Dominion Diamond Announces Fourth Quarter and Full Year Financial Results for Fiscal Year 2017

Dominion Diamond Corporation today reported its fourth quarter and full year financial results for the fiscal year ending January 31, 2017, and also provided an update on multiple projects within its robust development pipeline, and exploration priorities. The Company remains focused on continuing to optimize its existing operations, is well-positioned to advance its portfolio of development projects at both the Ekati Diamond Mine ("Ekati mine") and the Diavik Diamond Mine ("Diavik mine"), and is increasing exploration efforts in the highly prospective Lac de Gras region. Unless otherwise indicated, all financial information below is presented in US dollars.

"We continue to execute on our long-term strategy and create value for all shareholders. With the support of our strong balance sheet, we are well-positioned to advance a number of key development opportunities and begin reinvestment in near-mine exploration at both Ekati and Diavik," said Jim Gowans, Chairman of the Board. "As an established operator, one of our primary objectives is to leverage our infrastructure advantage in one of the world's most prospective diamond mining districts."

Key Corporate Highlights

• Guidance for strong sales and Adjusted EBITDA⁽¹⁾ in fiscal 2018: Financial and operating guidance for fiscal 2018 remains unchanged; sales expected to be between $875 and $975 million and Adjusted EBITDA between $475 and $560 million.
• Delivering on development projects
  • A-21 project, Diavik mine - completion of dike construction and the start of de-watering are on plan for late calendar 2017.
  • Sable project, Ekati mine - currently below budget and approximately seven months ahead of schedule, with pre-stripping expected to commence in July 2017.
  • Misery Deep project, Ekati mine - pre-feasibility study on track for completion by July 2017.
  • Fox Deep project, Ekati mine - indicated resource increased to 45.6 million tonnes and 16.5 million carats; completion of a pre-feasibility study expected late this fiscal year.
  • Jay project, Ekati mine - permitting continues to advance, with a decision on the water licence expected in summer 2017.
• Diavik mine life extension: Recently-filed technical report⁽²⁾ demonstrates improved economics and supports an extension in the mine life to 2025 from 2023.
• Growth opportunities through advanced exploration
  • Renewed strategic focus on exploration with a $9 million exploration budget for fiscal 2018 focused on near-mine exploration and completion of pre-feasibility studies.
  • Identification of priority targets with drilling at the Ekati and Diavik properties planned in fiscal 2018.
• Strong balance sheet supports capital allocation strategy
  • Maintained strong balance sheet with $136.2 million total unrestricted cash resources, debt of $10.6 million and $210 million available under its revolving credit facility as at January 31, 2017.
  • Three-year outlook for strong Adjusted EBITDA enables the Company to advance its suite of development projects with internally-generated cash flows.
  • Declared a dividend on April 12, 2017, of $0.20 per share payable on June 5, 2017, to shareholders of record at the close of business on May 17, 2017.
  • Repurchased and retired approximately 3.4 million shares in fiscal 2017 as part of the Company's normal course issuer bid for a total value of C$40.9 million.
  • In total, the company returned $65.1 million to shareholders in fiscal 2017 through a combination of dividends and share repurchases.

Fiscal Fourth Quarter Highlights

• Shift to higher-value ore blend at Ekati positively impacting financial results
  • Adjusted EBITDA was $62.7 million in Q4 fiscal 2017, an increase of 28% from $49.0 million in Q4 fiscal 2016, reflecting the contribution from the high value ore blend at the Ekati mine in the last sale of the quarter following the process plant fire in June 2016. Growth in Adjusted EBITDA is expected to continue in fiscal 2018 as the contribution from the high value ore blend increases.
• Delivering production growth
  • Record carats recovered at the Ekati mine coupled with solid performance at the Diavik mine.
• Driving efficiencies and lower operating costs
  • Efficiency improvements and cost reduction initiatives have been successfully implemented at the Ekati and Diavik mines; a recently-filed technical report⁽²⁾ for the Diavik mine demonstrated improved economics and supported an extension in the mine life to 2025 from 2023.
• Renewed focus on exploration
  • In the fourth quarter, planning and analysis to support a renewed greenfield exploration program at the Ekati mine was completed; drilling of priority kimberlites at Ekati and Diavik properties planned in fiscal 2018.
• New labour agreement in place at Ekati
  • A new collective agreement has been ratified by the union representing workers at the Ekati mine. The new agreement expires in 2019.

