Aber’s profits and dividend up

Aber Diamond (ABZ-T) has increased its quarterly dividend to US25 per share, after the company more than quadrupled its first quarter earnings for the period ended April 30 when compared with earnings from the same period last year.

Diamond production was up slightly however diamond sales more then doubled to US$110.1 million from US$52.3 million.

Aber had net earnings of US$13.6 million during the quarter, up from US$2.8 million in last year’s comparable quarter. This translates to basic earnings of US23 per share. Last year during the same quarter, earnings were just US5 per share.

This rosy result is not quite so good when compared with the fourth quarter results ended Jan. 31. Sales brought in US$144.6 million during that quarter, for basic earnings of US51 per share. The company rationalizes the drop by pointing to the seasonality of both production at its 40%-owned Diavik mine in the N.W.T. and the diamond retail sales market.

Less material was mined during the first calendar quarter compared with the preceding fourth quarter because of extreme weather conditions however, the grade was higher and processing rates improved so cash costs per carat fell to US$26 from US$33.

Production was up when compared with the equivalent quarter ended March 31, 2004; Aber’s share of production totalled 700,000 carats, as opposed to 615,000 carats. The grade was 3.55 carats per tonne in the first quarter of 2005, down from 3.89 carats per tonne a year earlier, so cash costs per carat rose by US$2.

Aber bought a 51% interest in diamond jewellery retailer Harry Winston at the beginning of April of last year. The US$51 million balance of the sale price was paid during the quarter ended April 30, 2005 and during that quarter Harry Winston sales brought in US$41.6 million in gross revenue.

Diavik is undergoing an expansion. Construction of a crusher and support buildings for the construction of the A-418 dike has begun and an exploration decline is being developed to access three kimberlite ore bodies at depth.

At April 30, Aber had cash and cash equivalents of US$135.5 million and long term debt of US$220 million. In addition capital expenditures over the next four years are estimated to total US$230 million.