.26 per share
compared to $17.3 million or $0.20 per share in the prior year.
Continuing operations includes all costs related to the Company’s
mining operations, including those previously reported as part of the
corporate segment.

Consolidated sales from continuing operations were $345.4 million
for the year compared to $290.1 million for the prior year, resulting in
an operating profit of $47.7 million compared to an operating profit of
$37.6 million in the prior year. Gross margin increased 25% to $77.8
million from $62.2 million in the prior year. Consolidated EBITDA from
continuing operations was $127.9 million compared to $116.3 million in
the prior year.

The increase in sales resulted from a 49% increase in volume of
carats sold during the year, offset by a 20% decrease in achieved rough
diamond prices. The 49% increase in the quantity of carats sold was
primarily the result of a decision by the Company to hold back some
lower priced goods at October 31, 2011 due to an oversupply in the
market at that time and the subsequent sale of almost all of these lower
priced carryover goods during fiscal 2013. Rough diamond production
during the year was 8% higher than the prior year. The Company recorded
a consolidated operating profit from continuing operations of $47.7
million compared to $37.6 million in the prior year. Included in the
operating profit for the prior year was a $13.0 million ($8.4 million
after tax) non-cash charge related to the de-recognition of certain
assets associated with paste production at the Diavik Diamond Mine,
which were no longer expected to be required for underground mining.

The net earnings from discontinued operations of $12.4 million are
presented separately in the consolidated income statements, and
comparative periods have been adjusted accordingly.

Management’s Discussion and Analysis

(ALL FIGURES ARE IN UNITED STATES DOLLARS UNLESS OTHERWISE
INDICATED)

On March 26, 2013, Harry Winston Diamond Corporation changed its
name to Dominion Diamond Corporation (“Dominion Diamond
Corporation” or the “Company”). The following is
management’s discussion and analysis (“MD&A”) of the
results of operations for Dominion Diamond Corporation for the year
ended January 31, 2013, and its financial position as at January 31,
2013. This MD&A is based on the Company’s consolidated
financial statements prepared in accordance with International Financial
Reporting Standards (“IFRS”) and should be read in conjunction
with the consolidated financial statements and related notes. Unless
otherwise specified, all financial information is presented in United
States dollars. Unless otherwise indicated, all references to
“year” refer to the fiscal year ended January 31, 2013.

Certain information included in this MD&A may constitute
forward-looking information within the meaning of Canadian and United
States securities laws. In some cases, forward-looking information can
be identified by the use of terms such as “may”,
“will”, “should”, “expect”,
“plan”, “anticipate”, “foresee”,
“appears”, “believe”, “intend”,
“estimate”, “predict”, “potential”,
“continue”, “objective”, “modeled”,
“hope” or other similar expressions concerning matters that
are not historical facts. Forward-looking information may relate to
management’s future outlook and anticipated events or results, and
may include statements or information regarding plans, timelines and
targets for construction, mining, development, production and
exploration activities at the Diavik Diamond Mine, future mining and
processing at the Diavik Diamond Mine, projected capital expenditure
requirements and the funding thereof, liquidity and working capital
requirements and sources, estimated reserves and resources at, and
production from, the Diavik Diamond Mine, the number and timing of
expected rough diamond sales, the demand for rough diamonds, expected
diamond prices and expectations concerning the diamond industry,
expected cost of sales and gross margin trends, and the ability to
complete the Ekati Diamond Mine Acquisition (as defined herein). Actual
results may vary from the forward-looking information. See “Risks
and Uncertainties” on page 15 for material risk factors that could
cause actual results to differ materially from the forward-looking
information.

Forward-looking information is based on certain factors and
assumptions regarding, among other things, mining, production,
construction and exploration activities at the Diavik Diamond Mine,
world and US economic conditions, diamond supply, and the timeline for
the funding and completion of the Ekati Diamond Mine Acquisition. In
making statements regarding expected diamond prices and expectations
concerning the diamond industry, the Company has made assumptions
regarding, among other things, the state of world and US economic
conditions, and worldwide diamond production levels. While the Company
considers these assumptions to be reasonable based on the information
currently available to it, they may prove to be incorrect. See
“Risks and Uncertainties” on page 15.

Forward-looking information is subject to certain factors, including
risks and uncertainties, which could cause actual results to differ
materially from what we currently expect. These factors include, among
other things, the uncertain nature of mining activities, including risks
associated with underground construction and mining operations, risks
associated with joint venture operations, including risks associated
with the inability to control the timing and scope of future capital
expenditures, the risk that the operator of the Diavik Diamond Mine may
make changes to the mine plan and other risks arising because of the
nature of joint venture activities, risks associated with the remote
location of and harsh climate at the Diavik Diamond Mine site, risks
resulting from the Eurozone financial crisis, risks associated with
regulatory requirements, fluctuations in diamond prices and changes in
US and world economic conditions, the risk of fluctuations in the
Canadian/US dollar exchange rate, cash flow and liquidity risks, and the
risks relating to the ability to satisfy the closing conditions of the
Ekati Diamond Mine Acquisition and the Company’s related new credit
facilities. Please see page 15 of this MD&A, as well as the
Company’s current Annual Information Form, available at
http://www.sedar.com and http://www.sec.gov, respectively, for a
discussion of these and other risks and uncertainties involved in the
Company’s operations.

Readers are cautioned not to place undue importance on
forward-looking information, which speaks only as of the date of this
MD&A, and should not rely upon this information as of any other
date. Due to assumptions, risks and uncertainties, including the
assumptions, risks and uncertainties identified above and elsewhere in
this MD&A, actual events may differ materially from current
expectations. The Company uses forward-looking statements because it
believes such statements provide useful information with respect to the
expected future operations and financial performance of the Company, and
cautions readers that the information may not be appropriate for other
purposes. While the Company may elect to, it is under no obligation and
does not undertake to update or revise any forward-looking information,
whether as a result of new information, future events or otherwise at
any particular time, except as required by law. Additional information
concerning factors that may cause actual results to materially differ
from those in such forward-looking statements is contained in the
Company’s filings with Canadian and United States securities
regulatory authorities and can be found at http://www.sedar.com and
http://www.sec.gov, respectively.

Summary Discussion

Dominion Diamond Corporation is focused on the mining and marketing
of rough diamonds to the global market. The Company supplies rough
diamonds to the global market from its 40% ownership interest in the
Diavik Diamond Mine, located in Canada’s Northwest Territories.

The Company has an ownership interest in the Diavik group of mineral
claims. The Diavik Joint Venture (the “Joint Venture”) is an
unincorporated joint arrangement between Diavik Diamond Mines Inc.
(“DDMI”) (60%) and Dominion Diamond Diavik Limited Partnership
(formerly known as Harry Winston Diamond Limited Partnership)
(“DDDLP”) (40%) where DDDLP holds an undivided 40% ownership
interest in the assets, liabilities and expenses of the Diavik Diamond
Mine. DDMI is the operator of the Diavik Diamond Mine. DDMI and DDDLP
are headquartered in Yellowknife, Canada. DDMI is a wholly owned
subsidiary of Rio Tinto plc of London, England.

On November 13, 2012, the Company entered into share purchase
agreements with BHP Billiton Canada Inc. and various affiliates to
purchase all of BHP Billiton’s diamond assets, including its
controlling interest in the Ekati Diamond Mine as well as the associated
diamond sorting and sales facilities in Yellowknife, Canada, and
Antwerp, Belgium (the “Ekati Diamond Mine Acquisition”). The
Ekati Diamond Mine consists of the Core Zone, which includes the current
operating mine and other permitted kimberlite pipes, as well as the
Buffer Zone, an adjacent area hosting kimberlite pipes having both
development and exploration potential. The agreed purchase price,
payable in cash, is $400 million for the Core Zone and $100 million for
the Buffer Zone, subject to adjustments in accordance with the terms of
the share purchase agreements. The share purchase agreements include
typical closing conditions, including receipt of required regulatory and
competition or antitrust law approvals. Each of the Core Zone and the
Buffer Zone is subject to a separate joint venture agreement. BHP
Billiton holds an 80% interest in the Core Zone and a 58.8% interest in
the Buffer Zone, with the remainder held by the Ekati minority joint
venture parties. BHP Billiton has advised the Company that all of the
minority joint venture partners have agreed to waive their rights of
first refusal to purchase the interests in the Buffer Zone and Core Zone
that they do not own, as applicable, pursuant to the terms of their
respective joint venture agreements. Closing of the Ekati Diamond Mine
Acquisition is currently expected to occur on April 10, 2013. In
connection with the Ekati Diamond Mine Acquisition, the Company has
arranged new secured credit facilities consisting of a $400 million term
loan, a $100 million revolving credit facility (of which $50 million
will be available for purposes of funding the Ekati Diamond Mine
Acquisition) and a $140 million letter of credit facility (expandable to
$265 million in aggregate). These new facilities will replace the
Company’s current $125 million facility with Standard Chartered
Bank.

On January 14, 2013, the Company announced that it entered into an
agreement to sell the Luxury Brand Segment to Swatch Group (the
“Luxury Brand Divestiture”). The Luxury Brand Divestiture was
completed on March 26, 2013. As a result of the Luxury Brand
Divestiture, the Company’s corporate group underwent name changes
to remove references to “Harry Winston”. The Company’s
name has now been changed to “Dominion Diamond Corporation”
and its common shares trade on both the Toronto and New York stock
exchanges under the symbol “DDC”.

Market Commentary

The Diamond Market

The rough and polished diamond markets continued to soften
throughout the first half of fiscal 2013 due to the macroeconomic
uncertainty that negatively impacted the second half of fiscal 2012. The
retail industry had built up diamond stocks in expectation of 2012 being
a year of greater growth in demand, and the overstocking did not clear
until late 2012. Market conditions improved in the second half of fiscal
2013 as a stronger US holiday season and renewed activity in the retail
market in China helped increase prices from the market lows experienced
in the middle of the year. In addition, the retail markets in both India
and the Middle East recovered in the second half of the year, adding
further stability to the diamond markets. The diamond market is impacted
by currency fluctuations and the dramatic fall in the Indian rupee
against the US dollar in early 2012 negatively affected the cost of
diamonds to the consumer and the credit available to the Indian diamond
cutting industry. In early 2012, industry leading banks reviewed their
credit exposure to the diamond industry, tightening liquidity and
creating an additional challenge to the difficult market conditions.
This tightening of credit forced many diamond companies to improve their
operations, allowing the industry to take full advantage of the better
market conditions that were evident at the end of fiscal 2013.

During the fourth quarter of fiscal 2013, the retail jewelry market
improved in almost all areas, led by Diwali and the wedding season in
India followed closely by a positive US year-end holiday season and
improved consumer demand in China, which regained momentum in advance of
the Lunar New Year. Rough diamond supply was impacted by delivery
problems at certain diamond mines combined with lower than expected
Russian rough diamond supply. The tight supply coupled with a more
active polished market helped improve rough prices during the
quarter.

Consolidated Financial Results

On January 14, 2013, the Company announced that it entered into an
agreement to sell the Luxury Brand Segment to Swatch Group. The sale
transaction was completed on March 26, 2013. As a result of the sale,
the Company’s corporate group underwent name changes to remove
references to “Harry Winston”. The Company’s name has now
been changed to “Dominion Diamond Corporation” and its common
shares trade on both the Toronto and New York stock exchanges under the
symbol “DDC”. See “Discontinued Operations”.
Accordingly, the Company’s consolidated results from continuing
operations relate solely to its mining operations, which include the
production, sorting and sale of rough diamonds. The results of the
Luxury Brand Segment are treated as discontinued operations for
accounting and reporting purposes and current and prior period results
have been adjusted accordingly. The following is a summary of the
Company’s consolidated quarterly results for the eight quarters
ended January 31, 2013 following the basis of presentation utilized in
its IFRS financial statements:

(expressed in thousands of United States dollars except per share
amounts and where otherwise noted)

(unaudited)

                                2013        2013      2013      2013
2012        2012
                                Q4          Q3        Q2        Q1
Q4          Q3
    Sales                  $ 110,111 $    84,818 $  61,473 $  89,009 $
102,232 $   36,239
    Cost of sales             79,038      71,663    46,784    70,099
72,783     34,112
    Gross margin              31,073      13,155    14,689    18,910
29,449      2,127
    Gross margin (%)            28.2%       15.5%     23.9%     21.2%
28.8%       5.9%
    Selling, general and
    administrative expenses   10,086       7,581     5,750     6,739
5,464      5,390
    Operating profit (loss)
    from continuing
    operations                20,987       5,574     8,939    12,171
23,985     (3,263)
    Finance expenses          (2,382)     (2,308)   (2,151)   (2,242)
(1,616)    (2,691)
    Exploration costs           (306)       (673)     (568)     (254)
(177)      (600)
    Finance and other income     601          60        67        52
51        256
    Foreign exchange gain (loss) 116       (301)     1,048     (370)
680        285
    Profit (loss) before income
    taxes from continuing
    operations                19,016       2,352     7,335     9,357
22,923     (6,013)
    Income tax expense
    (recovery)                 6,977       1,583     3,386     3,330
10,281     (1,574)
    Net profit (loss) from
    continuing operations  $  12,039 $       769 $   3,949 $   6,027 $
12,642 $   (4,439)
    Net profit (loss) from
    discontinued operations    2,802       3,245       804     5,583
3,946       (292)
    Net profit (loss)      $  14,841 $     4,014 $   4,753 $  11,610 $
16,588 $   (4,731)
    Net profit (loss) from
    continuing operations
    attributable to
    Shareholders           $  12,146 $       152 $   3,951 $   6,027 $
12,654 $   (4,436)
    Non-controlling interest    (107)        617        (2)        -
(12)         (3)
    Net profit (loss)
    attributable to
    Shareholders           $  14,948 $     3,397 $   4,755 $  11,610 $
16,600 $   (4,728)
    Non-controlling interest    (107)        617        (2)        -
(12)        (3)
    Earnings (loss) per share
    - continuing operations
    Basic                  $    0.14 $         - $    0.05 $    0.07 $
0.15 $    (0.05)
    Diluted                $    0.14 $         - $    0.05 $    0.07 $
0.15 $    (0.05)
    Earnings (loss) per share
    Basic                  $    0.18 $      0.04 $    0.06 $    0.14 $
0.20 $    (0.06)
    Diluted                $    0.18 $      0.04 $    0.06 $    0.14 $
0.19 $    (0.06)
    Cash dividends
    declared per share     $    0.00 $      0.00 $    0.00 $    0.00 $
0.00 $     0.00
    Total assets (i)       $   1,710 $     1,733 $   1,660 $   1,716 $
1,607 $    1,656
    Total long-term
    liabilities (i)        $     269 $       682 $     461 $     472 $
641 $      661
    Operating profit (loss)
    from continuing
    operations             $  20,987 $     5,574 $   8,939 $  12,171 $
23,985 $   (3,263)
    Depreciation and
    amortization (ii)         24,346      20,588    13,160    22,172
24,284     19,933
    EBITDA from continuing
    operations (iii)       $  45,333 $    26,162 $  22,099 $  34,343 $
48,269 $   16,670 