"The much-anticipated ramp up of high value production at Ekati, together with steady performance at Diavik, is driving significant growth in gross margins and Adjusted EBITDA," continued Mr. Gowans. "We expect this momentum to continue, with significantly higher sales and Adjusted EBITDA as highlighted in our guidance for fiscal 2018. We are confident in our ability to advance a number of projects to production, enhancing our medium- to long-term cash flow profile, while driving efficiencies across our operations and maximizing the value of our product by leveraging our expertise in sales and marketing."

^{(1) The term EBITDA (earnings before interest, taxes, depreciation and amortization) is a non-IFRS measure. Adjusted EBITDA removes the effects of impairment charges, foreign exchange gains (losses) and exploration costs from EBITDA.
(2) Technical report entitled "Diavik Diamond Mine, Northwest Territories, Canada, NI 43-101 Technical Report" that has an effective date of January 31, 2017 ("2017 Technical Report").}

Corporate and Strategic Update

The guidance provided in this news release is qualified by the "Forward-Looking Information" section of this news release.

Several projects are being advanced at the Ekati mine, in addition to the A-21 project at the Diavik mine. This robust project pipeline provides optionality in the mine plan and has the potential to enhance the Company's medium and longer-term production profile. Given the existing infrastructure at the Ekati and Diavik properties, the cost of developing new projects is significantly lower than in a greenfield setting.

Development and Exploration Projects

Dominion is advancing a number of near-term and long-term development projects and opportunities at the highly prospective Ekati property in fiscal 2018. Planning and analysis were completed during the fourth quarter to support an exploration program in calendar 2017.

The Company is renewing its focus on exploration at its extensive land package in the Lac de Gras region. This is a relatively new and highly prospective diamond mining district, which hosts some of the richest kimberlites in the world. No greenfield exploration has taken place at the Ekati mine since 2006. There are 150 known kimberlites on the property, approximately 110 of which have not been extensively tested.

Dominion plans to progress multiple projects from the target stage to execution. Targets are being identified through till sampling, geophysics and drilling. Advanced exploration will focus on delineation of kimberlite pipes and bulk sampling, and those prospects warranting further investigation are expected to progress to conceptual and engineering studies, and, if justified, development.

The exploration program includes prioritization of the known kimberlites pipes on the Ekati property, and planning for a potential bulk sampling program in fiscal 2019. Diamond drilling is planned on up to six identified priority targets in the Core and Buffer Zones. At Diavik, drilling of three priority kimberlites is planned in 2017.

Lynx

• Waste pre-stripping of the Lynx open pit at the Ekati mine was substantially completed in fiscal 2017, with first ore expected to be delivered to the process plant in the second quarter of fiscal 2018.

Sable

• Construction of an all-season access road to the Sable project site at the Ekati mine, and initial site infrastructure works, were completed on schedule and below budget by the end of fiscal 2017. The current estimate to complete Sable infrastructure is approximately C$30 million below the pre-feasibility estimate of $142 million. Pre-stripping is forecast to commence in July 2017, approximately seven months ahead of schedule.

Jay

• The Company announced its approval in July 2016 to proceed with the development of the Jay project at the Ekati mine, based on the results of the Jay Feasibility Study. Permitting of the Jay project continues to advance, with a decision on the project's water licence expected in mid-calendar 2017.

Misery Deep

• The Company is in the process of completing a pre-feasibility study on the potential development of additional underground resources at the Misery kimberlite pipe after completion of the current open pit. If the study is positive, the project could result in the processing of additional high value ore and the recovery of additional carats beyond fiscal 2020, resulting in an enhanced production profile at the Ekati mine. Completion of the pre-feasibility study is anticipated in the second quarter of fiscal 2018.

Fox Deep

• Based on successful results from the Fox Deep drilling program at the Ekati mine, indicated resources at the Fox kimberlite pipe have increased to 45.6 million tonnes and 16.5 million carats, as at January 31, 2017, from the previous estimates of 35.2 million tonnes and 11.6 million carats, respectively. A pre-feasibility study on the Fox Deep underground ore body is underway, and is expected to be completed in late fiscal 2018. If successful, this project has the potential to extend the life of the Ekati mine significantly.

A-21

• The development of the A-21 pipe at the Diavik mine continues to progress on time and on budget with the completion of the dike and the start of de-watering expected in late calendar 2017. Following waste stripping, processing of ore from the A-21 pipe is expected to commence in calendar 2018.

