Harry Winston Diamond Corporation Reports Fiscal 2013 Third Quarter Results

 Harry Winston Diamond Corporation Reports Fiscal 2013 Third Quarter Results

PR Newswire

TORONTO, Dec. 6, 2012

TORONTO, Dec. 6, 2012 /PRNewswire/  - Harry Winston Diamond Corporation  (TSX: 
HW) (NYSE:HWD) (the "Company") today  announced its third quarter Fiscal  2013 
results for the quarter ending October 31, 2012.

Robert Gannicott, Chairman and Chief Executive Officer stated, "This has  been 
a quarter of solid progress on many  fronts for us. Our luxury brand  business 
has demonstrated strong growth  in its bridal jewelry  sales, with the  higher 
margins and  broader base  that this  implies, while  the Diavik  Project  has 
successfully switched  fully  to  underground  ore  production.  Although  the 
underground mine  is still  tuning its  operating procedures,  it has  already 
reached and  exceeded  its  planned underground  production  rate.  The  rough 
diamond market has recovered its poise  as optimism returns in America,  still 
the world's largest consumer of diamond jewelry."

The Company is pleased to announce the appointment of Chuck Strahl to its
Board of Directors. Mr. Gannicott added, "We welcome Chuck Strahl to our
board of directors. Chuck recently retired from almost 18 years in federal
politics having served as both Minister of Transport and Minister of
Aboriginal Affairs and Northern Development. His experience and interest in
northern development is a welcome addition to the board."

Third Quarter Highlights:

Consolidated

  *Consolidated sales increased 51% to $180.4 million for the third quarter
    compared to $119.7 million for the comparable quarter of the prior year.
    Operating profit was $10.3 million compared to an operating loss of $2.0
    million in the comparable quarter of the prior year. (Included in the
    prior year's operating loss was a $13.0 million paste plant de-recognition
    charge for the mining segment.) EBITDA increased 64% to $34.8 million
    compared to $21.2 million in the comparable quarter of the prior year.
  *Consolidated net profit attributable to shareholders for the third quarter
    was $3.4 million or $0.04 per share compared to net loss attributable to
    shareholders of $4.7million or $0.06 per share in the comparable quarter
    of the prior year. Included in the prior year period net loss was a $8.4
    million (or $0.10 per share) after-tax paste plant de-recognition charge.

Mining Segment

  *Rough diamond sales increased 134% to $84.8 million, versus $36.2 million
    in the comparable quarter of the prior year. The increase in sales
    resulted from a 286% increase in volume of carats sold during the quarter.
    The Company sold approximately 0.88 million carats at an average price of
    $96 per carat versus approximately 0.23 million carats at an average price
    of $159 per carat in the comparable quarter of the prior year.
  *The 39% decrease in the Company's achieved average rough diamond prices
    during the third quarter resulted primarily from the sale of a higher
    portion of smaller size diamonds due to an improved market for these
    goods. Had the Company sold only the last production shipped in the third
    quarter, the estimated achieved price would have been approximately $123
    per carat based on the prices achieved in the October 2012 sale.
  *Rough diamond production for the calendar quarter ended September 30, 2012
    was 0.77 million carats (40% basis), which was consistent with the
    comparable period of the prior year.

Luxury Brand Segment

  *Luxury brand segment sales increased 14% (17% at constant exchange rates)
    to $95.6 million compared to $83.5 million in the comparable quarter of
    the prior year. The total number of units sold increased by 8% over the
    comparable quarter of the prior year.
  *Operating profit for the luxury brand segment increased 265% to $5.3
    million in the third quarter compared to $1.5 million in the comparable
    quarter of the prior year.
  *On November 7, 2012, the luxury brand segment amended its senior secured
    revolving credit facility to add an additional $40 million of capacity,
    increasing the total facility to $300 million. The facility has a
    maturity date of August 30, 2017.

Fiscal 2013 Third Quarter Financial Summary

(US$ in millions except Earnings per Share amounts)

                                                                  Nine months
                            Three months Three months Nine months     ended
                               ended        ended        ended       Oct 31,
                            Oct 31, 2012 Oct 31, 2011 Oct 31, 2012    2011
Sales                          $180.4       $119.7       $549.8      $486.0
-Mining Segment            84.8         36.2        235.3        187.9
-Luxury Brand Segment      95.6         83.5        314.5        298.1
Operating profit (loss)         10.3        (2.0)         45.4        25.8
-Mining Segment            9.2         (1.2)         37.3        21.3
-Luxury Brand Segment      5.3          1.5          20.5        12.6
-Corporate Segment        (4.2)        (2.3)        (12.4)       (8.1)
Net profit (loss)
attributable to
shareholders                    3.4         (4.7)         19.8         8.9
Earnings (loss) per share      $0.04       $(0.06)       $0.23        $0.10

Complete financial  statements, MD&A  and  a discussion  of risk  factors  are 
included in the accompanying release.