Table cont’d

                                2012      2012        2013       2012
2011
                                Q2        Q1        Total      Total
Total
    Sales                  $  89,608 $  62,035 $   345,411 $  290,114 $
279,154
    Cost of sales             67,613    53,443     267,584    227,951
205,412
    Gross margin              21,995     8,592      77,827     62,163
73,742
    Gross margin (%)            24.5%     13.9%       22.5%      21.4%
26.4%
    Selling, general and
    administrative expenses    5,709     8,026      30,156     24,589
19,742
    Operating profit (loss)
    from continuing
    operations                16,286       566      47,671     37,574
54,000
    Finance expenses          (3,787)   (2,693)     (9,083)   (10,787)
(7,136)
    Exploration costs           (781)     (212)     (1,801)    (1,770)
(666)
    Finance and other income      78        77         780        462
281
    Foreign exchange gain (loss) 846      (977)        493        834
( 1,644)
    Profit (loss) before income
    taxes from continuing
    operations                12,642    (3,239)     38,060     26,313
44,835
    Income tax expense
    (recovery)                 4,517    (4,217)     15,276      9,007
3,345
    Net profit (loss) from
    continuing operations  $   8,125 $     978 $    22,784 $   17,306 $
41,490
    Net profit (loss) from
    discontinued operations    1,863     2,620      12,434      8,137
5,711
    Net profit (loss)      $   9,988 $   3,598 $    35,218 $   25,443 $
47,201
    Net profit (loss) from
    continuing operations
    attributable to
    Shareholders           $   8,123 $     976 $    22,276 $   17,317 $
35,819
    Non-controlling interest       2         2         508        (11)
5,671
    Net profit (loss)
    attributable to
    Shareholders           $   9,986 $   3,596 $    34,710 $   25,454 $
41,530
    Non-controlling interest       2         2         508        (11)
5,671
    Earnings (loss) per share
    - continuing operations
    Basic                  $    0.10 $    0.01 $      0.26 $     0.20 $
0.45
    Diluted                $    0.09 $    0.01 $      0.26 $     0.20 $
0.44
    Earnings (loss) per share
    Basic                  $    0.12 $    0.04 $      0.41 $     0.30 $
0.52
    Diluted                $    0.12 $    0.04 $      0.41 $     0.30 $
0.51
    Cash dividends
    declared per share     $    0.00 $    0.00 $      0.00 $     0.00 $
0.00
    Total assets (i)       $   1,671 $   1,671 $     1,710 $    1,607 $
1,592
    Total long-term
    liabilities (i)        $     633 $     613 $       269 $      641 $
586
    Operating profit (loss)
    from continuing
    operations             $  16,286 $     566 $    47,671 $   37,574 $
54,000
    Depreciation and
    amortization (ii)         17,461    17,083      80,266     78,761
63,424
    EBITDA from continuing
    operations (iii)       $  33,747 $  17,649 $   127,937 $  116,335 $
117,424
    (i)        Total assets and total long-term liabilities are
expressed in
           millions of United States dollars.
    (ii)        Depreciation and amortization included in cost of sales
and
             selling, general and administrative expenses.
    (iii)
     Earnings before interest, taxes, depreciation and amortization
     ("EBITDA"). See "Non-IFRS Measures" on page 14.
The comparability of quarter-over-quarter results is impacted by
seasonality of mining operations. Dominion Diamond Corporation expects
that the quarterly results for its mining operations will continue to
fluctuate depending on the seasonality of production at the Diavik
Diamond Mine, the number of sales events conducted during the quarter,
and the volume, size and quality distribution of rough diamonds
delivered from the Diavik Diamond Mine in each quarter.
Three Months Ended January 31, 2013 Compared to Three Months Ended
January 31, 2012
CONSOLIDATED NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS
The Company recorded a fourth quarter consolidated net profit
attributable to shareholders of $14.9 million or $0.18 per share
compared to a net profit attributable to shareholders of $16.6 million
or $0.20 per share in the fourth quarter of the prior year. Net profit
from continuing operations attributable to shareholders was $12.1
million or $0.14 per share compared to $12.7 million or $0.15 per share
in the comparable quarter of the prior year. Discontinued operations
represented $2.8 million of net profit or $0.04 per share compared to
$3.9 million or $0.05 per share in the fourth quarter of the prior year.
CONSOLIDATED SALES FROM CONTINUING OPERATIONS
(expressed in thousands of United States dollars) (unaudited)
                      2013      2013      2013      2013       2012
2012
                       Q4        Q3        Q2        Q1         Q4
Q3
    Sales
    North America $   4,604  $  7,697  $  2,269  $  7,432  $   2,727  $
8,835
    Europe           84,346    57,438    50,514    54,370     78,846
21,993
    India            21,161    19,683     8,690    27,207     20,659
5,411
    Total sales   $ 110,111  $ 84,818  $ 61,473  $ 89,009  $ 102,232  $
36,239
Table cont'd
                      2012      2012      2013        2012       2011
                       Q2        Q1       Total       Total      Total
    Sales
    North America  $    447  $  3,009  $  22,002  $   15,018  $  10,418
    Europe           80,131    50,752    246,668     231,722    247,677
    India             9,030     8,274     76,741      43,374     21,059
    Total sales    $ 89,608  $ 62,035  $ 345,411  $  290,114  $ 279,154
During the fourth quarter, the Company sold approximately 0.83 million
carats for a total of $110.1 million for an average price per carat of
$133 compared to approximately 0.86 million carats for a total of $102.2
million for an average price per carat of $120 in the comparable quarter
of the prior year. The 11% increase in the Company's achieved
average rough diamond prices during the fourth quarter versus the
comparable quarter of the prior year resulted from an improved sales
mix.
Had the Company sold only the last production shipped in the fourth
quarter, the estimated achieved price would have been approximately $117
per carat based on the prices achieved in the February 2013 sale.
The Company expects that results for its mining operations will continue
to fluctuate depending on the seasonality of production at the Diavik
Diamond Mine, the number of sales events conducted during the quarter,
rough diamond prices and the volume, size and quality distribution of
rough diamonds delivered from the Diavik Diamond Mine and sold by the
Company in each quarter.
CONSOLIDATED COST OF SALES AND GROSS MARGIN FROM CONTINUING OPERATIONS
The Company's fourth quarter consolidated cost of sales was $79.0
million resulting in a gross margin of 28.2% compared to a cost of sales
of $72.8 million and a gross margin of 28.8% in the comparable quarter
of the prior year. Cost of sales for the fourth quarter included $23.6
million of depreciation and amortization compared to $23.5 million in
the comparable quarter of the prior year. The gross margin is
anticipated to fluctuate between quarters, resulting from variations in
the specific mix of product sold during each quarter and rough diamond
prices.
A substantial portion of consolidated cost of sales is mining operating
costs, which are incurred at the Diavik Diamond Mine. During the fourth
quarter, the Diavik cash cost of production was $44.8 million compared
to $44.2 million in the comparable quarter of the prior year. Cost of
sales also includes sorting costs, which consists of the Company's
cost of handling and sorting product in preparation for sales to third
parties, and depreciation and amortization, the majority of which is
recorded using the unit-of-production method over estimated proven and
probable reserves.
The MD&A refers to cash cost of production, a non-IFRS performance
measure, in order to provide investors with information about the
measure used by management to monitor performance. This information is
used to assess how well the Diavik Diamond Mine is performing compared
to the mine plan and prior periods. Cash cost of production includes
mine site operating costs such as mining, processing and administration,
but is exclusive of amortization, capital, and exploration and
development costs. Cash cost of production does not have any
standardized meaning prescribed by IFRS and differs from measures
determined in accordance with IFRS. This performance measure is intended
to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with IFRS. This measure is not necessarily indicative of net
profit or cash flow from operations as determined under IFRS. The
following table provides a reconciliation of cash cost of production to
the mining operations' cost of sales disclosed for the three months
ended January 31, 2013 and 2012.
    (expressed in thousands of      Three months ended  Three months
ended
    United States dollars)            January 31, 2013    January 31,
2012
    Diavik cash cost of production        $     44,764        $
44,187
    Private royalty                              2,040
1,529
    Other cash costs                             1,272
1,074
    Total cash cost of production               48,076
46,790
    Depreciation and amortization               20,182
21,748
    Total cost of production                    68,258
68,538
    Adjusted for stock movements                10,780
4,245
    Total cost of sales                   $     79,038        $
72,783
CONSOLIDATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSES FROM
CONTINUING OPERATIONS
Consolidated SG&A expenses for the fourth quarter increased by $4.6
million from the prior year primarily due to $1.6 million related to the
Ekati Diamond Mine Acquisition, $0.6 million related to the Luxury Brand
Divestiture and $0.8 million related to stock-based compensation.
CONSOLIDATED INCOME TAXES FROM CONTINUING OPERATIONS
The Company recorded a net income tax expense from continuing operations
of $7.0 million during the fourth quarter, compared to a net income tax
expense from continuing operations of $10.3 million in the comparable
quarter of the prior year. The Company's combined Canadian federal
and provincial statutory tax rate for the quarter is 26.5%.  There are a
number of items that can significantly impact the Company's
effective tax rate, including foreign currency exchange rate
fluctuations, the Northwest Territories mining royalty, earnings subject
to tax different than the statutory rate such as earnings in foreign
jurisdictions, and changes in the Company's view of whether
deferred tax assets are probable of being realized.  As a result, the
Company's recorded tax provision can be significantly different
than the expected tax provision calculated based on the statutory tax
rate.
The recorded tax provision is particularly impacted by foreign currency
exchange rate fluctuations. The Company's functional and reporting
currency is US dollars; however, the calculation of income tax expense
is based on income in the currency of the country of origin. As such,
the Company is continually subject to foreign exchange fluctuations,
particularly as the Canadian dollar moves against the US dollar. During
the fourth quarter, the Company recorded an unrealized foreign exchange
loss of $0.3 million on the revaluation of the Company's Canadian
dollar denominated deferred income tax liability. This compares to an
unrealized foreign exchange gain of $1.2 million in the comparable
quarter of the prior year. The unrealized foreign exchange loss is
recorded as part of the Company's deferred income tax expense, and
is not deductible for Canadian income tax purposes.  During the fourth
quarter, the Company also recognized a deferred income tax expense of
$0.9 million for temporary differences arising from the difference
between the historical exchange rate and the current exchange rate
translation of foreign currency non-monetary items. This compares to a
deferred income tax expense of $2.8 million recognized in the comparable
quarter of the prior year.  The recorded tax provision during the fourth
quarter also included a net income tax recovery of $1.1 million relating
to foreign exchange differences between income in the currency of the
country of origin and the US dollar.  This compares to a net income tax
recovery of $0.6 million recognized in the comparable period of the
prior year.
Due to the number of factors that can potentially impact the effective
tax rate and the sensitivity of the tax provision to these factors, as
discussed above, it is expected that the Company's effective tax
rate will fluctuate in future periods.
CONSOLIDATED FINANCE EXPENSES FROM CONTINUING OPERATIONS
Finance expenses for the fourth quarter were $2.4 million compared to
$1.6 million for the comparable quarter of the prior year. Also included
in consolidated finance expense is accretion expense of $0.6 million
(2012 - $(0.3) million) related to the Diavik Diamond Mine's future
site restoration liability.
CONSOLIDATED EXPLORATION EXPENSE FROM CONTINUING OPERATIONS
Exploration expense of $0.3 million was incurred during the fourth
quarter compared to $0.2 million in the comparable quarter of the prior
year.
CONSOLIDATED FINANCE AND OTHER INCOME FROM CONTINUING OPERATIONS
Finance and other income of $0.6 million was recorded during the fourth
quarter compared to $0.1 million in the comparable quarter of the prior
year.
CONSOLIDATED FOREIGN EXCHANGE FROM CONTINUING OPERATIONS
A net foreign exchange gain of $0.1 million was recognized during the
fourth quarter compared to a net foreign exchange gain of $0.7 million
in the comparable quarter of the prior year. The Company does not
currently have any significant foreign exchange derivative instruments
outstanding.
Year Ended January 31, 2013 Compared to Year Ended January 31, 2012
CONSOLIDATED NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS
The Company recorded a consolidated net profit attributable to
shareholders of $34.7 million or $0.41 per share for the year ended
January 31, 2013, compared to a net profit attributable to shareholders
of $25.5 million or $0.30 per share in the prior year. Excluding the
$8.4 million after-tax de-recognition in the prior year of certain paste
production assets, the Company would have recorded a net profit
attributable to shareholders of $33.8 million or $0.40 per share. Net
profit from continuing operations attributable to shareholders was $22.3
million or $0.26 per share, compared to $17.3 million or $0.20 per share
in the prior year. Excluding the $8.4 million described above, the
Company would have recorded a net profit from continuing operations
attributable to shareholders of $25.7 million or $0.30 per share in the
prior year. Discontinued operations represented $12.4 million of net
profit or $0.15 per share compared to $8.1 million or $0.10 per share in
the prior year.
CONSOLIDATED SALES FROM CONTINUING OPERATIONS
During the year ended January 31, 2013, the Company sold approximately
3.2 million carats for a total of $345.4 million for an average price
per carat of $109 compared to approximately 2.1 million carats for a
total of $290.1 million for an average price per carat of $137 in the
prior year. The 49% increase in the quantity of carats sold was
primarily the result of a decision by the Company to hold back some
lower priced goods at October 31, 2011 due to an oversupply in the
market at that time and the subsequent sale of almost all of these lower
priced carryover goods during fiscal 2013. The 20% decrease in the
Company's achieved average rough diamond prices during the fiscal
year resulted from a combination of two factors: first, the sale of the
lower priced goods originally held back in inventory by the Company at
October 31, 2011; and second, a decrease in the market price for rough
diamonds from the peak achieved in the prior year.
CONSOLIDATED COST OF SALES AND GROSS MARGIN FROM CONTINUING OPERATIONS
The Company's cost of sales was $267.6 million during the year
ended January 31, 2013, resulting in a gross margin of 22.5% compared to
a cost of sales of $228.0 million and a gross margin of 21.4% in the
prior year. Included in the cost of sales for the prior year was a
non-cash $13.0 million charge related to the de-recognition of certain
components of the backfill plant associated with paste production at the
Diavik Diamond Mine. Cost of sales for the year ended January 31, 2013,
included $77.3 million of depreciation and amortization compared to
$76.1 million for the prior year. The gross margin is anticipated to
fluctuate between quarters, resulting from variations in the specific
mix of product sold during each quarter and rough diamond prices.
A substantial portion of cost of sales is mining operating costs, which
are incurred at the Diavik Diamond Mine. During the year ended January
31, 2013, the Diavik cash cost of production was $171.4 million compared
to $167.8 million in the prior year. Cost of sales also includes sorting
costs, which consists of the Company's cost of handling and sorting
product in preparation for sales to third parties, and depreciation and
amortization, the majority of which is recorded using the
unit-of-production method over estimated proven and probable reserves.
The following table provides a reconciliation of cash cost of production
(a non-IFRS performance measure) to cost of sales disclosed in the
financial statements for the fiscal years ended January 31, 2013 and
2012.
    (expressed in thousands of United States dollars)      2013
2012
    Diavik cash cost of production                    $ 171,442  $
167,787
    Private royalty                                       7,399
5,535
    Other cash costs                                      4,360
4,009
    Total cash cost of production                       183,201
177,331
    Depreciation and amortization                        70,516
88,302
    Total cost of production                            253,717
265,633
    Adjusted for stock movements                         13,868
(37,682)
    Total cost of sales                               $ 267,585  $
227,951
CONSOLIDATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSES FROM
CONTINUING OPERATIONS
Consolidated SG&A expenses increased by $5.6 million from the prior
year primarily due to $3.2 million related to the Ekati Diamond Mine
Acquisition and $1.0 million related to the Luxury Brand Divestiture.
CONSOLIDATED INCOME TAXES FROM CONTINUING OPERATIONS
The Company recorded a net income tax expense from continuing operations
of $15.3 million during the year ended January 31, 2013, compared to a
net income tax expense from continuing operations of $9.0 million in the
prior year. The Company's combined Canadian federal and provincial
statutory tax rate for the period is 26.5%. There are a number of items
that can significantly impact the Company's effective tax rate,
including foreign currency exchange rate fluctuations, the Northwest
Territories mining royalty, earnings subject to tax different than the
statutory rate, such as earnings in foreign jurisdictions, and changes
in the Company's view of whether deferred tax assets are probable
of being realized.  As a result, the Company's recorded tax
provision can be significantly different than the expected tax provision
calculated based on the statutory tax rate.
The recorded tax provision is particularly impacted by foreign currency
exchange rate fluctuations. The Company's functional and reporting
currency is US dollars; however, the calculation of income tax expense
is based on income in the currency of the country of origin. As such,
the Company is continually subject to foreign exchange fluctuations,
particularly as the Canadian dollar moves against the US dollar. During
the year ended January 31, 2013, the Company recorded an unrealized
foreign exchange loss of $1.1 million on the revaluation of the
Company's Canadian dollar denominated deferred income tax
liability. This compares to an unrealized foreign exchange loss of $0.5
million in the prior year. The unrealized foreign exchange loss is
recorded as part of the Company's deferred income tax recovery, and
is not deductible for Canadian income tax purposes.  During the year
ended January 31, 2013, the Company also recognized a deferred income
tax expense of $4.4 million for temporary differences arising from the
difference between the historical exchange rate and the current exchange
rate translation of foreign currency non-monetary items. This compares
to a deferred income tax expense of $5.6 million recognized in the prior
year.  The recorded tax provision during the year ended January 31, 2013
also included a net income tax recovery of $5.2 million relating to
foreign exchange differences between income in the currency of the
country of origin and the US dollar. This compares to a net income tax
recovery of $4.4 million recognized in the prior year.
Due to the number of factors that can potentially impact the effective
tax rate and the sensitivity of the tax provision to these factors, as
discussed above, it is expected that the Company's effective tax
rate will fluctuate in future periods.
CONSOLIDATED FINANCE EXPENSES FROM CONTINUING OPERATIONS
Finance expenses for the year ended January 31, 2013 were $9.1 million
compared to $10.8 million in the prior year. Also included in finance
expense is accretion expense of $2.4 million (2012 - $2.0 million)
related to the Diavik Diamond Mine's future site restoration
liability.
CONSOLIDATED EXPLORATION EXPENSE FROM CONTINUING OPERATIONS
Exploration expense of $1.8 million was incurred during the year ended
January 31, 2013, consistent with the prior year.
CONSOLIDATED FINANCE AND OTHER INCOME FROM CONTINUING OPERATIONS
Finance and other income of $0.8 million was recorded during the year
ended January 31, 2013, compared to $0.5 million in the prior year.
CONSOLIDATED FOREIGN EXCHANGE FROM CONTINUING OPERATIONS
A net foreign exchange gain of $0.5 million was recognized during the
year ended January 31, 2013, compared to $0.8 million in the prior year.
The Company does not currently have any significant foreign exchange
derivative instruments outstanding.
OPERATIONAL UPDATE
Production for calendar year 2012 at the Diavik Diamond Mine was 7.2
million carats consisting of 4.3 million carats produced from 1.2
million tonnes of ore from the A-418 kimberlite pipe, 1.9 million carats
produced from 0.4 million tonnes of ore from the A-154 South kimberlite
pipe, and 0.9 million carats produced from 0.4 million tonnes of ore
from the A-154 North kimberlite pipe. Also included in production for
the 2012 calendar year was an estimated 0.1 million carats from
reprocessed plant rejects ("RPR"). These RPR are not included
in the Company's reserves and resource statement and are therefore
incremental to production. Rough diamond production was 8% higher than
the prior calendar year due primarily to improved grades in each of the
kimberlite pipes.
Production in the fourth calendar quarter was 1.9 million carats
consisting of 0.8 million carats produced from 0.2 million tonnes of ore
from the A-418 kimberlite pipe, 0.7 million carats produced from 0.2
million tonnes of ore from the A-154 South kimberlite pipe, 0.3 million
carats produced from 0.1 million tonnes of ore from the A-154 North
kimberlite pipe and 0.04 million carats from RPR. Average grade
increased to 4.1 carats per tonne in the fourth calendar quarter from
2.9 carats per tonne in the comparable quarter of the prior year. The
19% increase in carats recovered in the quarter was primarily due to
improved grades in each of the kimberlite pipes, partially offset by the
16% decline in ore processed in the quarter, which was due to a
reduction in processing plant throughput that resulted from changes in
the geological composition of the ore. Open pit mining of the A-418
kimberlite pipe concluded in September 2012, although processing of open
pit ore from the A-418 kimberlite pipe will continue into calendar 2013.
DOMINION DIAMOND DIAVIK LIMITED PARTNERSHIP'S 40% SHARE OF DIAVIK
DIAMOND MINE PRODUCTION
(reported on a one-month lag)
                      Three months  Three months  Twelve months  Twelve
months
                             ended         ended          ended
ended
                       December 31,  December 31,   December 31,
December 31,
                              2012          2011           2012
2011
    Diamonds recovered
    (000s carats)              760           641          2,892
2,670
    Grade (carats/tonne)      4.08          2.88           3.52
2.99
During the fiscal year, the Company expanded its Mumbai, India, office
to the Bharat Diamond Bourse in Bandra, India. The new office will
continue to support the Company's rough sorting and sales expansion
in India.
Mining Operations Outlook
PRODUCTION
A new mine plan and budget for calendar 2013 has been approved by Rio
Tinto plc and the Company. The plan for calendar 2013 foresees Diavik
Diamond Mine production of approximately 6 million carats from the
mining and processing of approximately 1.6 million tonnes of ore with a
further 0.2 million tonnes processed from stockpile ore. Mining
activities will be exclusively underground with approximately 0.7
million tonnes expected to be sourced from A-154 North, approximately
0.5 million tonnes from A-154 South and approximately 0.4 million tonnes
from A-418 kimberlite pipes. Included in the estimated production for
calendar 2013 is approximately 0.6 million carats from RPR and 0.1
million carats from the improved recovery process for small diamonds.
These RPR and small diamond recoveries are not included in the
Company's reserves and resource statement and are therefore
incremental to production.
The development of A-21, the last of the Diavik Diamond Mine's
kimberlite pipes in the original mine plan, has been deferred due both
to the current diamond market conditions and the decreased urgency of
development following the identification of extensions to the existing
pipes. Although these extension areas cannot be categorized as ore at
this time due to insufficient definition work, the Company expects the
life of the existing developed pipes will be extended, thereby deferring
the need for production from A-21 to keep the processing plant full. The
A-21 pre-feasibility study currently being undertaken assumes that the
A-21 pipe will be mined with the open pit methods used for the other
pipes. A dike would be constructed similar to the two other pits but
smaller in size. Detailed plans are still being refined and optimized
although no underground mining is currently envisaged.
PRICING
Based on prices from the Company's rough diamond sales during the
fourth quarter and the current diamond recovery profile of the Diavik
processing plant, the Company has modeled the current approximate rough
diamond price per carat for each of the Diavik ore types in the table
that follows:
                           February 2013
                 average price per carat
    Ore type              (in US dollars)
    A-154 South      $               135
    A-154 North                      170
    A-418                             95
    RPR                               45
COST OF SALES AND CASH COST OF PRODUCTION
The Company currently expects cost of sales in fiscal 2014 to be
approximately $255 million (including depreciation and amortization of
approximately $70 million). The Company's share of the cash cost of
production at the Diavik Diamond Mine for calendar 2013 is expected to
be approximately $170 million at an assumed average Canadian/US dollar
exchange rate of $1.00.
CAPITAL EXPENDITURES
During fiscal 2013 and the fourth quarter, DDDLP's 40% share of
capital expenditures at the Diavik Diamond Mine was approximately $51.6
million and $8.7 million, respectively. During fiscal 2014, DDDLP's
40% share of the planned capital expenditures is expected to be
approximately $28 million at an assumed average Canadian/US dollar
exchange rate of $1.00.
Discontinued Operations
On January 14, 2013, the Company announced that it entered into an
agreement to sell the Luxury Brand Segment to Swatch Group. The sale
transaction was completed on March 26, 2013 and the Company's
corporate group underwent name changes to remove references to
"Harry Winston".  The Company's name has now been changed
to "Dominion Diamond Corporation" and its common shares trade
on both the Toronto and New York stock exchanges under the symbol
"DDC". As a result of the Luxury Brand Divestiture, the
Company's consolidated results no longer include the operations of
the Luxury Brand Segment and the results of the Luxury Brand Segment are
now treated as discontinued operations for reporting purposes. Current
and prior period results have been restated to reflect this change.
Liquidity and Capital Resources
Working Capital
As at January 31, 2013, the Company had unrestricted cash and cash
equivalents of $104.3 million compared to $78.1 million at January 31,
2012. During the year ended January 31, 2013, the Company reported cash
from operations of $105.1 million compared to $59.0 million in the prior
year. The increase resulted primarily from the Company's decision
to hold rough diamond inventory due to market conditions in the prior
year. At January 31, 2013, the Company had 0.5 million carats of rough
diamond inventory with an estimated current market value of
approximately $65 million, of which approximately $25 million represents
inventory available for sale, with the remaining $40 million currently
being sorted. At January 31, 2012, the Company had 0.8 million carats of
rough diamond inventory with an estimated market value of approximately
$80 million, of which approximately $50 million represented inventory
available for sale, with the remaining $30 million being sorted.
Working capital decreased to $361.5 million at January 31, 2013 from
$439.0 million at January 31, 2012. During the year, the Company
increased accounts receivable from continuing operations by $1.7
million, decreased other current assets from continuing operations by