Strategic Review Process

On March 19, 2017, the Company disclosed that it had received an unsolicited expression of interest from the Washington Corporations. On March 27, 2017, the Company announced that its Board of Directors had formed a Special Committee to explore, review and evaluate a range of potential strategic alternatives focused on maximizing shareholder value. Working with the Company's management team and advisors, the Special Committee will consider alternatives that could include the sale of the Company, a continuation of, or changes to, the current strategic plan, or other strategic transactions.

The Board of Directors has not set a timetable for the strategic review process, nor has it made any decisions related to strategic alternatives at this time, and there can be no assurances that the exploration of strategic alternatives will result in any transaction or change in strategy. TD Securities Inc., Stikeman Elliott LLP and Kingsdale Advisors are acting as financial, legal and strategic advisors, respectively, to the Company. Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal advisor to the Special Committee and Board of Directors of the Company.

Fiscal Fourth Quarter Review

Financial Summary

^{(1) The term EBITDA (earnings before interest, taxes, depreciation and amortization) is a non-IFRS measure. Adjusted EBITDA removes the effects of impairment charges, foreign exchange gains (losses) and exploration costs from EBITDA. See "Non-IFRS Measures" for additional information.
(2) The term "free cash flow" does not have a standardized meaning according to IFRS. The Company defines free cash flow as cash provided from (used in) operating activities, less sustaining capital expenditures and less development capital expenditures. See "Non-IFRS Measures" for additional information.}

The Company has filed its fiscal 2017 annual report on Form 40-F, including its audited financial statements for the year ended January 31, 2017, with the SEC on EDGAR (www.sec.gov), and has filed its audited financial statements and accompanying Management's Discussion and Analysis with the Canadian securities authorities on SEDAR (www.sedar.com), on April 12, 2017.

Financial Review

Profit (Loss) Before Income Tax and Net Income

The Company reported Q4 fiscal 2017 income before income taxes of nil, and consolidated net income attributable to shareholders of $5.6 million, or $0.07 per share. During the fourth quarter, foreign currency exchange rate fluctuations resulted in a decrease of $7.1 million, or $0.09 per share, in the Company's net income tax expense. Relative to Q4 fiscal 2016, these measures were impacted by:

• A reduction in the value of goods available for sale during the quarter as a result of the process plant fire at the Ekati mine, and the disruption in normal trading activity following the demonetization of the Indian rupee in November 2016.
• The sale, late in the quarter, of Ekati mine goods from higher value Misery Main open pit and Koala underground ore processed in late Q3 fiscal 2017, together with higher processing volumes at the Diavik mine in the same period. These factors resulted in a stronger consolidated gross margin.
• An increase in depreciation associated with the Misery Main pre-stripping asset as the related goods were processed and sold.
• The strengthening of the Canadian dollar relative to the US dollar which resulted in an income tax recovery.

For the full fiscal year, the Company reported a loss before income taxes of $40.7 million and consolidated net income attributable to shareholders of $0.2 million or nil per share. Relative to fiscal 2016, these measures were impacted by:

• The sale of a higher proportion of lower value goods from both mines in fiscal 2017 which resulted in an average price per carat sold in fiscal 2017 of $87 as compared to $177 in fiscal 2016.
• The process plant fire at the Ekati mine resulting in $44.5 million in mine standby costs.
• Foreign exchange impacts on income tax resulting in an income tax recovery of $14.4 million.
• The sale of the Company's downtown Toronto office building for C$84.8 million. The Company recognized a pre-tax gain on sale of $44.8 million, or $0.46 per share after tax, in the third quarter.

Adjusted EBITDA, Cash Flow and Balance Sheet

• Q4 fiscal 2017 adjusted EBITDA of $62.7 million increased by 28% over the comparable period of the prior year due to the availability for sale of diamonds from high-grade Misery Main ore. In fiscal 2017, adjusted EBITDA was $182.2 million, a decrease of 17% from fiscal 2016, and was negatively affected by the process plant fire at the Ekati mine in June 2016, and the carry-over of lower average value goods from fiscal 2016. Adjusted EBITDA includes $44.5 million in mine standby costs, which were expensed following the Ekati mine process plant fire, but does not include the impact of significant non-cash costs in the fourth quarter which impacted gross margins. See "Non-IFRS Measures" below.
• Free cash flow was negative $19.6 million in Q4 fiscal 2017, compared to positive free cash flow of $27.5 million in Q4 fiscal 2016. Free cash flow reflected capital expenditures of $67.2 million, partly offset by positive operating cash flow of $47.6 million. In Q4 fiscal 2017, capital expenditures included significant investments in the Sable project at the Ekati mine and the A-21 project at the Diavik mine.
• As at January 31, 2017, the Company had total unrestricted cash and cash equivalents of $136.2 million, restricted cash of $65.7 million and an undrawn availability of $210 million under its corporate revolving credit facility. Debt was $10.6 million as of January 31, 2017.

