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.
<end_table>


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
     Basic                                         $      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



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