$0.1 million, decreased inventory and supplies from continuing
operations by $9.0 million, increased trade and other payables from
continuing operations by $0.1 million and increased employee benefit
plans from continuing operations by $1.4 million.
The Company's liquidity requirements fluctuate from quarter to
quarter depending on, among other factors, the seasonality of production
at the Diavik Diamond Mine, seasonality of mine operating expenses,
capital expenditure programs, the number of rough diamond sales events
conducted during the quarter, and the volume, size and quality
distribution of rough diamonds delivered from the Diavik Diamond Mine
and sold by the Company in each quarter.
The Company assesses liquidity and capital resources on a consolidated
basis. The Company's requirements are for cash operating expenses,
working capital, contractual debt requirements and capital expenditures.
The Company believes that it will generate sufficient liquidity to meet
its anticipated requirements for the next twelve months.
Financing Activities
The Company maintains a senior secured revolving credit facility with
Standard Chartered Bank. At January 31, 2013, $50.0 million was
outstanding.
On November 13, 2012, the Company entered into share purchase agreements
with respect to the Ekati Diamond Mine Acquisition. In connection with
the Ekati Diamond Mine Acquisition, the Company has arranged new secured
credit facilities with The Royal Bank of Canada and Standard Chartered
Bank consisting of a $400 million term loan, a $100 million revolving
credit facility (of which $50 million will be available for purposes of
funding the Ekati Diamond Mine Acquisition) and a $140 million letter of
credit facility (expandable to $265 million in aggregate).  These new
facilities will replace the Company's current $125 million facility
with Standard Chartered Bank. These new facilities include customary
covenants, including certain reporting and financial covenants, and bear
interest at market rates. The term loan will require principal
repayments beginning 30 months following closing of the Ekati Diamond
Mine Acquisition and a final bullet payment of 50 percent of the
principal amount being due on the date that is five years after the
closing of the Ekati Diamond Mine Acquisition. The $100 million portion
of the revolving facility will be due five years after closing. The
letter of credit facility expires 364 days after the closing of the
Ekati Diamond Mine Acquisition. These new facilities are subject to
customary closing conditions, including closing of the Core Zone
acquisition. If the Core Zone acquisition is not completed but the
Buffer Zone acquisition is completed, then the Company expects to
finance the acquisition of the Buffer Zone using other cash resources
available to it.
As at January 31, 2013, $nil and $1.1 million was outstanding under the
Company's revolving financing facility relating to its Belgian
subsidiary, Dominion Diamond International NV (formerly known as Harry
Winston Diamond International NV), and its Indian subsidiary, Dominion
Diamond (India) Private Limited (formerly known as Harry Winston Diamond
(India) Private Limited), respectively, compared to $nil and $4.3
million at January 31, 2012.
Investing Activities
During the fiscal year, the Company purchased property, plant and
equipment of $56.5 million for its continuing operations.
Contractual Obligations
The Company has contractual payment obligations with respect to
interest-bearing loans and borrowings and, through its participation in
the Joint Venture, future site restoration costs at the Diavik Diamond
Mine level. Additionally, at the Joint Venture level, contractual
obligations exist with respect to operating purchase obligations, as
administered by DDMI, the operator of the mine. In order to maintain its
40% ownership interest in the Diavik Diamond Mine, DDDLP is obligated to
fund 40% of the Joint Venture's total expenditures on a monthly
basis. Not reflected in the table below are capital expenditures for the
calendar years 2013 to 2017 of approximately $70 million assuming a
Canadian/US average exchange rate of $1.00 for each of the five years
relating to DDDLP's current projected share of the planned capital
expenditures (excluding the A-21 pipe) at the Diavik Diamond Mine. Also
not included is the potential impact of the Ekati Diamond Mine
Acquisition. The most significant contractual obligations for the
ensuing five-year period can be summarized as follows:
    CONTRACTUAL OBLIGATIONS
                                                           Less
    (expressed in thousands of                             than     Year
Year  After 5
    United States dollars)                     Total     1 year      2-3
4-5    years
    Interest-bearing loans and borrowings
    (a)(b)                                 $  58,938  $  53,191  $ 2,463
$ 2,463  $   821
    Environmental and participation
    agreements incremental commitments (c)    92,725     83,195    4,817
-    4,713
    Total contractual obligations          $ 151,663  $ 136,386  $ 7,280
$ 2,463  $ 5,534
    (a)  (i) Interest-bearing loans and borrowings presented in the
foregoing
        table include current and long-term portions. The Company
maintains a
        senior secured revolving credit facility with Standard Chartered
Bank
        for $125.0 million. The facility has an initial maturity date of
June
        24, 2013, with two one-year extensions at the Company's
option. There
         are no scheduled repayments required before maturity. At
January 31,
                          2013, $50.0 million was outstanding.
          (ii) The Company has available a $45.0 million revolving
financing
          facility (utilization in either US dollars or Euros) with
Antwerp
        Diamond Bank for inventory and receivables funding in connection
with
        marketing activities through its Belgian subsidiary, Dominion
Diamond
        International NV, and its Indian subsidiary, Dominion Diamond
(India)
         Private Limited. Borrowings under the Belgian facility bear
interest
            at the bank's base rate plus 1.5%. Borrowings under the
Indian
        facility bear an interest rate of 13.5%. At January 31, 2013,
$nil and
        $1.1 million were outstanding under this facility relating to
Dominion
        Diamond International NV and Dominion Diamond (India) Private
Limited,
             respectively. The facility is guaranteed by Dominion
Diamond
                                     Corporation.
          (iii) The Company's first mortgage on real property has
scheduled
          principal payments of approximately $0.2 million quarterly,
may be
        prepaid at any time, and matures on September 1, 2018. On
January 31,
             2013, $5.6 million was outstanding on the mortgage payable.
    (b)  Interest on loans and borrowings is calculated at various fixed
and
           floating rates. Projected interest payments on the current
debt
          outstanding were based on interest rates in effect at January
31,
            2013, and have been included under interest-bearing loans
and
         borrowings in the table above. Interest payments for the next
twelve
                     months are approximated to be $1.2 million.
    (c)   The Joint Venture, under environmental and other agreements,
must
        provide funding for the Environmental Monitoring Advisory Board.
These
          agreements also state that the Joint Venture must provide
security
         deposits for the performance by the Joint Venture of its
reclamation
             and abandonment obligations under all environmental laws
and
          regulations. The operator of the Joint Venture has fulfilled
such
        obligations for the security deposits by posting letters of
credit, of
        which DDDLP's share as at January 31, 2013 was $82.0
million based on
        its 40% ownership interest in the Diavik Diamond Mine. There can
be no
          assurance that the operator will continue its practice of
posting
         letters of credit in fulfillment of this obligation, in which
event
           DDDLP would be required to post its proportionate share of
such
          security directly, which would result in additional
constraints on
         liquidity. The requirement to post security for the reclamation
and
        abandonment obligations may be reduced to the extent of amounts
spent
         by the Joint Venture on those activities. The Joint Venture has
also
          signed participation agreements with various native groups.
These
          agreements are expected to contribute to the social, economic
and
         cultural well-being of area Aboriginal bands. The actual cash
outlay
          for the Joint Venture's obligations under these
agreements is not
          anticipated to occur until later in the life of the Diavik
Diamond
                                        Mine.
Non-IFRS Measures
In addition to discussing earnings measures in accordance with IFRS, the
MD&A provides the following non-IFRS measures, which are also used
by management to monitor and evaluate the performance of the Company.
Cash Cost of Production
The MD&A refers to cash cost of production, a non-IFRS performance
measure, in order to provide investors with information about the
measure used by management to monitor performance. This information is
used to assess how well the Diavik Diamond Mine is performing compared
to the mine plan and prior periods. Cash cost of production includes
mine site operating costs such as mining, processing and administration,
but is exclusive of amortization, capital, and exploration and
development costs. Cash cost of production does not have any
standardized meaning prescribed by IFRS and differs from measures
determined in accordance with IFRS. This performance measure is intended
to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with IFRS. This measure is not necessarily indicative of net
profit or cash flow from operations as determined under IFRS.
EBITDA
The term EBITDA (earnings before interest, taxes, depreciation and
amortization) does not have a standardized meaning according to IFRS and
therefore may not be comparable to similar measures presented by other
issuers. The Company defines EBITDA as sales minus cost of sales and
selling, general and administrative expenses, meaning it represents
operating profit before depreciation and amortization.
EBITDA is a measure commonly reported and widely used by investors and
analysts as an indicator of the Company's operating performance and
ability to incur and service debt and as a valuation metric. EBITDA
margin is defined as the ratio obtained by dividing EBITDA by sales.
(expressed in thousands of United States dollars)
(unaudited)
                                   2013      2013      2013      2013
2012       2012
                                    Q4        Q3        Q2        Q1
Q4         Q3
    Operating profit (loss)
    from continuing operations  $ 20,987  $  5,574  $  8,939  $ 12,171
$ 23,985  $ (3,263)
    Depreciation and amortization 24,346    20,588    13,160    22,172
24,284    19,933
    EBITDA from continuing
    operations                  $ 45,333  $ 26,162  $ 22,099  $ 34,343
$ 48,269  $ 16,670
Table cont'd.
                                   2012      2012      2013       2012
2011
                                    Q2        Q1       Total      Total
Total
    Operating profit (loss)
    from continuing operations  $ 16,286  $    566  $  47,671  $  37,574
$  54,000
    Depreciation and amortization 17,461    17,083     80,266     78,761
63,424
    EBITDA from continuing
    operations                  $ 33,747  $ 17,649  $ 127,937  $ 116,335
$ 117,424
Risks and Uncertainties
Dominion Diamond Corporation is subject to a number of risks and
uncertainties as a result of its operations. In addition to the other
information contained in this MD&A and the Company's other
publicly filed disclosure documents, readers should give careful
consideration to the following risks, each of which could have a
material adverse effect on the Company's business prospects or
financial condition.
Nature of Mining
The operation of the Diavik Diamond Mine is subject to risks inherent in
the mining industry, including variations in grade and other geological
differences, unexpected problems associated with required water
retention dikes, water quality, surface and underground conditions,
processing problems, equipment performance, accidents, labour disputes,
risks relating to the physical security of the diamonds, force majeure
risks and natural disasters. Particularly with underground mining
operations, inherent risks include variations in rock structure and
strength as it impacts on mining method selection and performance,
de-watering and water handling requirements, achieving the required
crushed rock-fill strengths, and unexpected local ground conditions.
Hazards, such as unusual or unexpected rock formations, rock bursts,
pressures, collapses, flooding or other conditions, may be encountered
during mining. Such risks could result in personal injury or fatality;
damage to or destruction of mining properties, processing facilities or
equipment; environmental damage; delays, suspensions or permanent
reductions in mining production; monetary losses; and possible legal
liability.
The Diavik Diamond Mine, because of its remote northern location and
access only by winter road or by air, is subject to special climate and
transportation risks. These risks include the inability to operate or to
operate efficiently during periods of extreme cold, the unavailability
of materials and equipment, and increased transportation costs due to
the late opening and/or early closure of the winter road. Such factors
can add to the cost of mine development, production and operation and/or
impair production and mining activities, thereby affecting the
Company's profitability.
Nature of Interest in DDMI
DDDLP holds an undivided 40% interest in the assets, liabilities and
expenses of the Diavik Diamond Mine and the Diavik group of mineral
claims. The Diavik Diamond Mine and the exploration and development of
the Diavik group of mineral claims is a joint arrangement between DDMI
(60%) and DDDLP (40%), and is subject to the risks normally associated
with the conduct of joint ventures and similar joint arrangements. These
risks include the inability to exert influence over strategic decisions
made in respect of the Diavik Diamond Mine and the Diavik group of
mineral claims, including the inability to control the timing and scope
of capital expenditures, and risks that DDMI may decide not to proceed
with mining of the A-21 pipe or may otherwise change the mine plan. By
virtue of DDMI's 60% interest in the Diavik Diamond Mine, it has a
controlling vote in virtually all Joint Venture management decisions
respecting the development and operation of the Diavik Diamond Mine and
the development of the Diavik group of mineral claims. Accordingly, DDMI
is able to determine the timing and scope of future project capital
expenditures, and therefore is able to impose capital expenditure
requirements on DDDLP that the Company may not have sufficient cash to
meet. A failure to meet capital expenditure requirements imposed by DDMI
could result in DDDLP's interest in the Diavik Diamond Mine and the
Diavik group of mineral claims being diluted. Rio Tinto plc, the parent
of DDMI, announced a review of its diamond operations in early 2012.
Diamond Prices and Demand for Diamonds
The profitability of the Company is dependent upon production from the
Diavik Diamond Mine, which is dependent on the worldwide demand for and
price of diamonds. Diamond prices fluctuate and are affected by numerous
factors beyond the control of the Company, including worldwide economic
trends, particularly in the US, Japan, China and India, worldwide levels
of diamond discovery and production, and the level of demand for, and
discretionary spending on, luxury goods such as diamonds. Low or
negative growth in the worldwide economy, renewed or additional credit
market disruptions, natural disasters or the occurrence of terrorist
attacks or similar activities creating disruptions in economic growth
could result in decreased demand for luxury goods such as diamonds,
thereby negatively affecting the price of diamonds. Similarly, a
substantial increase in the worldwide level of diamond production or the
release of stocks held back during recent periods of low demand could
also negatively affect the price of diamonds. In each case, such
developments could have a material adverse effect on the Company's
results of operations.
Cash Flow and Liquidity
The Company's liquidity requirements fluctuate from quarter to
quarter and year to year depending on, among other factors, the
seasonality of production at the Diavik Diamond Mine, the seasonality of
mine operating expenses, exploration expenses, capital expenditure
programs, the number of rough diamond sales events conducted during the
quarter, and the volume, size and quality distribution of rough diamonds
delivered from the Diavik Diamond Mine and sold by the Company in each
quarter. The Company's principal working capital needs include
investments in inventory, prepaid expenses and other current assets, and
accounts payable and income taxes payable. There can be no assurance
that the Company will be able to meet each or all of its liquidity
requirements. A failure by the Company to meet its liquidity
requirements could result in the Company failing to meet its planned
development objectives, or in the Company being in default of a
contractual obligation, each of which could have a material adverse
effect on the Company's business prospects or financial condition.
Economic Environment
The Company's financial results are tied to the global economic
conditions and their impact on levels of consumer confidence and
consumer spending. The global markets have experienced the impact of a
significant US and international economic downturn since autumn 2008.
This has restricted the Company's growth opportunities both
domestically and internationally, and a return to a recession or weak
recovery, due to recent disruptions in financial markets in the US, the
Eurozone or elsewhere, budget policy issues in the US and political
upheavals in the Middle East, could cause the Company to experience
revenue declines due to deteriorated consumer confidence and spending,
and a decrease in the availability of credit, which could have a
material adverse effect on the Company's business prospects or
financial condition. The credit facilities essential to the diamond
polishing industry are largely underwritten by European banks that are
currently under stress with the European sovereign debt issue. The
withdrawal or reduction of such facilities could also have a material
adverse effect on the Company's business prospects or financial
condition. The Company monitors economic developments in the markets in
which it operates and uses this information in its continuous strategic
and operational planning in an effort to adjust its business in response
to changing economic conditions.
Currency Risk
Currency fluctuations may affect the Company's financial
performance. Diamonds are sold throughout the world based principally on
the US dollar price, and although the Company reports its financial
results in US dollars, a majority of the costs and expenses of the
Diavik Diamond Mine are incurred in Canadian dollars. Further, the
Company has a significant deferred income tax liability that has been
incurred and will be payable in Canadian dollars. The Company's
currency exposure relates to expenses and obligations incurred by it in
Canadian dollars. The appreciation of the Canadian dollar against the US
dollar, therefore, will increase the expenses of the Diavik Diamond Mine
and the amount of the Company's Canadian dollar liabilities
relative to the revenue the Company will receive from diamond sales.
From time to time, the Company may use a limited number of derivative
financial instruments to manage its foreign currency exposure.
Licences and Permits
The operation of the Diavik Diamond Mine and exploration on the Diavik
property requires licences and permits from the Canadian government. The
Diavik Diamond Mine Type "A" Water Licence was renewed by the
regional Wek'eezhii Land and Water Board to October 31, 2015. While
the Company anticipates that DDMI, the operator of the Diavik Diamond
Mine, will be able to renew this licence and other necessary permits in
the future, there can be no guarantee that DDMI will be able to do so or
obtain or maintain all other necessary licences and permits that may be
required to maintain the operation of the Diavik Diamond Mine or to
further explore and develop the Diavik property.
Regulatory and Environmental Risks
The operation of the Diavik Diamond Mine and exploration activities at
the Diavik property are subject to various laws and regulations
governing the protection of the environment, exploration, development,
production, taxes, labour standards, occupational health, waste
disposal, mine safety, manufacturing safety and other matters. New laws
and regulations, amendments to existing laws and regulations, or more
stringent implementation or changes in enforcement policies under
existing laws and regulations could have a material adverse effect on
the Company by increasing costs and/or causing a reduction in levels of
production from the Diavik Diamond Mine.
Mining and manufacturing are subject to potential risks and liabilities
associated with pollution of the environment and the disposal of waste
products occurring as a result of mining and manufacturing operations.
To the extent that the Company's operations are subject to
uninsured environmental liabilities, the payment of such liabilities
could have a material adverse effect on the Company.
Climate Change
The Canadian government has established a number of policy measures in
response to concerns relating to climate change. While the impact of
these measures cannot be quantified at this time, the likely effect will
be to increase costs for fossil fuels, electricity and transportation;
restrict industrial emission levels; impose added costs for emissions in
excess of permitted levels; and increase costs for monitoring and
reporting. Compliance with these initiatives could have a material
adverse effect on the Company's results of operations.
Resource and Reserve Estimates
The Company's figures for mineral resources and ore reserves on the
Diavik group of mineral claims are estimates, and no assurance can be
given that the anticipated carats will be recovered. The estimation of
reserves is a subjective process. Forecasts are based on engineering
data, projected future rates of production and the timing of future
expenditures, all of which are subject to numerous uncertainties and
various interpretations. The Company expects that its estimates of
reserves will change to reflect updated information as well as to
reflect depletion due to production. Reserve estimates may be revised
upward or downward based on the results of current and future drilling,
testing or production levels, and on changes in mine design. In
addition, market fluctuations in the price of diamonds or increases in
the costs to recover diamonds from the Diavik Diamond Mine may render
the mining of ore reserves uneconomical.
Mineral resources that are not mineral reserves do not have demonstrated
economic viability. Due to the uncertainty that may attach to inferred
mineral resources, there is no assurance that mineral resources at the
Diavik property will be upgraded to proven and probable ore reserves.
Insurance
The Company's business is subject to a number of risks and hazards,
including adverse environmental conditions, industrial accidents, labour
disputes, unusual or unexpected geological conditions, risks relating to
the physical security of diamonds held as inventory or in transit,
changes in the regulatory environment, and natural phenomena such as
inclement weather conditions. Such occurrences could result in damage to
the Diavik Diamond Mine, personal injury or death, environmental damage
to the Diavik property, delays in mining, monetary losses and possible
legal liability. Although insurance is maintained to protect against
certain risks in connection with the Diavik Diamond Mine and the
Company's operations, the insurance in place will not cover all
potential risks. It may not be possible to maintain insurance to cover
insurable risks at economically feasible premiums.
Fuel Costs
The Diavik Diamond Mine's expected fuel needs are purchased
periodically during the year for storage, and transported to the mine
site by way of the winter road. These costs will increase if
transportation by air freight is required due to a shortened
"winter road season" or unexpected high fuel usage.
The cost of the fuel purchased is based on the then prevailing price and
expensed into operating costs on a usage basis. The Diavik Diamond Mine
currently has no hedges for its future anticipated fuel consumption.
Reliance on Skilled Employees
Production at the Diavik Diamond Mine is dependent upon the efforts of
certain skilled employees of DDMI. The loss of these employees or the
inability of DDMI to attract and retain additional skilled employees may
adversely affect the level of diamond production from the Diavik Diamond
Mine.
The Company's success in marketing rough diamonds is dependent on
the services of key executives and skilled employees, as well as the
continuance of key relationships with certain third parties, such as
diamantaires. The loss of these persons or the Company's inability
to attract and retain additional skilled employees or to establish and
maintain relationships with required third parties may adversely affect
its business and future operations in marketing diamonds.
Cybersecurity
The Company and certain of its third-party vendors receive and store
personal information in connection with human resources operations and
other aspects of the business. Despite the Company's implementation
of security measures, its IT systems are vulnerable to damage from
computer viruses, natural disasters, unauthorized access, cyber attack
and other similar disruptions. Any system failure, accident or security
breach could result in disruptions to the Company's operations. A
material network breach in the security of the IT systems could include
the theft of intellectual property or trade secrets. To the extent that
any disruption or security breach results in a loss or damage to the
Company's data, or in inappropriate disclosure of confidential
information or financial data, such disruption or breach could cause
significant damage to the Company's reputation, affect its
relationships with its customers, lead to claims against the Company and
ultimately harm its business. In addition, the Company may be required
to incur significant costs to protect against damage caused by these
disruptions or security breaches in the future. Although the Company
believes that it has robust information security procedures and other
safeguards in place, as cyber threats continue to evolve, the Company
may be required to expend additional resources to continue to enhance
its information security measures and/or to investigate and remediate
any information security vulnerabilities.
Risks relating to the Ekati Diamond Mine Acquisition
On November 13, 2012, the Company entered into share purchase agreements
with respect to the Ekati Diamond Mine Acquisition. The closing of the
Ekati Diamond Mine Acquisition is subject to the satisfaction of typical
closing conditions, including the receipt of competition and antitrust
law approvals and other regulatory approvals required in connection with
the transfer of operatorship and ownership of the Core Zone and the
Buffer Zone interests of the Ekati Diamond Mine. In connection with the
Ekati Diamond Mine Acquisition, the Company has arranged new secured
credit facilities with The Royal Bank of Canada and Standard Chartered
Bank. These new facilities are subject to customary closing conditions,
including closing of the Core Zone acquisition. There can be no
assurances that all of the closing conditions to the Core Zone
acquisition will be satisfied and accordingly, that the new facilities
become available to the Company, and there can be no assurances that all
of the closing conditions to the Ekati Diamond Mine Acquisition will be
satisfied.
Completion of the Ekati Diamond Mine Acquisition and the integration of
the Ekati Diamond Mine into the Company's operations will require
significant management time and resources.
Disclosure Controls and Procedures
The Company has designed a system of disclosure controls and procedures
to provide reasonable assurance that material information relating to
Dominion Diamond Corporation, including its consolidated subsidiaries,
is made known to the management of the Company by others within those
entities, particularly during the period in which the Company's
annual filings are being prepared. In designing and evaluating the
disclosure controls and procedures, the management of the Company
recognized that any controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the
desired control objectives. The management of Dominion Diamond
Corporation was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures. The
result of the inherent limitations in all control systems means no
evaluation of controls can provide absolute assurance that all control
issues and instances of fraud, if any, have been detected.
The management of Dominion Diamond Corporation has evaluated the
effectiveness of the design and operation of its disclosure controls and
procedures as of the end of the period covered by the Annual Report.
Based on that evaluation, management has concluded that these disclosure
controls and procedures, as defined in Canada by Multilateral Instrument
52-109, Certification of Disclosure in Issuers' Annual and Interim
Filings, and in the United States by Rule 13a-15(e) under the Securities
