From the Mine of the Present to the Brilliance of the ... · TSX/NYSE: DDC 5 Canada is the World’s Third Largest Diamond Producing Country Dominion Diamond is the Single Largest

From the Mine of the Present to the Brilliance of the Future

Jim Pounds Executive Vice-President, DiamondsDominion Diamond Corporation

TSX/NYSE: DDC

Dominion Diamond Corporation

• World 3rd largest Diamond Producer

• Top Tier Assets

– Ekati Diamond Mine – 90% ownership

– Diavik Diamond Mine – 40% ownership

• Diversified Diamond Supply in Canada

• Strong Near-Term & Long-Term Production Growth Potential

• Significant Resource Base and Exploration Potential on Existing Land Package

History.

Aber Diamond Corporation 1994-2007

Harry Winston Diamond Corporation 2007-2013

Dominion Diamond Corporation 2013-Present

TSX/NYSE: DDC

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Metal Mining versus Diamond Mining

Metal Mining

• Drilling, blasting, haulage

• Crushing

• Grinding

• Chemical treatment for recovery

• Chemical processing

• Refining

• Sales

Diamond Mining

• Drilling, blasting, haulage

• Crushing

• Physical recovery

• Chemical cleaning

• Sorting

• Aggregation

• Sales

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Global Diamond Supply Overview

Rough Supply Dominated by a handful of Players with Mines Mostly

Located in Africa, Russia and Canada

De Beers34%

ALROSA28%

Dominion Diamond

6%

Rio Tinto6%

Other26%

Source: Company reports, KPCS, Dominion analysis

2015 Rough diamond sales (by value)

0%

20%

40%

60%

80%

100%

De Beers ALROSA Dominion Rio Tinto Other

Botswana AngolaOther Africa RussiaCanada Other

2015 Rough production (by value)

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Canada is the World’s Third Largest Diamond Producing Country

Dominion Diamond is the Single Largest Canadian Player

2015 Rough production (by value)2015–2020E Canadian rough

production (billion US$, 2015 prices)

Russia29%

Botswana24%

Canada14%

Angola9%

Other Africa21%

Other3%

Source: Company reports, KPCS, Dominion analysis

(forecasts last revised September 2016)

0

1

2

3

2015 2016E 2017E 2018E 2019E 2020E

Dominion Rio Tinto

De Beers Mountain Province

Other

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Diavik and Ekati Mines - Summer

Diavik Diamond Mine Ekati Diamond Mine

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Winter Road

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Diavik and Ekati Mines - Winter

Diavik Diamond Mine Ekati Diamond Mine

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Underground Mining

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Underground Mining Methods – Sub-level

Retreat (SLR)

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Underground Mining Methods

Blasthole Stoping

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Road Trains – Ekati Diamond Mine

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Processing Plant

Diavik Processing Plant Ekati Processing Plant

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Schematic of Processing Circuit

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Jaw Crusher

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Trommel Screen

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Cone Crusher

Rotation

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Rolls Crusher

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Diamond Recovery

Recovery relies on three unusual physical characteristics of diamonds:

› Diamonds are heavy

› Diamonds emit visible light when irradiated with X-rays (photo luminescence)

› Diamonds bond with grease (oleophylic)

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Dense Media Separation Cyclones

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X-Ray Sortex

Schematic of single-pass sorting machine

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Grease Table

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Toronto Cleaning Facility

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Diamond Sorting

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Assortments

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Diavik Production Profile

Diavik Production

› A high colour production with a

small element of brown and

coated material

› A good size frequency distribution

› Many of the larger stones are

crystal in shape – very much in

demand for square-edged fancy

cut diamonds

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Diavik Production Profile

Ekati Production

› A wide range of goods coming

from various pipes

› More rounds goods delivering a

better yield

› More of the commercial qualities

and colours

› Vary rare yellow colours from the

Misery pipe

› Some interesting large stones

Both productions complement each

other to deliver well-balanced sales

parcels

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How We Sort and Sell

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How DDC Sorts and Sells Rough Diamonds

Sales Held 10 Times a Year from Our

Antwerp and Mumbai Offices

› We sell on a contractual basis to 35 clients, a

mixture of manufacturers and retailers

› 85% of our clients are Indian based, purchasing

80% (by value) of our production

› We sort into 12,500 price points and blend into 70

Sales Mixes (parcels)

› We hand sort every diamond over 0.02 carat in

size

› Consistent assortments and regular supply

deliver a premium for our parcels

› Our clients source goods from other suppliers,

allowing them to work with a balanced portfolio

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Antwerp Sales

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Technological Advances

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Mining Equipment

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Modern Haul Truck

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Diamond Marking

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Sarin Stone Mapping

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Diamond Cleaving

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Laser Cutting

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Production Security

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Carrier Pigeon

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Greasy Rag

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Protecting and Growing Demand

Initiatives Support Demand Growth, Both for the Category

and for Dominion Diamond’s Production in Particular

› Founding member of Diamond Producers Association: focus on

protecting and growing natural diamond demand

› Established proprietary program: guarantees natural Canadian origin and

promotes ethical and environmental stewardship. Scope of program to

be extended over the coming year

› Marketing pilot to foster aspirational demand for natural coloured

diamonds

› Other initiatives in planning phase

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CanadaMark Hallmark

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CanadaMark Hallmark – Main Objective

CREATE DEMAND FOR DOMINION DIAMOND ROUGH

Demand from manufacturers

Demand from retailers

Demand from end consumers

MAIN OBJECTIVE

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CanadaMark Hallmark - Targeting Millennial

Consumers

• Profile:

– Age 18-35

– Digital natives

– Largest generation globally

– Highly educated

› Cultural Shifts

• Relationships - With marriage levels

at an all time low, diamonds need to

find their way into multiple moments

during a person’s life, carrying

multiple meanings

• Luxury - Personal stories and

experiences are valued more than

the idea of one perfect product

• Influence - Distrust towards ads that

are targeted at the consumer.

Importance of particpating with the

consumer and their influencer group

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Digital Marketing Campaign –

Leveraging Social Media and Ethical

Credentials › Focus on online marketing channels to build

awareness

• Broad range of social platforms (Facebook,

YouTube, Instagram, Pinterest) counts over

140,000 active followers

• Online ad campaign (Google Adwords, SEM)

reaches 85 million people annually.

• Key influencers (bloggers, social celebrities)

› Story of ethically mined Canadian diamonds

resonates with target consumer group

• High engagement levels on social channels

compared to other major diamond and jewellery

brands

• 85% of surveyed millennials are open to pay a

premium (5%-10%) for a CanadaMark diamond

• Traits mostly associated with CanadaMark by end

consumers are: ‘conflict-free’, ‘trustworthy’,

‘conscious’, ‘ethical’ and ‘pure’