Mining Operations Review

Ekati

• During Q4 fiscal 2017, the Ekati mine recovered a record 2.3 million carats from 1.0 million tonnes processed, compared to 1.2 million carats recovered from 0.9 million tonnes processed in Q4 fiscal 2016.
• Carat production increased by 93% in Q4 fiscal 2017 compared to the same period in the prior year, due to the positive impact of the processing of a large proportion of high grade Misery ore.
• Commissioning of the fines dense media separation (Fines DMS) plant, which increases the recovery of smaller diamonds, was completed on budget and on schedule in Q4 fiscal 2017, and ramp up to full production is expected by the end of Q1 fiscal 2018. The Fines DMS plant has a design capacity of 1,800 tonnes per day, and is currently operating at a rate of over 1,000 tonnes per day.
• A new collective agreement has been ratified by the union representing workers at the Ekati mine. The new agreement expires in 2019.

Diavik

• Processing volumes of 0.54 million tonnes in Q4 of calendar 2016 were 16% higher than in the same quarter of the prior year due to the extended planned maintenance shutdown in the processing plant during Q4 of calendar 2015.
• 1.65 million carats were recovered at the Diavik mine in Q4 of calendar 2016, a 10% increase from the same quarter of the prior year, reflecting higher processing volumes that were partly offset by lower recovered grade.
• The 2017 Technical Report for the Diavik mine was filed on March 31, 2017. Highlights of the 2017 Technical Report:
  • After-tax net present value of approximately C$2.6 billion at a 7% discount rate, based on the assumptions and analysis contained in the 2017 Technical Report⁽¹⁾.
  • 46.0 million carats recovered between 2017 and 2025, an increase of 6.3 million carats or 16%, from the previous estimate for the comparable period⁽²⁾.
  • Forecast total revenue of approximately C$9.0 billion and total operating cash flow⁽³⁾ of approximately C$3.7 billion between 2017 and 2025, an increase of 22% and 32%, respectively, from the previous estimates for the comparable period⁽²⁾.
  • Total operating costs between 2017 and 2025 are consistent with the previous estimate for the comparable period⁽²⁾, as the impact of cost escalation and the increase in mine life and reclamation are offset by efficiency improvements.
  • Total capital expenditures between 2017 and 2025 are consistent with the previous estimate for the comparable period⁽²⁾, as lower expected capital expenditures at the A-21 pipe are offset by higher sustaining capital expenditures related to cost escalation and the increase in mine life.

^{(1) Refer to the 2017 Technical Report for the assumptions used in the calculation of the operating cash flow and net present value. The cash flow analysis, from which operating cash flow and net present value are derived, is solely for the purpose of demonstrating economic viability of the mineral reserve at the Diavik mine, and does not represent the business plans or cash flows of either participant of the Diavik Joint Venture.
(2) Comparable period for the previous estimate refers to years 2017-2023 in the 2015 Technical Report, "Diavik Diamond Mine, Northwest Territories, Canada, NI 43-101 Technical Report" with an effective date of March 18, 2015.").
(3) Operating cash flow is defined, for the purpose of this discussion, as revenue less operating expenses and taxes.}

Dividend Declaration

On April 12, 2017, Dominion declared a dividend of $0.20 per share to be paid in full on June 5, 2017, to shareholders of record at the close of business on May 17, 2017. The dividend will be an eligible dividend for Canadian income tax purposes.

Diamond Market

• The market ended the year on a positive note despite the divergence between the resilient market for larger, higher quality goods and the more challenging situation for smaller, relatively cheaper goods. The Christmas season in the US failed to meet market expectations, but this was balanced out by renewed retail activity over the Chinese New Year, resulting in an anticipated rise in polished demand from China in the first quarter of 2017.
• Prices decreased in the quarter by an average of 7% from Q3 fiscal 2017, reflecting the disruption in normal trading activity following the demonetization of the Indian rupee in November 2016. Much of the manufacturing sector that focuses on lower priced rough diamonds was brought to a standstill by the demonetization. However, the segment of the manufacturing sector in India that focuses on higher priced rough diamonds, and produces primarily for the export market, has been less disrupted. Demonetization was expected to have a significant adverse impact on the Indian retail jewelry market, however demand has proven to be more resilient and a return to normal business conditions is expected in the second quarter of calendar 2017.