Exchange Act of 1934 (the "Exchange Act"), are effective as of
January 31, 2013, to ensure that information required to be disclosed in
reports that the Company will file or submit under Canadian securities
legislation and the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in those rules and forms.
Internal Control over Financial Reporting
The certifying officers of the Company have designed a system of
internal control over financial reporting to provide reasonable
assurance regarding the reliability of financial reporting and the
preparation of financial statements in accordance with IFRS and the
requirements of the US Securities and Exchange Commission, as
applicable. Management is responsible for establishing and maintaining
adequate internal control over financial reporting for the Company,
including its consolidated subsidiaries.
Management has evaluated the effectiveness of internal control over
financial reporting using the framework and criteria established in the
Internal Control - Integrated Framework, issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on this
evaluation, management has concluded that internal control over
financial reporting was effective as of January 31, 2013.
Changes in Internal Control over Financial Reporting
During the fourth quarter of fiscal 2013, there were no changes in the
Company's disclosure controls and procedures or internal control
over financial reporting that materially affected, or are reasonably
likely to materially
affect, the Company's disclosure controls and procedures or
internal control over financial reporting.
Critical Accounting Estimates
Management is often required to make judgments, assumptions and
estimates in the application of IFRS that have a significant impact on
the financial results of the Company. Certain policies are more
significant than others and are, therefore, considered critical
accounting policies. Accounting policies are considered critical if they
rely on a substantial amount of judgment (use of estimates) in their
application, or if they result from a choice between accounting
alternatives and that choice has a material impact on the Company's
financial performance or financial position. The following discussion
outlines the accounting policies and practices that are critical to
determining Dominion Diamond Corporation's financial results.
Significant Judgments, Estimates and Assumptions
The preparation of the consolidated financial statements in conformity
with IFRS requires management to make judgments, estimates and
assumptions that affect the application of accounting policies and
reported amounts of assets and liabilities and contingent liabilities at
the date of the consolidated financial statements, and the reported
amounts of sales and expenses during the reporting period. Estimates and
assumptions are continually evaluated and are based on management's
experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances. However,
actual outcomes can differ from these estimates. Revisions to accounting
estimates are recognized in the period in which the estimates are
revised and in any future periods affected. Information about
significant areas of estimation uncertainty and critical judgments in
applying accounting policies that have the most significant effect on
the amounts recognized in the consolidated financial statements is as
follows:
a. Significant Judgments in Applying Accounting Policies
Recovery of deferred tax assets
Judgment is required in determining whether deferred tax assets are
recognized in the consolidated balance sheet. Deferred tax assets,
including those arising from un-utilized tax losses, require management
to assess the likelihood that the Company will generate taxable earnings
in future periods in order to utilize recognized deferred tax assets.
Estimates of future taxable income are based on forecasted income from
operations and the application of existing tax laws in each
jurisdiction. To the extent that future taxable income differs
significantly from estimates, the ability of the Company to realize the
deferred tax assets recorded at the consolidated balance sheet date
could be impacted. Additionally, future changes in tax laws in the
jurisdictions in which the Company operates could limit the ability of
the Company to obtain tax deductions in future periods.
Commitments and contingencies
The Company has conducted its operations in the ordinary course of
business in accordance with its understanding and interpretation of
applicable tax legislation in the countries where the Company has
operations. The relevant tax authorities could have a different
interpretation of those tax laws that could lead to contingencies or
additional liabilities for the Company. The Company believes that its
tax filing positions as at the balance sheet date are appropriate and
supportable. Should the ultimate tax liability materially differ from
the provision, the Company's effective tax rate and its profit or
loss could be affected positively or negatively in the period in which
the matters are resolved.
b. Significant Estimates and Assumptions in Applying Accounting Policies
Mineral reserves, mineral properties and exploration costs
The estimation of mineral reserves is a subjective process. The Company
estimates its mineral reserves based on information compiled by an
appropriately qualified person. Forecasts are based on engineering data,
projected future rates of production and the timing of future
expenditures, all of which are subject to numerous uncertainties and
various interpretations. The Company expects that its estimates of
reserves will change to reflect updated information. Reserve estimates
can be revised upward or downward based on the results of future
drilling, testing or production levels, and diamond prices. Changes in
reserve estimates may impact the carrying value of exploration and
evaluation assets, mineral properties, property, plant and equipment,
mine rehabilitation and site restoration provision, recognition of
deferred tax assets, and depreciation charges. Estimates and assumptions
about future events and circumstances are also used to determine whether
economically viable reserves exist that can lead to commercial
development of an ore body.
Estimated mineral reserves are used in determining the depreciation of
mine-specific assets. This results in a depreciation charge proportional
to the depletion of the anticipated remaining life of mine production. A
units-of-production depreciation method is applied, and depending on the
asset, is based on carats of diamonds recovered during the period
relative to the estimated proven and probable reserves of the ore
deposit being mined or to the total ore deposit. Changes in estimates
are accounted for prospectively.
Impairment of long-lived assets
The Company assesses each cash-generating unit at least annually to
determine whether any indication of impairment exists. Where an
indicator of impairment exists, a formal estimate of the recoverable
amount is made, which is considered to be the higher of the fair value
of an asset less costs to sell and its value in use. These assessments
require the use of estimates and assumptions such as long-term commodity
prices, discount rates, future capital requirements, exploration
potential and operating performance. Financial results as determined by
actual events could differ from those estimated.
Mine rehabilitation and site restoration provision
The mine rehabilitation and site restoration provision has been provided
by management of the Diavik Diamond Mine and is based on internal
estimates. Assumptions, based on the current economic environment, have
been made which DDMI management believes are a reasonable basis upon
which to estimate the future liability. These estimates are reviewed
regularly by management of the Diavik Diamond Mine to take into account
any material changes to the assumptions. However, actual rehabilitation
costs will ultimately depend upon future costs for the necessary
decommissioning work required, which will reflect market conditions at
the relevant time. Furthermore, the timing of rehabilitation is likely
to depend on when the Diavik Diamond Mine ceases to produce at
economically viable rates. This, in turn, will depend upon a number of
factors including future diamond prices, which are inherently uncertain.
Changes in Accounting Policies
The International Accounting Standards Board ("IASB") has
issued a new standard, IFRS 9, "Financial Instruments"
("IFRS 9"), which will ultimately replace IAS 39,
"Financial Instruments: Recognition and Measurement"
("IAS 39"). IFRS 9 provides guidance on the classification and
measurement of financial assets and financial liabilities. This standard
becomes effective for the Company's fiscal year end beginning
February 1, 2015. The Company is currently assessing the impact of the
new standard on its financial statements.
IFRS 10, "Consolidated Financial Statements" ("IFRS
10"), was issued by the IASB on May 12, 2011, and will replace the
consolidation requirements in SIC-12, "Consolidation - Special
Purpose Entities" and IAS 27, "Consolidated and Separate
Financial Statements". The new standard establishes control as the
basis for determining which entities are consolidated in the
consolidated financial statements and provides guidance to assist in the
determination of control where it is difficult to assess. IFRS 10 is
effective for the Company's fiscal year end beginning February 1,
2013, with early adoption permitted. The Company is currently assessing
the impact of IFRS 10 on its consolidated financial statements.
IFRS 11, "Joint Arrangements" ("IFRS 11"), was
issued by the IASB on May 12, 2011 and will replace IAS 31,
"Interest in Joint Ventures". The new standard will apply to
the accounting for interests in joint arrangements where there is joint
control. Under IFRS 11, joint arrangements are classified as either
joint ventures or joint operations. The structure of the joint
arrangement will no longer be the most significant factor in determining
whether a joint arrangement is either a joint venture or a joint
operation. For a joint venture, proportionate consolidation will no
longer be allowed and will be replaced by equity accounting. IFRS 11 is
effective for the Company's fiscal year end beginning February 1,
2013, with early adoption permitted. The Company is currently assessing
the impact of IFRS 11 on its results of operations and financial
position.
IFRS 13, "Fair Value Measurement" ("IFRS 13"), was
also issued by the IASB on May 12, 2011. The new standard generally
makes IFRS consistent with generally accepted accounting principles in
the United States ("US GAAP") on measuring fair value and
related fair value disclosures. The new standard creates a single source
of guidance for fair value measurements. IFRS 13 is effective for the
Company's fiscal year end beginning February 1, 2013, with early
adoption permitted. The Company is currently assessing the impact of
IFRS 13 on its consolidated financial statements.
The International Financial Reporting Interpretations Committee
("IFRIC") issued IFRIC 20, "Stripping Costs in the
Production Phase of a Surface Mine" ("IFRIC 20"), on
October 19, 2011. IFRIC 20 clarifies the requirements for accounting for
stripping costs associated with waste removal in surface mining,
including when production stripping costs should be recognized as an
asset, how the asset is initially recognized, and subsequent
measurement. IFRIC 20 is effective for the Company's fiscal year
end beginning February 1, 2013. The Company is currently assessing the
impact of IFRIC 20 on its consolidated financial statements.
Amendments to IAS 19, "Employee Benefits" ("IAS
19"), was issued by the IASB on June 11, 2011. The amended standard
eliminates the option to defer the recognition of actuarial gains and
losses through the "corridor" approach, revises the
presentation of changes in assets and liabilities arising from defined
benefit plans and enhances the disclosures for defined benefit plans.
IAS 19 is effective for the Company's fiscal year end beginning
February 1, 2013, with early adoption permitted. The Company is
currently assessing the impact of IAS 19 on its consolidated financial
statements.
Outstanding Share Information
        As at March 31, 2013
    Authorized                        Unlimited
    Issued and outstanding shares    84,883,031
    Options outstanding               2,362,175
    Fully diluted                    87,245,206
Additional Information
Additional information relating to the Company, including the
Company's most recently filed Annual Information Form, can be found
on SEDAR at http://www.sedar.com, and is also available on the
Company's website at http://www.ddcorp.ca.
                                      Consolidated Balance Sheets
                   (EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS)
(UNAUDITED)
                                                    January 31,
January 31,
                                                          2012
2011
                                   January 31,       (Recast -
(Recast -
                                         2013          note 25)
note 25)
    ASSETS
    Current assets
    Cash and cash equivalents
    (note 4)                      $   104,313      $    78,116      $
108,693
    Accounts receivable
    (note 5)                            3,705           26,910
22,788
    Inventory and supplies
    (note 6)                          115,627          457,827
403,212
    Other current assets
    (note 7)                           29,486           45,494
41,317
    Assets held for sale
    (note 8)                          718,804                -
-
                                      971,935          608,347
576,010
    Property, plant and equipment
    - Mining (note 9)                 727,489          734,146
764,093
    Property, plant and equipment
    - Luxury brand (note 9)                 -           69,781
61,019
    Intangible assets, net                  -          127,337
127,894
    Other non-current assets (note 11)  6,937           14,165
14,521
    Deferred income tax assets
    (note 14)                           4,095           53,485
48,563
    Total assets                  $ 1,710,456      $ 1,607,261      $
1,592,100
    LIABILITIES AND EQUITY
    Current liabilities
    Trade and other payables
    (note 12)                     $    39,053      $   104,681      $
139,551
    Employee benefit plans
    (note 13)                           2,634            6,026
4,317
    Income taxes payable (note 14)     32,977           29,450
6,660
    Promissory note                         -                -
70,000
    Current portion of
    interest-bearing loans and
    borrowings (note 15)               51,508           29,238
24,215
    Liabilities held for sale
    (note 8)                          484,252                -
-
                                      610,424          169,395
244,743
    Interest-bearing loans and
    borrowings (note 15)                4,799          270,485
235,516
    Deferred income tax liabilities
    (note 14)                         181,427          295,565
292,598
    Employee benefit plans
    (note 13)                           3,499            9,463
7,287
    Provisions (note 16)               79,055           65,245
50,130
    Total liabilities                 879,204          810,153
830,274
    Equity
    Share capital (note 17)           508,007          507,975
502,129
    Contributed surplus                20,387           17,764
16,233
    Retained earnings                 295,738          261,028
235,574
    Accumulated other
    comprehensive income                6,357           10,086
7,624
    Total shareholders' equity        830,489          796,853
761,560
    Non-controlling interest              763              255
266
    Total equity                      831,252          797,108
761,826
    Total liabilities and equity  $ 1,710,456      $ 1,607,261      $
1,592,100
    Subsequent events (note 1)
    The accompanying notes are an integral part of these consolidated
financial statements.
                                    Consolidated Income Statements
    (EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT PER SHARE
AMOUNTS) (UNAUDITED)
                                                         2013
2012
    Sales                                        $    345,411
$    290,114
    Cost of sales                                     267,584
227,951
    Gross margin                                       77,827
62,163
    Selling, general and administrative expenses       30,156
24,589
    Operating profit (note 18)                         47,671
37,574
    Finance expenses                                   (9,083)
(10,787)
    Exploration costs                                  (1,801)
(1,770)
    Finance and other income                              780
462
    Foreign exchange gain                                 493
834
    Profit before income taxes                         38,060
26,313
    Income tax expense (note 14)                       15,276
9,007
    Net profit from continuing operations              22,784
17,306
    Net profit from discontinued operations
    (note 8)                                           12,434
8,137
    Net profit                                   $     35,218
$     25,443
    Net profit (loss) from continuing
    operations attributable to
        Shareholders                             $     22,276
$     17,317
        Non-controlling interest                          508
(11)
    Net profit (loss) attributable to
        Shareholders                             $     34,710
25,454
        Non-controlling interest                          508
$        (11)
    Earnings per share - continuing operations
        Basic                                    $       0.26
$       0.20
        Diluted                                          0.26
0.20
    Earnings per share
        Basic                                            0.41
0.30
        Diluted                                          0.41
0.30
    Weighted average number of shares
    outstanding (note 19)                          84,875,789
84,660,796
    The accompanying notes are an integral part of these consolidated
financial statements.
                            Consolidated Statements of Comprehensive
Income
                      (EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS)
(UNAUDITED)
                                                           2013
2012
    Net profit                                       $   35,218
$   25,443
    Other comprehensive income
        Net gain (loss) on translation of net
        foreign operations (net of tax of nil)           (2,883)
3,634
        Actuarial loss on employee benefit plans
        (net of tax of $0.1 million for the year
         ended January 31, 2013; 2012 - $0.6 million)      (846)
(1,172)
    Other comprehensive income, net of tax               (3,729)
2,462
    Total comprehensive income                       $   31,489
$   27,905
        Comprehensive income from continuing
        operations                                   $   22,778
$   17,319
        Comprehensive income from discontinued
        operations                                        8,711
10,586
    Net comprehensive income (loss) attributable to
             Shareholders                            $   30,981
$   27,916
             Non-controlling interest                       508
(11)
    The accompanying notes are an integral part of these consolidated
financial statements.
                   Consolidated Statements of Changes in Equity
          (EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS) (UNAUDITED)
                                                         2013
2012
    Common shares:
    Balance at beginning of period                 $  507,975       $
502,129
    Issued during the period                               32
5,286
    Transfer from contributed surplus on
    exercise of options                                     -
560
    Balance at end of period                          508,007
507,975
    Contributed surplus:
    Balance at beginning of period                     17,764
16,233
    Stock-based compensation expense                    2,623
2,091
    Transfer from contributed surplus on
    exercise of options                                     -
(560)
    Balance at end of period                           20,387
17,764
    Retained earnings:
    Balance at beginning of period (Recast
    - note 25)                                        261,028
235,574
    Net profit attributable to common
    shareholders                                       34,710
25,454
    Balance at end of period                          295,738
261,028
    Accumulated other comprehensive income:
    Balance at beginning of period                     10,086
7,624
    Other comprehensive income
        Net gain (loss) on translation of net
        foreign operations (net of tax of nil)         (2,883)
3,634
        Actuarial loss on employee benefit plans
        (net of tax of $0.1 million for the year
        ended January 31, 2013; 2012 - $0.6 million)     (846)
(1,172)
    Balance at end of period                            6,357
10,086
    Non-controlling interest:
    Balance at beginning of period                        255
266
    Non-controlling interest                              508
(11)
    Balance at end of period                              763
255
    Total equity                                   $  831,252       $
797,108
    The accompanying notes are an integral part of these consolidated
financial statements.
                    Consolidated Statements of Cash Flows
        (EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS) (UNAUDITED)
                                                     2013
2012
    Cash provided by (used in)
    OPERATING
    Net profit (loss)                         $    22,784     $
17,306
        Depreciation and amortization              80,266
78,761
        Deferred income tax recovery               (9,752)
(2,290)
        Current income tax expense                 25,028
11,297
        Finance expenses                            9,083
10,787
        Stock-based compensation                    2,623
2,091
        Other non-cash items                       (1,761)
303
        Foreign exchange gain                         (45)
(2,619)
        Gain on disposition of assets                (330)
-
    Change in non-cash operating working
    capital, excluding taxes and finance
    expenses                                        8,871
(27,691)
    Cash provided by (used in) operating
    activities                                    136,767
87,945
         Interest paid                             (5,318)
(8,922)
         Income and mining taxes paid             (15,987)
12,422
    Cash provided by (used in) operating
    activities - continuing operations            115,462
91,445
    Cash provided by (used in) operating
    activities - discontinued operations          (10,339)
(32,454)
    Net cash from (used in) operating
    activities                                    105,123
58,991
    FINANCING
    Decrease in interest-bearing loans
    and borrowings                                 (5,359)
(709)
    Increase in revolving credit                   38,765
60,166
    Decrease in revolving credit                  (41,898)
(56,118)
    Repayment of promissory note                        -
(70,000)
    Issue of common shares, net of issue
    costs                                              32
5,286
    Contributed capital                            (8,000)
(10,000)
    Cash provided from financing
    activities - continuing operations            (16,460)
(71,375)
    Cash provided from financing
    activities - discontinued operations           39,880
46,045
    Cash provided from financing
    activities                                     23,420
(25,330)
    Investing
    Property, plant and equipment                 (56,478)
(45,165)
    Net proceeds from sale of property,
    plant and equipment                             2,619
-
    Other non-current assets                           50
(652)
    Cash provided in investing
    activities - continuing operations            (53,809)
(45,817)
    Cash provided in investing
    activities - discontinued operations          (25,023)
(20,918)
    Cash used in investing activities             (78,832)
(66,735)
    Foreign exchange effect on cash
    balances                                         (378)
2,497
    Increase (decrease) in cash and cash
    equivalents                                    49,333
(30,577)
    Cash and cash equivalents, beginning
    of period                                      78,116
108,693
    Cash and equivalents, end of period           127,449
78,116
    Less cash and equivalents of
    discontinued operations, end of
    period                                         23,136
19,815
    Cash and cash equivalents of
    continuing operations, end of period      $   104,313     $
58,301
    Change in non-cash operating working
    capital, excluding taxes and finance
    expenses
    Accounts receivable                            (1,747)
669
    Inventory and supplies                          8,994
(21,718)
    Other current assets                              148
(4,491)
    Trade and other payables                           72
(3,725)
    Employee benefit plans                          1,404
1,574
                                              $     8,871     $
(27,691)
    The accompanying notes are an integral part of these consolidated
financial statements
Notes to Consolidated Financial Statements
JANUARY 31, 2013 (UNAUDITED) WITH COMPARATIVE FIGURES
(TABULAR AMOUNTS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT AS
OTHERWISE NOTED)
Note 1:
Nature of Operations and Subsequent Events
Effective March 26, 2013, Harry Winston Diamond Corporation changed its
name to Dominion Diamond Corporation ("Dominion Diamond
Corporation" or the "Company") and its common shares now
trade on both the Toronto and New York stock exchanges under the symbol
"DDC". Dominion Diamond Corporation is focused on the mining
and marketing of rough diamonds to the global market.
The Company is incorporated and domiciled in Canada and its shares are
publicly traded on the Toronto Stock Exchange and the New York Stock
Exchange. The address of its registered office is Toronto, Ontario.
The Company's mining asset is an ownership interest in the Diavik
group of mineral claims. The Diavik Joint Venture (the "Joint
Venture") is an unincorporated joint arrangement between Diavik
Diamond Mines Inc. ("DDMI") (60%) and Dominion Diamond Diavik
Limited Partnership (formerly known as Harry Winston Diamond Limited
Partnership) ("DDDLP") (40%) where DDDLP holds an undivided
40% ownership interest in the assets, liabilities and expenses of the
Diavik Diamond Mine. DDMI is the operator of the Diavik Diamond Mine.
DDMI and DDDLP are headquartered in Yellowknife, Canada. DDMI is a
wholly owned subsidiary of Rio Tinto plc of London, England, and DDDLP
is a wholly owned subsidiary of Dominion Diamond Corporation of Toronto,
Canada.
On November 13, 2012, the Company entered into share purchase agreements
with BHP Billiton Canada Inc. and various affiliates to purchase all of
BHP Billiton's diamond assets, including its controlling interest
in the Ekati Diamond Mine as well as the associated diamond sorting and
sales facilities in Yellowknife, Canada, and Antwerp, Belgium (the
"Ekati Diamond Mine Acquisition"). The Ekati Diamond Mine
consists of the Core Zone, which includes the current operating mine and
other permitted kimberlite pipes, as well as the Buffer Zone, an
adjacent area hosting kimberlite pipes having both development and
exploration potential. The agreed purchase price, payable in cash, is
$400 million for the Core Zone interest and $100 million for the Buffer
Zone interest, subject to adjustments in accordance with the terms of
the share purchase agreements. The share purchase agreements include
typical closing conditions. Each of the Core Zone and the Buffer Zone is
subject to a separate joint venture agreement. BHP Billiton holds an 80%
interest in the Core Zone and a 58.8% interest in the Buffer Zone, with
the remainder held by the Ekati minority joint venture parties. BHP
Billiton has advised the Company that all of the minority joint venture
partners have agreed to waive their rights of first refusal to purchase
the interests in the Buffer Zone and Core Zone that they do not own, as
applicable, pursuant to the terms of their respective joint venture
agreements. Closing of the Ekati Diamond Mine Acquisition is currently
expected to occur on April 10, 2013. In connection with the Ekati
Diamond Mine Acquisition, the Company has arranged new secured credit
facilities consisting of a $400 million term loan, a $100 million
revolving credit facility (of which $50 million will be available for
purposes of funding the Ekati Diamond Mine Acquisition) and a $140
million letter of credit facility (expandable to $265 million in
aggregate). These new facilities will be secured and will replace the
Company's current $125 million facility with Standard Chartered
Bank.
On March 26, 2013, the Company completed the sale of the Luxury Brand
Segment to Swatch Group (the "Luxury Brand Divestiture"). As a
result of the sale, the Company's corporate group underwent name
changes to remove references to "Harry Winston".
Note 2: Basis of Preparation
    (a)                        Statement of compliance
            These consolidated financial statements have been prepared
in
         accordance with International Financial Reporting Standards
("IFRS")
         as issued by the International Accounting Standards Board
("IASB").
    (b)                          Basis of measurement
          These consolidated financial statements have been prepared on
the
                   historical cost basis except for the following:

* financial instruments held for trading are measured at fair value
through profit and loss

* liabilities for Restricted Share Unit and Deferred Share Unit
plans are measured at fair value

     (c)                        Currency of presentation
        These consolidated financial statements are expressed in United
States
            dollars, which is the functional currency of the Company.
All
          financial information presented in United States dollars has
been
                           rounded to the nearest thousand.
Note 3:
Significant Accounting Policies
The accounting policies set out below have been applied consistently to
all periods presented in these consolidated financial statements, and
have been applied consistently by Company entities.
    (a)                         Basis of consolidation
             The consolidated financial statements comprise the
financial
           statements of the Company and its subsidiaries as at January
31,
              2013. Subsidiaries are fully consolidated from the date of
         acquisition or creation, being the date on which the Company
obtains
          control, and continue to be consolidated until the date that
such
           control ceases. The financial statements of the subsidiaries
are
         prepared for the same reporting period as the parent company,
using
        consistent accounting policies. All intercompany balances,
income and
        expenses, and unrealized gains and losses resulting from
intercompany
         transactions are eliminated in full. For partly owned
subsidiaries,
        the net assets and net earnings attributable to minority
shareholders
            are presented as non-controlling interests on the
consolidated
                                    balance sheet.
                           Interest in Diavik Joint Venture
             DDDLP has an undivided 40% ownership interest in the
assets,
          liabilities and expenses of the Joint Venture. The Company
records
          its interest in the assets, liabilities and expenses of the
Joint
          Venture in its consolidated financial statements with a
one-month
          lag. The accounting policies described below include those of
the
                                    Joint Venture.
    (b)                                Revenue
          Sales of rough diamonds are recognized when significant risks
and
         rewards of ownership are transferred to the customer, the
amount of
          sales can be measured reliably and the receipt of future
economic
          benefits are probable. Sales are measured at the fair value of
the
           consideration received or receivable and after eliminating
sales
                                 within the Company.
    (c)                       Cash and Cash Equivalents
           Cash and cash equivalents consist of cash on hand, balances
with
          banks and short-term money market instruments (with a maturity
on
          acquisition of less than 90 days), and are carried at fair
value.
    (d)                       Trade Accounts Receivable
          Trade accounts receivable are recorded at the invoiced amount
and
           generally do not bear interest. Account balances are written
off
            against the allowance after all means of collection have
been
            exhausted and the potential for recovery is considered
remote.
    (e)                         Inventory and supplies
          Mining rough diamond inventory is recorded at the lower of
cost or
          net realizable value. Cost is determined on an average cost
basis
           including production costs and value-added processing
activity.
          Mining supplies inventory is recorded at the lower of cost or
net
         realizable value. Supplies inventory includes consumables and
spare
        parts maintained at the Diavik Diamond Mine site and at the
Company's
                     sorting and distribution facility locations.
         Net realizable value is the estimated selling price in the
ordinary
         course of business, less estimated costs of completion and
costs of
           selling the final product. In order to determine net
realizable
           value, the carrying amount of obsolete and slow moving items
is
            written down on a basis of an estimate of their future use
or
         realization. A provision for obsolescence is made when the
carrying
                     amount is higher than net realizable value.
    (f)            Assets held for sale and discontinued operations
        A discontinued operation represents a separate major line of
business
         that either has been disposed of or is classified as held for
sale.
           Classification as held for sale applies when an asset's
carrying
        value will be recovered principally through a sale transaction
rather
          than through continuing use, it is available for immediate
sale in
          its present condition and its sale is highly probable. Results
for
           assets held for sale are disclosed separately as net profit
from
          discontinued operations in the consolidated income statements
and
                  comparative periods are reclassified accordingly.
    (g)          Exploration, evaluation and development expenditures
         Exploration and evaluation activities include: acquisition of
rights
          to explore; topographical, geological, geochemical and
geophysical
        studies; exploratory drilling; trenching and sampling; and
activities
           involved in evaluating the technical feasibility and
commercial
          viability of extracting mineral resources. Capitalized
exploration
         and evaluation expenditures are recorded as a component of
property,
         plant and equipment. Exploration and evaluation assets are no
longer
           classified as such when the technical feasibility and
commercial
         viability of extracting a mineral resource are demonstrable.
Before
         reclassification, exploration and evaluation assets are
assessed for
           impairment. Recognized exploration and evaluation assets will
be
        assessed for impairment when the facts and circumstances suggest
that
                the carrying amount may exceed its recoverable amount.
           Drilling and related costs are capitalized for an ore body
where
        proven and probable reserves exist and the activities are
directed at
         either (a) obtaining additional information on the ore body
that is
          classified within proven and probable reserves, or (b)
converting
          non-reserve mineralization to proven and probable reserves and
the
         benefit is expected to be realized over an extended period of
time.
            All other drilling and related costs are expensed as
incurred.
    (h)                     Property, plant and equipment
          Items of property, plant and equipment are measured at cost,
less
           accumulated depreciation and accumulated impairment losses.
The
              initial cost of an asset comprises its purchase price and
          construction cost, any costs directly attributable to bringing
the
         asset into operation, including stripping costs incurred in
open pit
           mining before production commences, the initial estimate of
the
           rehabilitation obligation, and for qualifying assets,
borrowing
           costs. The purchase price or construction cost is the
aggregate
          amount paid and the fair value of any other consideration
given to
                                  acquire the asset.
        When parts of an item of property, plant and equipment have
different
          useful lives, the parts are accounted for as separate items
(major
                    components) of property, plant and equipment.
            Gains and losses on disposal of an item of property, plant
and
         equipment are determined by comparing the proceeds from the
disposal
          with the carrying amount of property, plant and equipment and
are
               recognized within cost of sales or selling, general and
                               administrative expenses.
          (i)                                   DEPRECIATION
                 Depreciation commences when the asset is available for
use. Depreciation
                 is charged so as to write off the depreciable amount of
the asset to its
                   residual value over its estimated useful life, using
a method that
                   reflects the pattern in which the asset's future
economic benefits
                              are expected to be consumed by the
Company.
                    The unit-of-production method is applied to a
substantial portion of
                  Diavik Diamond Mine property, plant and equipment,
and, depending on the
                 asset, is based on carats of diamonds recovered during
the period relative
                    to the estimated proven and probable ore reserves of
the ore deposit
                   being mined, or to the total ore deposit. The Company
does not include
                  estimates of measured, indicated or inferred resources
in its calculation
                 of ore reserves. Other plant, property and equipment
are depreciated using
                  the straight-line method over the estimated useful
lives of the related
                   assets, for the current and comparative periods,
which are as follows:
          Asset                                 Estimated useful life
(years)
          Buildings                                                    10-40
          Machinery and mobile equipment
3-10
          Computer equipment and software
3
          Furniture, fixtures and equipment
2-10
          Leasehold and building improvements                       Up
to 20
                   Amortization for mine related assets was charged to
mineral properties
                              during the pre-commercial production
stage.
                     Upon the disposition of an asset, the accumulated
depreciation and
                   accumulated impairment losses are deducted from the
original cost, and
                         any gain or loss is reflected in current net
profit or loss.
                     Depreciation methods, useful lives and residual
values are reviewed
                    at each financial year end and adjusted if
appropriate. The impact of
                    changes to the estimated useful lives or residual
values is accounted
                                              for prospectively.
          (ii)                                 STRIPPING COSTS
                     Mining costs associated with stripping activities
in an open pit mine
                    are expensed unless the stripping activity can be
shown to represent a
                     betterment to the mineral property, in which case
the stripping costs
                     would be capitalized and included in deferred
mineral property costs
                     within mining assets. Stripping costs incurred
during the production
                       phase of an open pit mine are variable production
costs that are
                     included as a component of inventory to be
recognized as a component
                         of cost of sales in the same period as the sale
of inventory.
          (iii)                          MAJOR MAINTENANCE AND REPAIRS
                    Expenditure on major maintenance refits or repairs
comprises the cost
                    of replacement assets or parts of assets and
overhaul costs. When an
                    asset, or part of an asset that was separately
depreciated, is replaced
                     and it is probable that future economic benefits
associated with the
                       new asset will flow to the Company through an
extended life, the
                       expenditure is capitalized. The unamortized value
of the existing
                    asset or part of the existing asset that is being
replaced is expensed.
                      Where part of the existing asset was not
separately considered as a
                           component, the replacement value is used to
estimate the
                      carrying amount of the replaced assets, which is
immediately written
                      off. All other day-to-day maintenance costs are
expensed as incurred.
    (i)                    Other non-current assets
          Other non-current assets include depreciable assets amortized
over
                          a period not exceeding ten years.
    (j)                     Financial instruments
          From time to time, the Company may use a limited number of
            derivative financial instruments to manage its foreign
           currency and interest rate exposure. For a derivative to
          qualify as a hedge at inception and throughout the hedged
            period, the Company formally documents the nature and
           relationships between the hedging instruments and hedged
         items, as well as its risk-management objectives, strategies
         for undertaking the various hedge transactions and method of
             assessing hedge effectiveness. Financial instruments
          qualifying for hedge accounting must maintain a specified
         level of effectiveness between the hedge instrument and the
           item being hedged, both at inception and throughout the
              hedged period. Gains and losses resulting from any
           ineffectiveness in a hedging relationship are recognized
                      immediately in net profit or loss.
    (k)                           Provisions
          Provisions represent obligations to the Company for which
         the amount or timing is uncertain. Provisions are recognized
           when (a) the Company has a present obligation (legal or
             constructive) as a result of a past event, (b) it is
           probable that an outflow of resources embodying economic
         benefits will be required to settle the obligation, and (c)
             a reliable estimate can be made of the amount of the
             obligation. The expense relating to any provision is
          included in net profit or loss. If the effect of the time
         value of money is material, provisions are discounted using
         a current pre-tax rate that reflects, where appropriate, the
         risks specific to the obligation. Where discounting is used,
         the increase in the provision due to the passage of time is
             recognized as a finance cost in net profit or loss.
             Mine rehabilitation and site restoration provision:
         The Company records the present value of estimated costs of
            legal and constructive obligations required to restore
         operating locations in the period in which the obligation is
             incurred. The nature of these restoration activities
         includes dismantling and removing structures, rehabilitating
          mines and tailings dams, dismantling operating facilities,
              closure of plant and waste sites, and restoration,
               reclamation and re-vegetation of affected areas.
         The obligations generally arise when the asset is installed
           or the ground/environment is disturbed at the production
          location. When the liability is initially recognized, the
            present value of the estimated cost is capitalized by
          increasing the carrying amount of the related assets. Over
          time, the discounted liability is increased/decreased for
         the change in present value based on the discount rates that
         reflect current market assessments and the risks specific to
             the liability. Additional disturbances or changes in
         rehabilitation costs, including re-measurement from changes
         in the discount rate, are recognized as additions or charges
           to the corresponding assets and rehabilitation liability
          when they occur. The periodic unwinding of the discount is
             recognized in net profit or loss as a finance cost.
    (l)                        Foreign currency
                         Foreign currency translation
            Monetary assets and liabilities denominated in foreign
         currencies are translated to US dollars at exchange rates in
          effect at the balance sheet date, and non-monetary assets
            and liabilities are translated at rates of exchange in
             effect when the assets were acquired or obligations
          incurred. Revenues and expenses are translated at rates in
           effect at the time of the transactions. Foreign exchange
             gains and losses are included in net profit or loss.
         For certain subsidiaries of the Company where the functional
         currency is not the US dollar, the assets and liabilities of
         these subsidiaries are translated at the rate of exchange in
             effect at the reporting date. Sales and expenses are
         translated at the rate of exchange in effect at the time of
           the transactions. Foreign exchange gains and losses are
               accumulated in other comprehensive income within
          shareholders' equity. When a foreign operation is
disposed
          of, in part or in full, the relevant amount in the foreign
          exchange reserve account is reclassified to net profit or
                 loss as part of profit or loss on disposal.
    (m)                          Income taxes
                          Current and deferred taxes
         Income tax expense comprises current and deferred tax and is
          recognized in net profit or loss except to the extent that
         it relates to items recognized directly in equity, in which
          case it is recognized in equity or in other comprehensive
                                   income.
            Current tax expense is the expected tax payable on the
           taxable income for the year, using tax rates enacted or
             substantively enacted at the reporting date, and any
           adjustment to tax payable in respect of previous years.
          Deferred tax expense is recognized in respect of temporary
            differences between the carrying amounts of assets and
         liabilities for financial reporting purposes and the amounts
         used for taxation purposes. Deferred tax expense is measured
             at the tax rates that are expected to be applied to
          temporary differences when they reverse, based on the laws
            that have been enacted or substantively enacted by the
                               reporting date.
         A deferred tax asset is recognized to the extent that it is
            probable that future taxable profits will be available
           against which the temporary difference can be utilized.
         Deferred tax assets are reviewed at each reporting date and
            are reduced to the extent that it is probable that the
                  related tax benefit will not be realized.
          Deferred income and mining tax assets and deferred income
             and mining tax liabilities are offset, if a legally
            enforceable right exists to offset current tax assets
           against current income tax liabilities and the deferred
         income taxes relate to the same taxable entity and the same
                             taxation authority.
         The Company classifies exchange differences on deferred tax
         assets or liabilities in jurisdictions where the functional
             currency is different from the currency used for tax
                       purposes as income tax expense.
    (n)                Stock-based payment transactions
                           Stock-based compensation
          The Company applies the fair value method to all grants of
             stock options. The fair value of options granted is
         estimated at the date of grant using a Black-Scholes option
         pricing model incorporating assumptions regarding risk-free
           interest rates, dividend yield, volatility factor of the
         expected market price of the Company's stock, and a
weighted
           average expected life of the options. When option awards
              vest in installments over the vesting period, each
         installment is accounted for as a separate arrangement. The
            estimated fair value of the options is recorded as an
          expense with an offsetting credit to shareholders'
equity.
         Any consideration received on amounts attributable to stock
                    options is credited to share capital.
                   Restricted and Deferred Share Unit Plans
           The Restricted and Deferred Share Unit ("RSU" and
"DSU")
         Plans are full value phantom shares that mirror the value of
            Dominion Diamond Corporation's publicly traded common
           shares. Grants under the RSU Plan are on a discretionary
            basis to employees of the Company subject to Board of
         Directors approval. Under the prior RSU Plan, each RSU grant
         vests on the third anniversary of the grant date. Under the
              2010 RSU Plan, each RSU grant vests equally over a
          three-year period. Vesting under both RSU Plans is subject
             to special rules for death, disability and change in
              control. Grants under the DSU Plan are awarded to
         non-executive directors of the Company. Each DSU grant vests
          immediately on the grant date. The expenses related to the
            RSUs and DSUs are accrued based on fair value. When a
           share-based payment award vests in installments over the
            vesting period, each installment is accounted for as a
           separate arrangement. These awards are accounted for as
            liabilities with the value of these liabilities being
          re-measured at each reporting date based on changes in the
            fair value of the awards, and at settlement date. Any
         changes in the fair value of the liability are recognized as
             employee benefit plan expense in net profit or loss.
    (o)                     Employee benefit plans
           Contributions to defined contribution pension plans are
                            expensed as incurred.
    (p)                        Operating leases
         Minimum rent payments under operating leases, including any
            rent-free periods and/or construction allowances, are
           recognized on a straight-line basis over the term of the
                  lease and included in net profit or loss.
    (q)               Impairment of non-financial assets
          The carrying amounts of the Company's non-financial
assets
         other than inventory and deferred taxes are reviewed at each
         reporting date to determine whether there is any indication
            of impairment. If any such indication exists, then the
                   asset's recoverable amount is estimated.
           The recoverable amount of an asset is the greater of its
          fair value less costs to sell and its value in use. In the
             absence of a binding sales agreement, fair value is
           estimated on the basis of values obtained from an active
          market or from recent transactions or on the basis of the
         best information available that reflects the amount that the
          Company could obtain from the disposal of the asset. Value
           in use is defined as the present value of future pre-tax
         cash flows expected to be derived from the use of an asset,
          using a pre-tax discount rate that reflects current market
             assessments of the time value of money and the risks
             specific to the asset. For the purpose of impairment
         testing, assets are grouped together into the smallest group
          of assets that generates cash inflows from continuing use
          that are largely independent of the cash inflows of other
           assets or groups of assets (the "cash-generating
unit").
          An impairment loss is recognized if the carrying amount of
          an asset or its cash-generating unit exceeds its estimated
         recoverable amount. Impairment losses are recognized in the
         consolidated statement of income in those expense categories
             consistent with the function of the impaired asset.
          Impairment losses recognized in respect of cash-generating
          units would be allocated to reduce the carrying amounts of
         the assets in the unit (group of units) on a pro rata basis.
         For property, plant and equipment, an assessment is made at
          each reporting date as to whether there is any indication
          that previously recognized impairment losses may no longer
         exist or may have decreased. If such indication exists, the
            Company makes an estimate of the recoverable amount. A
          previously recognized impairment loss is reversed only if
          there has been a change in the estimates used to determine
           the asset's recoverable amount since the last impairment
            loss was recognized. If this is the case, the carrying
         amount of the asset is increased to its recoverable amount.
         The increased amount cannot exceed the carrying amount that
           would have been determined, net of depreciation, had no
            impairment loss been recognized for the asset in prior
            years. Such reversal is recognized in the consolidated
