Dominion Diamond (TSE:DDC) shares were jumping Friday after the company posted third quarter production slightly ahead of expectations, as its Ekati mine in the Northwest Territories continued to benefit from increased small stone recovery.
The company produced 1.36 million carats during the three months to October 31, versus Dundee Capital's 1.08 million estimate. Shares climbed 6.5 percent to C$17.45 as of 1:30pm ET.
While production at Ekati was strong, output at the company's other Diavik property was slightly below previously released results as mining entered a lower grade zone.
Third quarter revenue of $222.3 million was also ahead of Dundee Capital's forecast of $199 million. Dundee analyst Matthew O'Keefe retiterated his buy rating and C$21.00 price target for the company, saying the diamond producer remains inexpensive versus its peers.
Aside from its two producing mines, Dominion is also developing its Jay project, which is an expansion of the company's Ekati diamond mine.
"Dominion's rerating upward to peers should continue with a positive PFS for Jay expected by year end, a positive updated resource at Ekati in Q1 C2015 and potentially a construction decision at A-21 in C2015," O'Keefe said.
"Additionally, the NWT's decision to accept a surety bond for Ekati strengthens Dominions' balance sheet and should allow Dominion to internally fund growth beyond the high grade Misery pipe."
The Dundee analyst said that these positive catalysts should continue the company's momentum, despite the fact that it announced yesterday its CEO and chairman Robert Gannicott will be taking medical leave until mid-February.
"Although a significant development as Mr. Gannicott had been CEO since 1999, we expect the appointed leadership to keep Ekati's future on track in the short term," Dundee Capital wrote.
Brendan Bell, who is currently the executive VP of community affairs for the company, will act as CEO and Dan Jarvis will act as chairman while Gannicott is on leave.
Dominion's full Q3 financial results are expected during the second week of December.