Fiscal 2018 Guidance

The financial and operating guidance for fiscal 2018 remains consistent with that provided on March 16, 2017.

Fiscal 2018 Financial Guidance

^{(1) Sales guidance for fiscal 2018 includes production from the Misery Southwest pipe, which is currently an inferred resource. The mine plan for fiscal 2018 foresees between 1.3 and 1.4 million carats recovered from Misery Southwest, with an estimated market value of approximately $50 million. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Inferred mineral resources are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the Operating Case will be realized.
(2) The term "Adjusted EBITDA" does not have a standardized meaning according to IFRS. See "Non-IFRS Measures" for additional information.
(3) Combined Adjusted EBITDA includes corporate G&A. EBITDA (earnings before interest, taxes, depreciation and amortization) is a non-IFRS measure. Adjusted EBITDA removes the effects of impairment charges, foreign exchange gains (losses) and exploration costs from EBITDA.
(4) Planned sustaining capital expenditures include capitalized production stripping.
(5) Combined sustaining capital includes corporate capital expenditures.}

Sales are expected to be between $875 and $975 million and are expected to benefit from the focus on high value ore processed from the Misery Main and Koala underground pipes at the Ekati mine in the latter part of fiscal 2017 and the first quarter of fiscal 2018. Sales are also expected to benefit from the ramp up of ore from the Pigeon and Lynx pipes at the Ekati mine during the remainder of the year and strong production from the Diavik mine. The diamond market continues to show signs of recovery from the impact of demonetization in India, however the lower value segment of the diamond market is expected to recover at a slower pace than the higher value segment. The guidance for fiscal 2018 foresees the sale of a higher volume of lower value diamonds that were previously held back from sale and remained in inventory due to the weaker market conditions following the demonetization. This is expected to affect the average price per carat sold as well as the number of carats sold.

Adjusted EBITDA is expected to be between $475 and $560 million, reflecting a high margin ore mix, combined with ongoing cost containment and efficiency initiatives, including reduced energy consumption and continued implementation of the long haulage strategy at the Ekati mine, with the addition of two high capacity road trains.

The average price per carat sold is expected to range from $70 to $90 per carat. The upper end of the range reflects the potential for a larger proportion of sales of higher value diamonds, while the lower end of the range reflects the potential for a higher proportion of sales of lower quality stones.

Sales, Adjusted EBITDA and the average price per carat sold in any given quarter are impacted by seasonal trends in the diamond industry, the number of sales in a quarter, ore mix, opening period inventory levels of goods available for sale, the sale of very high value special stones via a limited number of special tenders during the year, and other factors.

The Ekati mine contains a greater number of kimberlite sources, each with different average price per carat and grade profile compared to those at the Diavik mine. In the first fiscal quarter, the combined average price per carat sold is expected to be near the low end of the guidance range for the full fiscal year, partly due to a significant volume of lower value goods in inventory from recent Misery Main production, and a slower recovery in the lower value segment of the diamond market relative to higher value goods after the demonetization in India. This is expected to reverse later in the year with the processing of ore containing diamonds with a higher average price per carat.

Three-Year Outlook

The three-year outlook includes the Company's current expectations for revenue, Adjusted EBITDA, unit cash costs of production and capital expenditures for fiscal years 2018 to 2020 for the Ekati and Diavik mines. The revenue and Adjusted EBITDA estimates are based on, among other things, the current mine plans at each of the Ekati and Diavik mines for those periods.

In the three-year outlook scenario presented, sales and Adjusted EBITDA are expected to increase significantly in fiscal 2018 compared to fiscal 2017, and to remain robust through fiscal 2019 and fiscal 2020.

Demonetization in India has had a negative impact on the Indian retail jewelry market, but a return to normal business conditions is expected in the second quarter of fiscal 2018. The higher end of the outlook for revenue and Adjusted EBITDA reflects a scenario where prices increase gradually over the latter half of fiscal 2018, reaching mid-calendar 2016 pricing levels by the start of fiscal 2019, and increasing by approximately 2% annually thereafter. The lower end of the outlook reflects a scenario where revenue and Adjusted EBITDA increase more gradually as a result of a slower improvement in prices, with production towards the lower end of the guidance range.