                             statement of income.
    (r)              Basic and diluted earnings per share
           Basic earnings per share are calculated by dividing net
           profit or loss by the weighted average number of shares
          outstanding during the period. Diluted earnings per share
         are determined using the treasury stock method to calculate
          the dilutive effect of options and warrants. The treasury
         stock method assumes that the exercise of any
"in-the-money"
          options with the option proceeds would be used to purchase
          common shares at the average market value for the period.
            Options with an exercise price higher than the average
             market value for the period are not included in the
          calculation of diluted earnings per share as such options
                              are not dilutive.
    (s)          Use of estimates, judgments and assumptions
         The preparation of the consolidated financial statements in
         conformity with IFRS requires management to make judgments,
           estimates and assumptions that affect the application of
            accounting policies and reported amounts of assets and
          liabilities and contingent liabilities at the date of the
         consolidated financial statements, and the reported amounts
         of sales and expenses during the reporting period. Estimates
          and assumptions are continually evaluated and are based on
             management's experience and other factors, including
            expectations of future events that are believed to be
         reasonable under the circumstances. However, actual outcomes
           can differ from these estimates. Revisions to accounting
             estimates are recognized in the period in which the
          estimates are revised and in any future periods affected.
              Information about significant areas of estimation
          uncertainty and critical judgments in applying accounting
            policies that have the most significant effect on the
         amounts recognized in the consolidated financial statements
                                is as follows:
          a.        Significant Judgments in Applying Accounting
Policies
                              Recovery of deferred tax assets
               Judgment is required in determining whether deferred tax
assets
               are recognized in the consolidated balance sheet.
Deferred tax
                assets, including those arising from un-utilized tax
losses,
                     require management to assess the likelihood that
the
                  Company will generate taxable earnings in future
periods in
                 order to utilize recognized deferred tax assets.
Estimates of
             future taxable income are based on forecasted income from
operations
               and the application of existing tax laws in each
jurisdiction. To
                the extent that future taxable income differs
significantly from
                  estimates, the ability of the Company to realize the
deferred
                   tax assets recorded at the consolidated balance sheet
date
               could be impacted. Additionally, future changes in tax
laws in the
               jurisdictions in which the Company operates could limit
the ability
                   of the Company to obtain tax deductions in future
periods.
                                Commitments and contingencies
               The Company has conducted its operations in the ordinary
course
              of business in accordance with its understanding and
interpretation
                of applicable tax legislation in the countries where the
Company
               has operations. The relevant tax authorities could have a
different
               interpretation of those tax laws that could lead to
contingencies
              or additional liabilities for the Company. The Company
believes that
              its tax filing positions as at the balance sheet date are
appropriate
                 and supportable. Should the ultimate tax liability
materially
                differ from the provision, the Company's effective
tax rate and
                 its profit or loss could be affected positively or
negatively
                     in the period in which the matters are resolved.
          b.  Significant Estimates and Assumptions in Applying
Accounting Policies
                 Mineral reserves, mineral properties and exploration
costs
                 The estimation of mineral reserves is a subjective
process. The
                   Company estimates its mineral reserves based on
information
                   compiled by an appropriately qualified person.
Forecasts are
                      based on engineering data, projected future rates
of
                  production and the timing of future expenditures, all
of which
                        are subject to numerous uncertainties and
various
                     interpretations. The Company expects that its
estimates of
                    reserves will change to reflect updated information.
Reserve
                estimates can be revised upward or downward based on the
results of
                     future drilling, testing or production levels, and
diamond
                    prices. Changes in reserve estimates may impact the
carrying
                        value of exploration and evaluation assets,
mineral
                 properties, property, plant and equipment, mine
rehabilitation and
                      site restoration provision, recognition of
deferred tax
                  assets, and depreciation charges. Estimates and
assumptions about
                  future events and circumstances are also used to
determine whether
                    economically viable reserves exist that can lead to
commercial
                                      development of an ore body.
                       Estimated mineral reserves are used in
determining the
                       depreciation of mine-specific assets. This
results in a
                       depreciation charge proportional to the depletion
of the
                 anticipated remaining life of mine production. A
units-of-production
                    depreciation method is applied, and depending on the
asset, is
                       based on carats of diamonds recovered during the
period
                  relative to the estimated proven and probable reserves
of the ore
                      deposit being mined or to the total ore deposit.
Changes in
                             estimates are accounted for prospectively.
                                    Impairment of long-lived assets
                        The Company assesses each cash-generating unit
at least
                   annually to determine whether any indication of
impairment exists.
                   Where an indicator of impairment exists, a formal
estimate of the
                  recoverable amount is made, which is considered to be
the higher of
                      the fair value of an asset less costs to sell and
its value in
                  use. These assessments require the use of estimates
and assumptions
                      such as long-term commodity prices, discount
rates, future
                       capital requirements, exploration potential and
operating
                  performance. Financial results as determined by actual
events could
                                      differ from those estimated.
                            Mine rehabilitation and site restoration
provision
                     The mine rehabilitation and site restoration
provision has been
                     provided by management of the Diavik Diamond Mine
and is based
                        on internal estimates. Assumptions, based on the
current
                       economic environment, have been made which DDMI
management
                    believes are a reasonable basis upon which to
estimate the future
                     liability. These estimates are reviewed regularly
by management
                   of the Diavik Diamond Mine to take into account any
material changes
                      to the assumptions. However, actual rehabilitation
costs will
                          ultimately depend upon future costs for the
necessary
                         decommissioning work required, which will
reflect market
                        conditions at the relevant time. Furthermore,
the timing of
                     rehabilitation is likely to depend on when the
Diavik Diamond Mine
                    ceases to produce at economically viable rates.
This, in turn, will
                     depend upon a number of factors including future
diamond prices,
                                   which are inherently uncertain.
    (t)             Standards issued but not yet effective
         The following standards and interpretations have been issued
         but are not yet effective and have not been early adopted in
                         these financial statements.
          The International Accounting Standards Board
("IASB") has
            issued a new standard, IFRS 9, "Financial
Instruments"
         ("IFRS 9"), which will ultimately replace IAS 39,
"Financial
         Instruments: Recognition and Measurement" ("IAS
39"). IFRS 9
          provides guidance on the classification and measurement of
          financial assets and financial liabilities. This standard
             becomes effective for the Company's fiscal year end
             beginning February 1, 2015. The Company is currently
          assessing the impact of the new standard on its financial
                                 statements.
          IFRS 10, "Consolidated Financial Statements"
("IFRS 10"),
         was issued by the IASB on May 12, 2011, and will replace the
            consolidation requirements in SIC-12, "Consolidation -
           Special Purpose Entities" and IAS 27, "Consolidated
and
         Separate Financial Statements". The new standard
establishes
           control as the basis for determining which entities are
          consolidated in the consolidated financial statements and
         provides guidance to assist in the determination of control
          where it is difficult to assess. IFRS 10 is effective for
          the Company's fiscal year end beginning February 1, 2013,
           with early adoption permitted. The Company is currently
             assessing the impact of IFRS 10 on its consolidated
                            financial statements.
         IFRS 11, "Joint Arrangements" ("IFRS 11"),
was issued by the
          IASB on May 12, 2011 and will replace IAS 31, "Interest
in
             Joint Ventures". The new standard will apply to the
          accounting for interests in joint arrangements where there
           is joint control. Under IFRS 11, joint arrangements are
         classified as either joint ventures or joint operations. The
           structure of the joint arrangement will no longer be the
            most significant factor in determining whether a joint
         arrangement is either a joint venture or a joint operation.
           For a joint venture, proportionate consolidation will no
         longer be allowed and will be replaced by equity accounting.
            IFRS 11 is effective for the Company's fiscal year end
          beginning February 1, 2013, with early adoption permitted.
         The Company is currently assessing the impact of IFRS 11 on
              its results of operations and financial position.
           IFRS 13, "Fair Value Measurement" ("IFRS
13"), was also
             issued by the IASB on May 12, 2011. The new standard
           generally makes IFRS consistent with generally accepted
          accounting principles in the United States ("US
GAAP") on
         measuring fair value and related fair value disclosures. The
          new standard creates a single source of guidance for fair
          value measurements. IFRS 13 is effective for the
Company's
            fiscal year end beginning February 1, 2013, with early
          adoption permitted. The Company is currently assessing the
         impact of IFRS 13 on its consolidated financial statements.
            The International Financial Reporting Interpretations
         Committee ("IFRIC") issued IFRIC 20, "Stripping
Costs in the
         Production Phase of a Surface Mine" ("IFRIC
20"), on October
         19, 2011. IFRIC 20 clarifies the requirements for accounting
         for stripping costs associated with waste removal in surface
         mining, including when production stripping costs should be
              recognized as an asset, how the asset is initially
             recognized, and subsequent measurement. IFRIC 20 is
            effective for the Company's fiscal year end beginning
           February 1, 2013. The Company is currently assessing the
         impact of IFRIC 20 on its consolidated financial statements.
          Amendments to IAS 19, "Employee Benefits" ("IAS
19"), was
          issued by the IASB on June 11, 2011. The amended standard
         eliminates the option to defer the recognition of actuarial
          gains and losses through the "corridor" approach,
revises
            the presentation of changes in assets and liabilities
             arising from defined benefit plans and enhances the
          disclosures for defined benefit plans. IAS 19 is effective
           for the Company's fiscal year end beginning February 1,
             2013, with early adoption permitted. The Company is
         currently assessing the impact of IAS 19 on its consolidated
                            financial statements.
Note 4: Cash and Cash Equivalents
                                               2013      2012
    Cash on hand and balances with banks  $ 104,313  $ 76,030
    Short-term investments                        -     2,086
    Total cash and cash equivalents       $ 104,313  $ 78,116
Short-term investments are held in overnight deposits and money market
instruments with a maturity of 30 days.
Note 5: Accounts Receivable
                                                     2013      2012
    Mining receivables                            $ 3,705  $  1,923
    Luxury brand trade receivables                      -    25,828
    Luxury brand allowance for doubtful accounts        -      (841)
    Total accounts receivable                     $ 3,705  $ 26,910
The Company's exposure to interest rate risk and sensitivity
analysis is disclosed in Note 22.
Note 6: Inventory and Supplies
                                             2013       2012
    Mining rough diamonds               $  45,467  $  62,472
    Mining supplies inventory              70,160     68,916
    Luxury brand raw materials                  -     62,188
    Luxury brand work-in-progress               -     45,407
    Luxury brand merchandise inventory          -    218,844
    Total inventory and supplies        $ 115,627  $ 457,827
Total inventory and supplies is net of a provision for obsolescence of
$0.4 million ($3.1 million at January 31, 2012). Cost of sales from
continuing operations includes inventory of $262.7 million sold during
the year (2012 - $207.3 million), with another $4.9 million of
non-inventoried costs (2012 - $20.6 million).
Note 7: Other Current Assets
                                           2013      2012
    Mining prepaid assets              $ 29,486  $ 28,148
    Luxury brand other current assets         -     7,082
    Luxury brand prepaid assets               -    10,264
    Total other current assets         $ 29,486  $ 45,494
Note 8: Assets Held for Sale (Discontinued Operations) On March 26,
2013, the Company completed the sale of the Luxury Brand Segment to
Swatch Group (the "Luxury Brand Divestiture"). As a result of
the sale, the Company's corporate group underwent name changes to
remove references to "Harry Winston".  The Company's name
has now been changed to "Dominion Diamond Corporation" and its
common shares trade on both the Toronto and New York stock exchanges
under the symbol "DDC".
The major classes of assets and liabilities of the discontinued
operations were as follows:
                                                             January 31,
                                                                   2013
    ASSETS
    Cash and cash equivalents                             $      23,136
    Accounts receivable and other current assets                 51,674
    Inventory and supplies                                      373,957
    Property, plant and equipment                                78,176
    Intangible assets, net                                      126,779
    Other non-current assets                                     11,452
    Deferred income tax assets                                   53,630
    Total assets related to discontinued operations       $     718,804
    LIABILITIES
    Trade and other payables                              $      93,495
    Income taxes payable                                          2,547
    Interest-bearing loans and borrowings                       273,175
    Deferred income tax liabilities                             106,614
    Other long-term liabilities                                   8,421
    Total liabilities related to discontinued operations  $     484,252
Results of the discontinued operations are presented separately as net
profit from discontinued operations in the consolidated income
statements, and comparative periods have been adjusted accordingly.
                                                            2013
2012
    Sales                                            $   435,835  $
411,929
    Cost of sales                                       (208,574)
(224,009)
    Other expenses                                      (212,562)
(174,862)
    Other income and foreign exchange gains                1,888
293
    Net income tax expense                                (4,153)
(5,214)
    Net profit from discontinued operations          $    12,434  $
8,137
    Earnings per share - discontinued operations
    Eo[euro]EAEBasic                                         $      0.15
$      0.10
    Diluted                                                 0.15
0.10
Note 9: Property, Plant and Equipment
    MINING OPERATIONS
                                                     Diavik
Real
                                                  equipment
Furniture,     property -
                                     Mineral            and
equipment      land and
                                  properties(a)  leaseholds(b)  and
other(c)   building(d)
    Cost:
    Balance at February 1, 2012   $   249,527    $   855,213    $
9,306    $    37,577
    Additions                             327              -
2,509          2,460
    Disposals                                        (14,805)
(151)             -
    Foreign exchange differences            -              -
-            157
    Transfers and other movements        (134)        59,187
-              -
    Balance at January 31, 2013   $   249,720    $   899,595    $
11,664    $    40,194
    Accumulated depreciation/
    amortization:
    Balance at February 1, 2012   $   162,068    $   297,245    $
6,028    $     9,335
    Depreciation and amortization
    for the year                       11,425         54,502
904          1,578
    Disposals                               -        (12,403)
(151)             -
    Foreign exchange differences            -              -
-            (34)
    Balance at January 31, 2013   $   173,493    $   339,344    $
6,781    $    10,879
    Net book value at
    January 31, 2013              $    76,227    $   560,251    $
4,883    $    29,315
Table cont'd.
    MINING OPERATIONS
                                                            Mine
                                          Assets  rehabilitation
                                           under        and site
                                    construction     restoration(e)
Total
    Cost:
    Balance at February 1, 2012   $       23,174  $         53,471   $
1,228,268
    Additions                             51,181            11,368
67,845
    Disposals                                  -                 -
(14,956)
    Foreign exchange differences               -                 -
157
    Transfers and other movements        (59,053)                -
-
    Balance at January 31, 2013   $       15,302  $         64,839   $
1,281,314
    Accumulated depreciation/
    amortization:
    Balance at February 1, 2012   $            -  $         19,446   $
494,122
    Depreciation and amortization
    for the year                               -             3,882
72,291
    Disposals                                  -                 -
(12,554)
    Foreign exchange differences               -                 -
(34)
    Balance at January 31, 2013   $            -  $         23,328   $
553,825
    Net book value at
    January 31, 2013              $       15,302  $         41,511   $
727,489
                                                     Diavik
Real
                                                  equipment
Furniture,     property -
                                     Mineral            and
equipment      land and
                                  properties(a)  leaseholds(b)  and
other(c)   building(d)
    Cost:
    Balance at February 1, 2011   $   250,047    $   768,515    $
7,927    $    35,227
    Additions                               -              -
1,379          2,450
    Disposals                               -           (942)
-              -
    Impairments for the year                -        (13,193)
-              -
    Foreign exchange differences            -              -
-           (100)
    Transfers and other movements        (520)       100,833
-              -
    Balance at January 31, 2012   $   249,527    $   855,213    $
9,306    $    37,577
    Accumulated depreciation/
    amortization:
    Balance at February 1, 2011   $   149,814    $   239,883    $
5,677    $     8,062
    Depreciation and amortization
    for the year                       12,254         58,304
351          1,293
    Disposals                               -           (942)
-              -
    Foreign exchange differences            -              -
-            (20)
    Balance at January 31, 2012   $   162,068    $   297,245    $
6,028    $     9,335
    Net book value at
    January 31, 2012              $    87,459    $   557,968    $
3,278    $    28,242
Table cont'd.
                                                            Mine
                                          Assets  rehabilitation
                                           under        and site
                                    construction     restoration(e)
Total
    Cost:
    Balance at February 1, 2011   $       82,135  $         40,291   $
1,184,142
    Additions                             41,352            13,180
58,361
    Disposals                                  -                 -
(942)
    Impairments for the year                   -                 -
(13,193)
    Foreign exchange differences               -                 -
(100)
    Transfers and other movements       (100,313)                -
-
    Balance at January 31, 2012   $       23,174  $         53,471   $
1,228,268
    Accumulated depreciation/
    amortization:
    Balance at February 1, 2011   $            -  $         16,613   $
420,049
    Depreciation and amortization
    for the year                               -             2,833
75,035
    Disposals                                  -                 -
(942)
    Foreign exchange differences               -                 -
(20)
    Balance at January 31, 2012   $            -  $         19,446   $
494,122
    Net book value at
    January 31, 2012              $       23,174  $         34,025   $
734,146
    LUXURY BRAND SEGMENT
                                       Furniture,       Real
                                       equipment    property -
                                            and     land and     Assets
under
                                          other(c)  building(d)
construction        Total
    Cost:
    Balance at February 1, 2012      $     43,024  $    87,828   $
9,961  $   140,813
    Additions                              13,957        7,218
2,579       23,754
    Disposals                                (216)        (376)
-        (592)
    Foreign exchange differences           (1,446)      (3,206)
(23)      (4,675)
    Reclassification to assets held
    for sale                              (55,319)     (91,464)
(12,517)    (159,300)
    Balance at January 31, 2013      $          -  $         -   $
-  $         -
    Accumulated depreciation/
    amortization:
    Balance at February 1, 2012      $     29,460  $    41,572   $
-  $    71,032
    Depreciation and amortization
    for the year                            5,284        8,861
-       14,145
    Disposals                                (219)        (410)
-         (629)
    Foreign exchange differences           (1,161)      (2,263)
-       (3,424)
    Reclassification to assets
    held for sale                         (33,364)     (47,760)
-      (81,124)
    Balance at January 31, 2013      $          -  $         -   $
-  $         -
    Net book value at
    January 31, 2013                 $          -  $         -   $
-  $         -
                                                            Real
                                       Furniture,     property -
                                    equipment and       land and
Assets under
                                         other(c)    building(d)
construction      Total
    Cost:
    Balance at February 1,
    2011                          $        34,866  $      85,430  $
63  $ 120,359
    Additions                               8,196          1,587
9,898     19,681
    Disposals                               (765)        (1,366)
-    (2,131)
    Foreign exchange
    differences                               727          2,177
-      2,904
    Balance at January 31,
    2012                          $        43,024  $      87,828  $
9,961  $ 140,813
    Accumulated
    depreciation/amortization:
    Balance at February 1,
    2011                          $        23,879  $      35,461  $
-  $  59,340
    Depreciation and
    amortization for the year               5,835          6,487
-     12,322
    Disposals                                (763)        (1,358)
-     (2,121)
    Foreign exchange
    differences                               509            982
-      1,491
    Balance at January 31,
    2012                          $        29,460  $      41,572  $
-  $  71,032
    Net book value at January
    31, 2012                      $        13,564  $      46,256  $
9,961  $  69,781
    (a)   The Company holds a 40% ownership interest in the Diavik group
of
        mineral claims, which contains commercially mineable diamond
reserves.
          DDMI, a subsidiary of Rio Tinto plc, is the operator of the
Joint
         Venture and holds the remaining 60% interest. The claims are
subject
         to private royalties, which are in the aggregate 2% of the
value of
                                    production.
    (b)   Diavik equipment and leaseholds are project related assets at
the
                                 Joint Venture level.
    (c)    Furniture, equipment and other includes equipment located at
the
         Company's diamond sorting facility and at Harry Winston
Inc. salons.
    (d)      Real property is comprised of land and a building that
houses the
              corporate activities of the Company, and various leasehold
           improvements to Harry Winston Inc. salons and corporate
offices.
    (e)  The Joint Venture has an obligation under various agreements
(note 22)
         to reclaim and restore the lands disturbed by its mining
operations.
Depreciation expense for continuing operations for 2013 was $72.3
million (2012 - $75.0 million).
Note 10:
Diavik Joint Venture
The following represents DDDLP's 40% proportionate interest in the
Joint Venture as at December 31, 2012 and December 31, 2011:
                                                               2012
2011
    Current assets                                        $ 102,299  $
101,454
    Non-current assets                                      677,808
685,590
    Current liabilities                                      30,517
31,745
    Non-current liabilities and participant's account       749,590
755,298
                                                               2012
2011
    Expenses net of interest income of $0.1 million
    (2011 - $0.1 million) (a)                           $   243,796  $
257,807
    Cash flows used in operating activities                (164,645)
(166,854)
    Cash flows resulting from financing activities          214,061
214,834
    Cash flows used in investing activities                 (50,925)
(43,499)
    (a) The Joint Venture only earns interest income.
DDDLP is contingently liable for DDMI's portion of the liabilities
of the Joint Venture, and to the extent DDDLP's participating
interest has increased because of the failure of DDMI to make a cash
contribution when required, DDDLP would have access to an increased
portion of the assets of the Joint Venture to settle these liabilities.
Additional information on commitments and contingencies related to the
Diavik Joint Venture is found in Note 22.
During fiscal 2012, the Company recognized a non-cash $13.0 million
charge in cost of sales related to the de-recognition of certain
components of the backfill plant (the "Paste Plant")
associated with paste production at the Diavik Diamond Mine. The
original mine plan envisioned the use of blasthole stoping and underhand
cut and fill underground mining methods for the Diavik ore bodies using
paste to preserve underground stability. It is now expected that the
higher velocity and lower cost sub-level retreat mining method, which
does not require paste, will be used for both the A-154 South and A-418
underground ore bodies. As a result, certain components of the Paste
Plant necessary for the production of paste will no longer be required
and accordingly were de-recognized during the year.
Note 11:
Other Non-Current Assets
                                                                     2013      2012
    Prepaid pricing discount(a), net of accumulated
    amortization of $11.7 million (2012 - $10.3 million)          $
240  $  1,680
    Other assets                                                    6,279     3,276
    Refundable security deposits
418     9,209
                                                                  $
6,937  $ 14,165
    (a)  Prepaid pricing discount represents funds paid to Tiffany &
Co. by the
          Company to amend its rough diamond supply agreement. The
amendment
        eliminated all pricing discounts on future sales. The payment
has been
          deferred and is being amortized on a straight-line basis over
the
                           remaining life of the contract.
Note 12:
Trade and Other Payables
                                                              2013
2012
    Trade and other payables                              $  1,105  $
41,031
    Accrued expenses                                         6,647
17,835
    Customer deposits                                          784
14,070
    Payables and accruals at the Diavik Joint Venture       30,517
31,745
                                                          $ 39,053  $
104,681
Note 13:
Employee Benefit Plans
The employee benefit obligation reflected in the consolidated balance
sheet is as follows:
                                                             2013
2012
    Post-retirement benefit plan - Diavik Diamond
    Mine (b)                                              $   699  $
289
    RSU and DSU plans (note 17)                             5,434
3,731
    Defined benefit plan obligation - Harry Winston
    luxury brand segment                                        -
11,381
    Defined contribution plan obligation - Harry
    Winston luxury brand segment                                -
88
    Total employee benefit plan obligation                $ 6,133  $
15,489
                                                             2013
2012
    Non-current                                           $ 3,499  $
9,463
    Current                                                 2,634
6,026
    Total employee benefit plan obligation                $ 6,133  $
15,489
The amounts recognized in the consolidated income statement in respect
of employee benefit plans are as follows:
                                                                 2013
2012
    Defined contribution plan - the Company's mining head
    office (a)                                                $   251  $
207
    Defined contribution plan - Diavik Diamond Mine (a)         2,258
2,081
    Post-retirement benefit plan - Diavik Diamond Mine
    (b)                                                            51
299
    RSU and DSU plans (note 17)                                 3,380
2,169
                                                              $ 5,940  $
4,756
    Share-based payments                                        2,623
2,091
    Total employee benefit plan expense                       $ 8,563  $
6,847
Employee benefit plan expense has been included in the consolidated
income statement as follows:
                                                       2013     2012
    Cost of sales                                   $ 2,309  $ 2,380
    Selling, general and administrative expenses      6,254    4,467
                                                    $ 8,563  $ 6,847
    (a)                       Defined contribution plan
          The Joint Venture sponsors a defined contribution plan whereby
the
                  employer contributes 6% of the employee's salary.
        Dominion Diamond Corporation sponsors a defined contribution
plan for
        Canadian employees whereby the employer contributes to a maximum
of 6%
           of the employee's salary to the maximum contribution
limit under
        Canada's Income Tax Act. The total defined contribution
plan liability
           at January 31, 2013 was $nil ($0.1 million at January 31,
2012).
    (b)                      Post-retirement benefit plan
          The Joint Venture provides non-pension post-retirement
benefits to
        retired employees. The post-retirement benefit plan liability
was $0.7
           million at January 31, 2013 ($0.3 million at January 31,
2012).
Note 14:
Income Taxes
The deferred income tax asset of the Company is $4.1 million. Included
in the deferred tax asset is $0.3 million that has been recorded to
recognize the benefit of $1.2 million of net operating losses that the
Company has available for carry forward to shelter income taxes for
future years. Certain net operating losses are scheduled to expire
between 2027 and 2031.
The deferred income tax liability of the Company is $181.4 million. The
Company's deferred income tax asset and liability accounts are
revalued to take into consideration the change in the Canadian dollar
compared to the US dollar and the unrealized foreign exchange gain or
loss is recorded as part of deferred tax expenses for each year.
(a) The income tax provision consists of the following:
                                                               2013
2012
    CURRENT TAX EXPENSE FROM CONTINUING OPERATIONS
    Current period                                        $  25,172  $
14,317
    Adjustment for prior periods                               (144)
(3,020)
    Total current tax expense                                25,028
11,297
    DEFERRED TAX EXPENSE FROM CONTINUING OPERATIONS
    Origination and reversal of temporary differences        (9,718)
(1,779)
    Change in unrecognized deductible temporary
    differences                                                 (36)
(525)
    Current year losses for which no deferred tax
    asset was recognized                                          2
14
    Total deferred tax expense                               (9,752)
(2,290)
    Total income tax expense from continuing
    operations                                            $  15,276  $
9,007
Tax expense from continuing operations excludes tax expense from
discontinued operations of $4.2 million (2012 - $5.2 million).
(b) The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and liabilities at
January 31, 2013 and 2012 are as follows:
                                                             2013
2012
    DEFERRED INCOME TAX ASSETS:
    Net operating loss carryforwards                  $       331  $
36,935
    Property, plant and equipment                             116
4,625
    Future site restoration costs                          13,329
11,083
    Luxury brand inventory                                      -
6,211
    Deferred mineral property costs                           240
251
    Other deferred income tax assets                       12,861
11,772
                                                           26,877
70,877
    Reclassification to deferred income tax
    liabilities (a)                                       (22,782)
(17,392)
    Deferred income tax assets                              4,095
53,485
    DEFERRED INCOME TAX LIABILITIES:
    Deferred mineral property costs                       (27,459)
(29,339)
    Property, plant and equipment                        (157,683)
(160,616)
    Luxury brand inventory                                      -
(47,927)
    Intangible assets                                           -
(52,081)
    Other deferred income tax liabilities                 (19,067)
(22,994)
                                                         (204,209)
(312,957)
    Reclassification to deferred income tax
    assets (a)                                             22,782
17,392
    Deferred income tax liabilities                      (181,427)
(295,565)
    Deferred income tax liabilities, net              $  (177,332) $
(242,080)
(a) There was an out-of-period reclassification in the prior year of
deferred income tax assets to deferred income tax liabilities, including
future site restoration costs, related to income taxes levied by the
same tax jurisdiction.
Movement in net deferred tax liabilities:
                                                             2013
2012
    Balance at the beginning of the year              $  (242,080) $
(244,035)
    Reclassification to assets held for sale               50,181
(335)
    Recognized in profit (loss)                             9,752
2,290
    Reclassification to current income taxes
    payable                                                 4,815
-
    Balance at the end of the year                    $  (177,332) $
(242,080)
(c) Unrecognized deferred tax assets and liabilities:
Deferred tax assets have not been recognized in respect of the following
items:
                                           2013     2012
    Tax losses                           $  548  $ 6,460
    Deductible temporary differences        265      166
    Total                                $  813  $ 6,626
The tax losses not recognized expire as per the amount and years noted
below. The deductible temporary differences do not expire under current
tax legislation. Deferred tax assets have not been recognized in respect
of these items because it is not probable that future taxable profit
will be available against which the Company can utilize the benefits
therefrom.
The following table summarizes the Company's non-capital losses as
at January 31, 2013 that may be applied against future taxable profit:
    Jurisdiction                     Type       Amount   Expiry Date
    Luxembourg       Net operating losses   $    1,903     No expiry
The deductible temporary differences associated with investments in
subsidiaries and joint ventures, for which a deferred tax asset has not
been recognized, aggregate to $60.0 million (2012 - $67.2 million).
(d) The difference between the amount of the reported consolidated
income tax provision and the amount computed by multiplying the earnings
(loss) before income taxes by the statutory tax rate of 26.5% (2012 -
28%) is a result of the following:
                                                               2013
2012
    Expected income tax expense from continuing
    operations                                            $  10,080  $
7,368
    Non-deductible (non-taxable) items                        1,208
592
    Impact of foreign exchange                                  659
1,153
    Northwest Territories mining royalty (net of
    income tax relief)                                        4,637
3,242
    Earnings subject to tax different than statutory
    rate                                                         70
(726)
    Assessments and adjustments                              (1,386)
(2,622)
    Current year losses for which no deferred tax
    asset was recognized                                          2
14
    Change in unrecognized temporary differences                (36)
(525)
    Other                                                        42
511
    Recorded income tax expense from continuing
    operations                                            $  15,276  $
9,007
e) The mining operations have net operating loss carryforwards for
Canadian income tax purposes of approximately $1.2 million and $1.9
million for other foreign jurisdictions' tax purposes.
Note 15:
Interest-Bearing Loans and Borrowings
                                                          2013
2012
    Mining operations credit facilities             $   49,560  $
48,460
    First mortgage on real property                      5,619
6,342
    Bank advances                                        1,128
27,850
    Harry Winston Inc. credit facilities                     -
217,071
    Total interest-bearing loans and borrowings         56,307
299,723
    Less current portion                               (51,508)
(29,238)
                                                    $    4,799  $
270,485
                                                Carrying        Face
                           Nominal             amount at    value at
                          interest   Date of  January 31, January 31,
                 Currency     rate  maturity        2013        2013
Borrower
    Secured bank                     June 24,      $49.6       $50.0
Dominion Diamond
    loan (a)(i)        US    3.70%      2013     million     million
Corporation and
                                                                         Dominion Diamond
                                                                         Holdings Ltd.
    First mortgage
    on real                        September        $5.6        $5.6
    property (a)(ii)  CDN    7.98%   1, 2018     million     million
6019838 Canada Inc.
    Secured bank                      Due on        $1.1        $1.1
Dominion Diamond
    advance (c)        US   13.50%    demand     million     million
(India) Private
                                                                         Limited
    (a)                           Credit facilities
        (i)   The mining operation maintains a senior secured revolving
credit
               facility with Standard Chartered Bank for $125.0 million.
The
              facility has an initial maturity date of June 24, 2013,
with two
                 one-year extensions at the Company's option. There
are no
               scheduled repayments required before maturity. The
facility is
                available to the Company and Dominion Diamond Holdings
Ltd.
              (formerly known as Harry Winston Diamond Mines Ltd.) for
general
               corporate purposes. Borrowings bear an interest margin of
3.5%
               above the higher of LIBOR or lender cost of funds. The
Company
                is required to comply with financial covenants at the
mining
               operation level customary for a financing of this nature,
with
               change in control provisions at the Company and Diavik
Diamond
                 Mines level. These provisions include consolidated
minimum
                tangible net worth, maximum mining operation debt to
equity
              ratio, maximum mining operation debt to EBITDA ratio and
minimum
                  interest coverage ratio. The Company has met all of
its
              financial covenants as at January 31, 2013. At January 31,
2013,
               the Company had $50.0 million outstanding on its mining
senior
                             secured revolving credit facility.
        (ii)    The Company's first mortgage on real property has
scheduled
              principal payments of approximately $0.2 million
quarterly, and
                                may be prepaid at any time.
    (b) Required principal repayments
        2014                              $ 51,948
        2015                                   886
        2016                                   958
        2017                                 1,036
        2018                                 1,121
        Thereafter                             797
    (c)                             Bank advances
         The Company has available a $45.0 million (utilization in
either US
           dollars or Euros) revolving financing facility for inventory
and
         receivables funding in connection with marketing activities
through
         its Belgian subsidiary, Dominion Diamond International NV
(formerly
           known as Harry Winston Diamond International NV), and its
Indian
         subsidiary, Dominion Diamond (India) Private Limited (formerly
known
         as Harry Winston Diamond (India) Private Limited). Borrowings
under
        the Belgian facility bear interest at the bank's base rate
plus 1.5%.
         Borrowings under the Indian facility bear an interest rate of
13.5%.
           At January 31, 2013, $1.1 million was drawn under the
Company's
          revolving financing facility relating to Dominion Diamond
(India)
         Private Limited and $nil was drawn by Dominion Diamond
International
           NV. The facility is guaranteed by Dominion Diamond
Corporation.
Note 16:
Provisions
(a) Future site restoration costs
                                           2013      2012
    At February 1, 2012 and 2011       $ 65,245  $ 50,130
    Revision of previous estimates       11,369    13,179
    Accretion of provision                2,441     1,936
    At January 31, 2013 and 2012       $ 79,055  $ 65,245
The Joint Venture has an obligation under various agreements (Note 22)
to reclaim and restore the lands disturbed by its mining operations.
The Company's share of the total undiscounted amount of the future
cash flows that will be required to settle the obligation incurred at
January 31, 2013 is estimated to be $87.6 million, of which
approximately $49.1 million is expected to occur at the end of the mine
life. The revision of previous estimates in fiscal 2012 and 2013 is
based on revised expectations of reclamation activity costs and changes
in estimated reclamation timelines. The anticipated cash flows relating
to the obligation at the time of the obligation have been discounted at
an annualized rate of 2.65% (2012 - 1.5%).
(b) Provisions for litigation claims
By their nature, contingencies will only be resolved when one or more
future events occur or fail to occur. The assessment of contingencies
inherently involves the exercise of significant judgment and estimates
of the outcome of future events. The Company is subject to various
litigation actions, whose outcome could have an impact on the
Company's results should it be required to make payments to the
plaintiffs. Legal advisors assess the potential outcome of the
litigation and the Company establishes provisions for future
disbursements as required. At January 31, 2013, the Company does not
have any material provisions for litigation claims.
Note 17:
Share Capital
(a) Authorized
Unlimited common shares without par value.
(b) Issued
                                   Number of shares      Amount
    Balance, January 31, 2011            84,159,851  $  502,129
    SHARES ISSUED FOR:
    Exercise of options                     714,930       5,846
    Balance, January 31, 2012            84,874,781     507,975
    SHARES ISSUED FOR:
    Exercise of options                       8,250          32
    Balance, January 31, 2013            84,883,031  $  508,007
(c) Stock options
Under the Employee Stock Option Plan, amended and approved by the
shareholders on June 4, 2008, the Company may grant options for up to
6,000,000 shares of common stock. Options may be granted to any
director, officer, employee or consultant of the Company or any of its
affiliates. Options granted to directors vest immediately and options
granted to officers, employees or consultants vest over three to four
years. The maximum term of an option is ten years. The number of shares
reserved for issuance to any one optionee pursuant to options cannot
exceed 2% of the issued and outstanding common shares of the Company at
the date of grant of such options.
The exercise price of each option cannot be less than the fair market
value of the shares on the last trading day preceding the date of grant.
The Company's shares are primarily traded on a Canadian dollar
based exchange, and accordingly stock option information is presented in
Canadian dollars, with conversion to US dollars at the average exchange
rate for the year.
Compensation expense for stock options was $2.6 million for fiscal 2013
(2012 - $2.1 million) and is presented as a component of both cost of
sales and selling, general and administrative expenses. The amount
credited to share capital for the exercise of the options is the sum of
(a) the cash proceeds received and (b) the amount debited to contributed
surplus upon exercise of stock options by optionees (2013 - $nil; 2012 -
$0.6 million).
Changes in share options outstanding are as follows:
                                              2013
2012
                                                                      Weighted
                                                                       average
                                  Weighted average
exercise
                  Options           exercise price  Options
price
                     000s  CDN $              US $     000s   CDN $
US $
    Outstanding,
    beginning of
    year            2,401  14.21             14.34    2,868 $ 12.58 $
12.26
    Granted           350  14.00             14.14      350   16.70
17.44
    Forfeited        (26)  26.64             26.54        -       -
-
    Exercised (a)     (8)   3.78              3.82    (715)    7.26
7.43
    Expired         (355)  24.39             24.48    (102)   25.54
26.14
    Outstanding,
    end of year     2,362  12.56             12.68    2,401 $ 14.21 $
14.34
(a) The weighted average share price at the date of exercise for options
exercised during the year was CDN $14.05.