At the Ekati mine, production is forecast, on a 100% basis, to be between 6.4 and 7.1 million carats in fiscal 2019, and between 5.1 and 5.6 million carats in fiscal 2020, from the processing of approximately 4.0 million tonnes per year. Misery Main production is forecast to contribute approximately 60% to 65% of carat production in fiscal 2019 and fiscal 2020, with Sable contributing approximately 20% of recovered carats in fiscal 2020.

At the Diavik mine, production is forecast, on a 100% basis, to be between 7.0 and 7.4 million carats in calendar 2018 and between 6.5 and 6.9 million carats in calendar 2019, from the processing of over 2 million tonnes per year. The A-21 pipe is expected to start delivering ore to the processing plant in calendar 2018, and to account for approximately 15% of tonnes processed in calendar 2019.

Cash cost per tonne processed reflects relatively stable production costs, and cash cost per carat produced increases modestly in fiscal 2020 due to depletion of the high grade Misery Main pipe at the Ekati mine.

Sales, Adjusted EBITDA and the average price per carat sold in any given quarter are impacted by seasonal trends in the diamond industry, the number of sales in a quarter, ore mix, opening period inventory levels of goods available for sale, the sale of very high value special stones via a limited number of special tenders during the year, and other factors.

^{(1) Reflects the Operating Case at Ekati mine; this includes the Misery Southwest pipe which is currently an inferred mineral resource. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Inferred mineral resources are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the Operating Case will be realized.
(2) Sales guidance for fiscal 2018 and fiscal 2019 includes production from the Misery Southwest pipe (this is the Operating Case). Misery Southwest pipe is currently an inferred resource. The mine plan for fiscal 2018 foresees between 1.3 and 1.4 million carats recovered from Misery Southwest, with an estimated market value of between $48 and $52 million. The mine plan for fiscal 2019 foresees between 1.4 and 1.5 million carats recovered from the Misery Southwest with an estimated market value of between $56 and $60 million. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Inferred mineral resources are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the Operating Case will be realized.
(3) The term EBITDA (earnings before interest, taxes, depreciation and amortization) is a non-IFRS measure. Adjusted EBITDA removes the effects of impairment charges, foreign exchange gains (losses) and exploration costs from EBITDA.
(4) Cash cost per tonne processed and cash cost per carat produced are non-IFRS measures, and are calculated by dividing cash cost of production by total tonnes processed and total carats produced, respectively. Cash cost of production is a non-IFRS measure, and includes mine site operating costs such as mining, processing and administration, but is exclusive of amortization, capital, and exploration and development costs. Total cost is comprised of cash cost plus depreciation and amortization.
(5) For additional information on capital expenditures at the Ekati and Diavik mines, refer to the technical report entitled "Ekati Diamond Mine, Northwest Territories, Canada, NI 43-101 Technical Report" with an effective date of July 31, 2016, and to the 2017 Technical Report for Diavik.
(6) Planned sustaining capital expenditures include capitalized production stripping.
(7) Combined figures include 100% of Ekati and 40% of Diavik.
(8) Combined production includes 100% of Ekati production in Fiscal 2018 and 40% of Diavik production in calendar 2017.
(9) Combined Adjusted EBITDA includes corporate G&A. EBITDA (earnings before interest, taxes, depreciation and amortization) is a non-IFRS measure. Adjusted EBITDA removes the effects of impairment charges, foreign exchange gains (losses) and exploration costs from EBITDA.
(10) Combined sustaining capital includes corporate capital expenditures.}

It is expected that processed ore and recovered carats will be sourced from the following kimberlite pipes in the approximate proportions noted below:

^{(1) Misery Southwest pipe is currently an inferred mineral resource. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Inferred mineral resources are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the Operating Case will be realized.
(2) The Company is the operator of the Ekati mine, and has a participating interest of 88.9% in the Core Zone, and 72.0% in the Buffer Zone. The Lynx pipe is in the Buffer Zone; the other pipes are in the Core Zone.}

Business Overview

The Company has ownership interests in two established mines, and the associated processing plants, in the Lac de Gras region. The Ekati 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, such as the Jay kimberlite pipe and the Lynx kimberlite pipe.

The Company is the operator of the Ekati mine, and has a participating interest of 88.9% in the Core Zone, and 72.0% in the Buffer Zone.

The Company has a 40% interest in the Diavik mine; Rio Tinto plc has a 60% interest and operates the mine.

Non-IFRS Measures

The terms Adjusted EBITDA, Adjusted EBITDA margin, free cash flow, cash cost of production, cash cost per tonne processed, cash cost per carat produced and working capital do not have standardized meanings according to International Financial Reporting Standards. See "Non-IFRS Measures" in the Company's fiscal 2017 Annual Report Management's Discussion and Analysis for additional information.

The term EBITDA (earnings before interest, taxes, depreciation and amortization) is a non-IFRS measure. Adjusted EBITDA removes the effects of impairment charges, foreign exchange gains (losses), exploration costs and the gain on sale of the Toronto office building from EBITDA.

The following table provides a reconciliation of consolidated EBITDA and Adjusted EBITDA for the fourth quarter and the full year for each of fiscal 2017 and fiscal 2016.

The term "free cash flow" is a non-IFRS measure, which is defined as cash provided from (used in) operating activities, less sustaining capital expenditure and less development capital expenditure.

The following table provides a reconciliation of free cash flow for the fourth quarter and the full year for each of fiscal 2017 and fiscal 2016.

^{(1) Sustaining capital expenditure includes production stripping.
(2) Development capital expenditure is net of proceeds from pre-production sales.}

Conference Call and Webcast

Beginning at 11:00 AM (ET) on Thursday, April 13, 2017, 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 website at www.ddcorp.ca or by dialing 844-249-9383 within North America or 270-823-1531 from international locations and entering the conference ID 89945848.

An online archive of the broadcast will be available by accessing the Company's website at www.ddcorp.ca. A telephone replay of the call will be available two hours after the call through 2:00 PM (ET), Thursday, April 27, 2017, by dialing 855-859-2056 within North America or 404-537-3406 from international locations and entering the conference ID 89945848.

Mineral Reserve and Resource Statements

As of December 31, 2016, the Diavik mine had 16.3 million tonnes of proven and probable mineral reserves containing 46.0 million carats of diamonds, compared to 18.7 million tonnes of proven and probable mineral reserves containing 52.8 million carats as of December 31, 2015. The updated mineral reserves and mineral resources statement reflects a decrease of 2.4 million tonnes containing approximately 6.8 million carats, attributable almost entirely to depletion.

As of January 31, 2017, the Ekati mine, on a 100% basis, had 68.9 million tonnes of proven and probable mineral reserves containing 105.4 million carats of diamonds, compared to 70.4 million tonnes of proven and probable mineral reserves containing 109.6 million carats as of July 31, 2016. The updated mineral reserves and mineral resources statement reflects a decrease of 1.5 million tonnes containing approximately 4.2 million carats. Mineral resources at the Fox pipe increased as a result of a successful drilling campaign below the previously mined pit.

Diavik Diamond Mine Mineral Reserve and Mineral Resource Statement
AS OF DECEMBER 31, 2016 (UNAUDITED) (100% BASIS)

^{Note: Totals may not add up due to rounding.
Mineral reserves estimates reflect a bottom screen size of +1.0 mm.}

^{Note: Totals may not add up due to rounding.
Mineral resources are exclusive of mineral reserves.
Mineral resources estimates reflect a bottom screen size of +1.0 mm.}

Ekati Diamond Mine Mineral Reserve and Mineral Resource Statement
AS OF JANUARY 31, 2017 (UNAUDITED) (100% BASIS)

^{Note: Totals may not add up due to rounding.
Mineral reserves are reported at +1.0 mm (diamonds that would be recovered using 1.0 mm width slot de-grit screens and inclusive of incremental small diamonds recovered by the Fines Dense Media Separator circuit which was commissioned in the fourth quarter of fiscal 2017).}

^{Note: Totals may not add up due to rounding.
Mineral resources are inclusive of mineral reserves.
Mineral resources are reported at +0.5 mm (diamonds recovered using a 0.5 mm width slot de-grit screen and retained on a 1.0 mm circular aperture screen).}

Financial Statements

Complete Management's Discussion and Analysis and Financial Statements can be found on Dominion's website at: http://www.ddcorp.ca/investors/reports/quarterly-reports.

Consolidated Balance Sheets

Consolidated Statements of Income (Loss)

Consolidated Statement of Cash Flows