The following summarizes information about stock options outstanding at
January 31, 2013:
                       Options outstanding                   Options
exercisable
                               Weighted
                                average
                              remaining    Weighted
Weighted
    Range of                contractual     average
average
    exercise        Number      life in    exercise       Number
exercise
    prices     outstanding        years       price  exercisable
price
    CDN $             000s                    CDN $         000s
CDN $
    3.78             1,007          6.2    $   3.78        1,007     $
3.78
    12.35-16.70      1.000          5.4       14.45          317
13.95
    26.45              219          0.2       26.45          219
26.45
    41.45              136          1.2       41.45          136
41.45
                     2,362                 $  12.56        1,679     $
11.70
(d) Stock-based compensation
The Company applies the fair value method to all grants of stock
options.
The fair value of options granted during the years ended January 31,
2013 and 2012 was estimated using a Black-Scholes option pricing model
with the following weighted average assumptions:
                                                  2013         2012
    Risk-free interest rate                      1.17%        2.41%
    Dividend yield                               0.00%        0.00%
    Volatility factor                           50.00%       50.00%
    Expected life of the options             3.5 years    3.5 years
    Average fair value per option, CDN     $      5.17  $      6.51
    Average fair value per option, US      $      5.18  $      6.80
Expected volatility is estimated by considering historic average share
price volatility based on the average expected life of the options.
(e) RSU and DSU Plans
    RSU                                        Number of units
    Balance, January 31, 2011                          155,946
    Awards and payouts during the year (net)
                RSU awards                              66,991
                RSU payouts                            (46,963)
    Balance, January 31, 2012                          175,974
    Awards and payouts during the year (net)
                RSU awards                             175,200
                RSU payouts                            (74,148)
    Balance, January 31, 2013                          277,026
    DSU                                        Number of units
    Balance, January 31, 2011                          193,214
    Awards and payouts during the year (net)
                DSU awards                              38,781
                DSU payouts                            (17,127)
    Balance, January 31, 2012                          214,868
    Awards and payouts during the year (net)
                DSU awards                              27,078
                DSU payouts                            (52,261)
    Balance, January 31, 2013                          189,685
During the fiscal year, the Company granted 175,200 RSUs (net of
forfeitures) and 27,078 DSUs under an employee and director incentive
compensation program, respectively. The RSU and DSU Plans are full value
phantom shares that mirror the value of Dominion Diamond
Corporation's publicly traded common shares.
Grants under the RSU Plan are on a discretionary basis to employees of
the Company and its subsidiaries subject to Board of Directors approval.
The RSUs granted vest one-third on March 31 and one-third on each
anniversary thereafter. The vesting of grants of RSUs is subject to
special rules for a change in control, death and disability. The Company
shall pay out cash on the respective vesting dates of RSUs and
redemption dates of DSUs.
Only non-executive directors of the Company are eligible for grants
under the DSU Plan. Each DSU grant vests immediately on the grant date.
The expenses related to the RSUs and DSUs are accrued based on fair
value. This expense is recognized on a straight-line basis over each
vesting period. The Company recognized an expense of $3.4 million for
the year ended January 31, 2013 (2012 - $2.2 million). The total
carrying amount of liabilities for cash settled share-based payment
arrangements is $5.4 million (2012 - $3.7 million). The amounts for
obligations and expense (recovery) for cash settled share-based payment
arrangements have been grouped with Employee Benefit Plans in Note 13
for presentation purposes.
Note 18:
Expenses by Nature
Operating profit (loss) from continuing operations includes the
following items of expense:
                                          2013      2012
    Research and development          $  3,651  $  4,147
    Operating lease                        382       317
    Employee compensation expense       60,265    47,062
    Depreciation and amortization       80,266    78,761
Note 19:
Earnings per Share
The following table presents the calculation of diluted earnings per
share:
                                                                2013
2012
    NUMERATOR
    Net earnings for the year attributable to
    shareholders                                            $ 34,710  $
25,454
    DENOMINATOR (000S SHARES)
    Weighted average number of shares outstanding             84,876
84,661
    Dilutive effect of employee stock options (a)                620
871
                                                              85,496
85,532
(a) A total of 1.2 million options were excluded from the dilution
calculation (2012 - 1.3 million) as they are anti-dilutive.
Note 20:
Related Party Disclosure
(a) Operational information
The Company had the following investments in significant subsidiaries at
January 31, 2013:
    Name of company                        Effective interest
Country of incorporation
    Dominion Diamond Holdings Ltd.                       100%
Canada
    Dominion Diamond Diavik Limited Partnership          100%
Canada
    Dominion Diamond (India) Private Limited             100%
India
    Dominion Diamond International NV                    100%
Belgium
    Dominion Diamond Technical Services Inc.             100%
Canada
    6019838 Canada Inc.                                  100%
Canada
    Harry Winston Inc.(1)                                100%
US
    Harry Winston SARL1                                  100%
France
    Harry Winston Japan, K.K.(1)                         100%
Japan
    Harry Winston (UK) Limited(1)                        100%
UK
    Harry Winston Inc. Taiwan Branch(1)                  100%
Taiwan
    Harry Winston S.A.(1)                                100%
Switzerland
    Harry Winston (Hong Kong) Limited(1)                 100%
Hong Kong
    Harry Winston Commercial (Beijing) Co., Ltd(1)       100%
China
    Harry Winston N.A. Pte Ltd.(1)                       100%
Singapore
(1) These subsidiaries have been classified as discontinued operations
as at January 31, 2013.
Note 21:
Segmented Information
The Company's continuing operations has activities in three
geographical areas for the years ended January 31, 2013 and 2012.
                            2013       2012
    Sales
    North America      $  22,002  $  15,018
    Europe               246,668    231,722
    India                 76,741     43,374
                       $ 345,411  $ 290,114
                            2013
    Assets
    North America      $ 966,014
    Europe                15,407
    India                 10,231
                       $ 991,652
Note 22:
Commitments and Guarantees
    (a)                        Environmental agreements
        Through negotiations of environmental and other agreements, the
Joint
        Venture must provide funding for the Environmental Monitoring
Advisory
          Board. Further funding will be required in future years;
however,
         specific amounts have not yet been determined. These agreements
also
         state that the Joint Venture must provide security deposits for
the
         performance by the Joint Venture of its reclamation and
abandonment
          obligations under all environmental laws and regulations.
DDDLP's
         share of the letters of credit outstanding posted by the
operator of
         the Joint Venture with respect to the environmental agreements
as at
           January 31, 2013, was $82.0 million. The agreement
specifically
         provides that these funding requirements will be reduced by
amounts
             incurred by the Joint Venture on reclamation and
abandonment
                                     activities.
    (b)                        Participation agreements
          The Joint Venture has signed participation agreements with
various
          native groups. These agreements are expected to contribute to
the
        social, economic and cultural well-being of the Aboriginal
bands. The
         agreements are each for an initial term of twelve years and
shall be
           automatically renewed on terms to be agreed upon for
successive
          periods of six years thereafter until termination. The
agreements
         terminate in the event that the mine permanently ceases to
operate.
             Dominion Diamond Corporation's share of the Joint
Venture's
          participation agreements as at January 31, 2013 was $1.2
million.
Note 23:
Financial Risk Management Objectives and Policies
The Company is exposed, in varying degrees, to a variety of
financial-instrument-related risks by virtue of its activities. The
Company's overall financial risk-management program focuses on the
preservation of capital and protecting current and future Company assets
and cash flows by minimizing exposure to risks posed by the
uncertainties and volatilities of financial markets.
The Company's Audit Committee has responsibility to review and
discuss significant financial risks or exposures and to assess the steps
management has taken to monitor, control, report and mitigate such risks
to the Company.
Financial risk management is carried out by the Finance department,
which identifies and evaluates financial risks and establishes controls
and procedures to ensure financial risks are mitigated.
The types of risk exposure and the way in which such exposures are
managed are as follows:
(i) Currency risk
The Company's sales are predominantly denominated in US dollars. As
the Company operates in an international environment, some of the
Company's financial instruments and transactions are denominated in
currencies other than the US dollar. The results of the Company's
operations are subject to currency transaction risk and currency
translation risk. The operating results and financial position of the
Company are reported in US dollars in the Company's consolidated
financial statements. The Company's primary foreign exchange
exposure impacting pre-tax profit arises from the following sources:
           Net Canadian dollar denominated monetary assets and
liabilities
            The Company's functional and reporting currency is US
dollars;
             however, many of the mining operation's monetary
assets and
             liabilities are in Canadian dollars. As such, the Company
is
        continually subject to foreign exchange fluctuations,
particularly as
                 the Canadian dollar moves against the US dollar. The
         weakening/strengthening of the Canadian dollar versus the US
dollar
        results in an unrealized foreign exchange gain/loss on the
revaluation
         of the Canadian dollar denominated monetary assets and
liabilities.
          Committed or anticipated foreign currency denominated
transactions
             Primarily Canadian dollar costs at the Diavik Diamond Mine.
Based on the Company's net exposure to Canadian dollar monetary
assets and liabilities at January 31, 2013, a one-cent change in the
exchange rate would have impacted pre-tax profit for the year by $0.5
million (2012 - $0.5 million).
(ii) Interest rate risk
Interest rate risk is the risk borne by an interest-bearing asset or
liability as a result of fluctuations in interest rates. Financial
assets and financial liabilities with variable interest rates expose the
Company to cash flow interest rate risk. The Company's most
significant interest rate risk arises from its various credit
facilities, which bear variable interest based on LIBOR. Based on the
Company's LIBOR-based credit facilities at January 31, 2013, a 100
basis point change in LIBOR would have impacted pre-tax net profit for
the year by $0.5 million (2012 - $2.3 million).
(iii) Concentration of credit risk
Credit risk is the risk of a financial loss to the Company if a customer
or counterparty to a financial instrument fails to meet its contractual
obligation.
The Company's exposure to credit risk in the mining operations is
minimized by its sales policy, which requires receipt of cash prior to
the delivery of rough diamonds to its customers.
The Company manages credit risk, in respect of short-term investments,
by maintaining bank accounts with Tier 1 banks and investing only in
term deposits or banker's acceptances with highly rated financial
institutions that are capable of prompt liquidation. The Company
monitors and manages its concentration of counterparty credit risk on an
ongoing basis.
At January 31, 2013, the Company's maximum counterparty credit
exposure consists of the carrying amount of cash and cash equivalents
and accounts receivable, which approximates fair value.
(iv) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its
financial obligations as they fall due.
The Company manages its liquidity by ensuring that there is sufficient
capital to meet short-term and long-term business requirements, after
taking into account cash flows from operations and the Company's
holdings of cash and cash equivalents. The Company also strives to
maintain sufficient financial liquidity at all times in order to
participate in investment opportunities as they arise, as well as to
withstand sudden adverse changes in economic circumstances. The Company
assesses liquidity and capital resources on a consolidated basis.
Management forecasts cash flows for its current and subsequent fiscal
years to predict future financing requirements. Future financing
requirements are met through a combination of committed credit
facilities and access to capital markets.
At January 31, 2013, the Company had $104.3 million of cash and cash
equivalents and $75.0 million available under credit facilities.
The following table summarizes the aggregate amount of contractual
undiscounted future cash outflows for the Company's financial
liabilities:
                                                           Less
After
                                                           than     Year
Year        5
                                                Total    1 year      2-3
4-5    years
    Trade and other payables                 $ 39,053  $ 39,053  $     -
$     -  $     -
    Income taxes payable                       32,977    32,977        -
-        -
    Interest-bearing loans and borrowings(a)   58,938    53,191    2,463
2,463      821
    Environmental and participation agreement
    incremental commitments                    92,725    83,195    4,817
-    4,713
(a) Includes projected interest payments on the current debt outstanding
based on interest rates in effect at January 31, 2013.
(v) Capital management
The Company's capital includes cash and cash equivalents, current
and non-current interest-bearing loans and borrowings and equity, which
includes issued common shares, contributed surplus and retained
earnings.
The Company's primary objective with respect to its capital
management is to ensure that it has sufficient cash resources to
maintain its ongoing operations, to provide returns to shareholders and
benefits for other stakeholders, and to pursue growth opportunities. To
meet these needs, the Company may from time to time raise additional
funds through borrowing and/or the issuance of equity or debt or by
securing strategic partners, upon approval by the Board of Directors.
The Board of Directors reviews and approves any material transactions
out of the ordinary course of business, including proposals on
acquisitions or other major investments or divestitures, as well as
annual capital and operating budgets.
The Company assesses liquidity and capital resources on a consolidated
basis. The Company's requirements are for cash operating expenses,
working capital, contractual debt requirements and capital expenditures.
The Company believes that it will generate sufficient liquidity to meet
its anticipated requirements for the next twelve months.
Note 24:
Financial Instruments
The Company has various financial instruments comprising cash and cash
equivalents, accounts receivable, trade and other payables, and
interest-bearing loans and borrowings.
Cash and cash equivalents consist of cash on hand and balances with
banks and short-term investments held in overnight deposits with a
maturity on acquisition of less than 90 days. Cash and cash equivalents,
which are designated as held-for-trading, are carried at fair value
based on quoted market prices and are classified within Level 1 of the
fair value hierarchy established by the International Accounting
Standards Board.
The fair value of accounts receivable is determined by the amount of
cash anticipated to be received in the normal course of business from
the financial asset.
The Company's interest-bearing loans and borrowings are for the
most part fully secured; hence the fair values of these instruments at
January 31, 2013 are considered to approximate their carrying value.
The carrying values and estimated fair values of these financial
instruments are as follows:
                                             January 31, 2013
January 31, 2012
                                  Estimated       Carrying
Estimated       Carrying
                                 fair value          value       fair
value          value
    Financial assets
          Cash and cash
          equivalents          $    104,313     $  104,313     $
78,116     $   78,116
          Accounts receivable         3,705          3,705
26,910         26,910
                               $    108,018     $  108,018     $
105,026     $  105,026
    Financial liabilities
          Trade and other
          payables             $     39,053     $   39,053     $
104,681     $  104,681
          Interest-bearing
          loans and borrowings       56,307         56,307
299,723        299,723
                               $     95,360     $   95,360     $
404,404     $  404,404
Note 25:
Recast
During the preparation of the income tax provision for the quarter ended
April 30, 2012, the Company noted a historical difference related to the
accounting for Northwest Territories mining royalty taxes in connection
with the Company's rough diamond inventory. For Northwest
Territories mining royalty tax purposes, the Company is subject to
mining royalty taxes, which includes a requirement to treat the rough
diamond inventory when it comes out of the Diavik Diamond Mine as
taxable. This results in an accounting timing difference between the
mining and extraction of the diamonds and when they are sold. The
Company did not previously record the corresponding deferred tax asset
on the rough diamond inventory related to royalty taxes payable. The
Company has revised the comparative figures to correct the immaterial
impact of this item with the offset recorded in retained earnings,
amounting to $5.8 million as at January 31, 2011 and 2012.
Diavik Diamond Mine Mineral Reserve and Mineral Resource Statement AS OF
DECEMBER 31, 2012
Proven and Probable Reserves
                                                   Proven
Probable
    Open pit and           Millions     Carats   Millions   Millions
Carats   Millions
    underground mining    of tonnes  per tonne  of carats  of tonnes
per tonne  of carats
    A-154 South
      Open Pit                    -         -         -           -
-         -
      Underground               1.2       4.2       5.2         1.4
3.4       4.9
      Total A-154 South         1.2       4.2       5.2         1.4
3.4       4.9
    A-154 North
      Open Pit                    -         -         -           -
-         -
      Underground               4.1       2.1       8.4         4.1
2.1       8.4
      Total A-154 North         4.1       2.1       8.4         4.1
2.1       8.4
    A-418
      Open Pit                    -         -         -           -
-         -
      Underground               5.1       3.8      19.3         2.2
2.9       6.4
      Total A-418               5.1       3.8      19.3         2.2
2.9       6.4
    Stockpile                   0.3       2.9       0.9           -
-         -
    Total
      Open Pit                    -         -         -           -
-         -
      Underground              10.3       3.2      32.9         7.7
2.6      19.6
      Stockpile                 0.3       2.9       0.9           -
-         -
    Total Reserves             10.7       3.2      33.8         7.7
2.6      19.6
Table cont'd.
                                      Proven and Probable
    Open pit and           Millions     Carats   Millions
    underground mining    of tonnes  per tonne  of carats
    A-154 South
      Open Pit                    -          -         -
      Underground               2.7        3.8      10.1
      Total A-154 South         2.7        3.8      10.1
    A-154 North
      Open Pit                    -          -         -
      Underground               8.1        2.1      16.8
      Total A-154 North         8.1        2.1      16.8
    A-418
      Open Pit                    -          -         -
      Underground               7.2        3.6      25.6
      Total A-418               7.2        3.6      25.6
    Stockpile                   0.3        2.9       0.9
    Total
      Open Pit                    -          -         -
      Underground              18.0        2.9      52.5
      Stockpile                 0.3        2.9       0.9
    Total Reserves             18.3        2.9      53.5
Note: Totals may not add up due to rounding.
Additional Indicated and Inferred Resources
                                   Measured Resources
Indicated Resources
                       Millions     Carats   Millions    Millions
Carats   Millions
    Kimberlite pipe   of tonnes  per tonne  of carats   of tonnes  per
tonne  of carats
    A-154 South               -          -          -           -
-          -
    A-154 North               -          -          -           -
-          -
    A-418                     -          -          -           -
-          -
    A-21                    3.6        2.8       10.0         0.4
2.6        1.0
    Total                   3.6        2.8       10.0         0.4
2.6        1.0
Table cont'd.
                                  Inferred  Resources
                       Millions     Carats   Millions
    Kimberlite pipe   of tonnes  per tonne  of carats
    A-154 South            0.04        3.6        0.2
    A-154 North             2.3        2.6        5.9
    A-418                   0.3        2.4        0.7
    A-21                    0.8        3.0        2.3
    Total                   3.4        2.7        9.0
Note: Totals may not add up due to rounding.
Cautionary Note to United States Investors Concerning Disclosure of
Mineral Reserves and Resources:  The Company is organized under the laws
of Canada. The mineral reserves and resources described herein are
estimates, and have been prepared in compliance with NI 43-101. The
definitions of proven and probable reserves used in NI 43-101 differ
from the definitions in the United States Securities and Exchange
Commission ("SEC") Industry Guide 7.  In addition, the terms
"mineral resource", "measured mineral resource",
"indicated mineral resource" and "inferred mineral
resource" are defined in and required to be disclosed by NI 43-101;
however, these terms are not defined terms under SEC Industry Guide 7,
and normally are not permitted to be used in reports and registration
statements filed with the SEC. Accordingly, information contained in
this financial report containing descriptions of the Diavik Diamond
Mine's mineral deposits may not be comparable to similar
information made public by US companies subject to the reporting and
disclosure requirements under the United States federal securities laws
and the rules and regulations thereunder. United States investors are
cautioned not to assume that all or any part of Measured or Indicated
Mineral Resources will ever be converted into Mineral Reserves.  United
States investors are also cautioned not to assume that all or any part
of an Inferred Mineral Resource exists, or is economically or legally
mineable.
The above mineral reserve and mineral resource statement was prepared by
Diavik Diamond Mines Inc., operator of the Diavik Diamond Mine, under
the supervision of Calvin Yip, P.Eng., Principal Advisor, Strategic
Planning of Diavik Diamond Mines Inc., and a Qualified Person within the
meaning of National Instrument 43-101 of the Canadian Securities
Administrators. For further details and information concerning Dominion
Diamond Corporation's Mineral Reserves and Resources, readers
should reference Dominion Diamond Corporation's Annual Information
Form available through http://www.sedar.com and http://www.ddcorp.ca.
For further information:
Mr. Richard Chetwode, Vice President, Corporate Development -
+44(0)7720-970-762 or rchetwode@ddcorp.ca
Ms. Kelley Stamm, Manager, Investor Relations - +1-416-205-4380 or
kstamm@ddcorp.ca 

SOURCE Dominion Diamond Corporation