Outlook
Mining Segment
Diavik  Diamond  Mine's  full-year  target   production  is  expected  to   be 
approximately 7.1 million carats from the mining of 2.1 million tonnes of  ore 
and the processing of 2.0 million tonnes  of ore. The decrease in carats  from 
the original plan is primarily due to deferring the processing and recovery of
lower value  carats  from  the  re-processed  rejects  ("RPR")  in  favour  of 
processing underground ore containing higher valued carats.

A new mine  plan and budget  for calendar 2013  is under final  review 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 stockpiled  ore  from calendar  2012.  Mining 
activities  will  be  exclusively  underground.  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.

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 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, including receipt of  required 
regulatory and Competition Act 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. Pursuant  to 
the joint venture agreements, BHP Billiton will first separately offer to  the 
joint venture parties its interest in each of the Core and Buffer Zones on the
same terms as those agreed to by  the Company. The joint venture parties  will 
then have 60 days to elect to  acquire either or both of those interests.  Any 
interests that the joint venture parties  do not elect to acquire within  that 
time period can then be transferred to the Company in the following 60  days. 
If the  Core Zone  transaction is  not completed  because the  minority  joint 
venture parties  exercise  their  pre-emptive  rights,  the  Company  will  be 
entitled to be paid a termination fee of $30 million by BHP Billiton.  Closing 
of the transactions is  currently expected to occur  before the end of  March, 
2013. The purchase  price for  the acquisitions  will be  satisfied from  cash 
resources on hand and from new debt financing that has been arranged with  two 
banks. The  new facilities  will comprise  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 in support of the Core  Zone environmental reclamation bond. The  new 
facilities will  be secured  and  will replace  the Company  mining  segment's 
current $125  million facility  with Standard  Chartered Bank,  which will  be 
repaid and terminated on closing.

Luxury Brand Segment
Continued economic  uncertainty  in  Europe  coupled  with  the  softening  in 
consumer demand in China and the budget policy issues in the US are likely  to 
translate into slower growth in the  near term, impacting the holiday  season. 
The Company  believes that  the  Harry Winston  brand  is well  positioned  to 
continue to increase  its market  share in  the luxury  jewelry and  timepiece 
sector. New  salons  in China  have  significantly improved  the  distribution 
network in the fastest growing luxury market in the world. During August 2012,
a new directly operated  salon was opened in  the Harrods department store  in 
London, England. A new directly operated  salon is also expected to be  opened 
early next year in Geneva, Switzerland.  In addition, a new licensed salon  is 
expected to be opened in Kuwait City, Kuwait, during the first quarter of next
fiscal year.The Company plans  to expand by 15  wholesale watch doors to  216 
doors by the end of fiscal 2013.

Conference Call and Webcast
Beginning at 8:30AM  (ET) on  Friday, December 7th,  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://investor.harrywinston.com or by  dialing 
877-299-4454 within North America or 617-597-5447 from international locations
and entering passcode 95731015.

An online  archive  of  the  broadcast will  be  available  by  accessing  the 
Company's investor relations web  site at http://investor.harrywinston.com.  A 
telephone replay of the call will be available one hour after the call through
11:00PM (ET), Friday, December 21st, 2012 by dialing 888-286-8010 within North
America or  617-801-6888 from  international locations  and entering  passcode 
96824980.

About Harry Winston Diamond Corporation
Harry Winston Diamond Corporation is a diamond enterprise with premium  assets 
in the  mining and  retail segments  of the  diamond industry.  Harry  Winston 
supplies rough diamonds  to the global  market from its  40 percent  ownership 
interest in the Diavik Diamond Mine. The Company's luxury brand segment is  a 
premier diamond  jeweler and  luxury  timepiece retailer  with salons  in  key 
locations, including New  York, Paris, London,  Beijing, Shanghai, Hong  Kong, 
Singapore, Tokyo and Beverly Hills.

The Company  focuses  on the  two  most  profitable segments  of  the  diamond 
industry, mining and retail, in which its expertise creates shareholder value.
This unique business model provides key competitive advantages; rough  diamond 
sales and polished diamond purchases provide market intelligence that enhances
the Company's overall performance.

For more information, please visit www.harrywinston.com or for investor
information, visit http://investor.harrywinston.com.

                                  Highlights

    (ALL FIGURES ARE IN UNITED STATES DOLLARS UNLESS OTHERWISE INDICATED)

Consolidated sales  were $180.4  million  for the  third quarter  compared  to 
$119.7 million for the comparable quarter  of the prior year, resulting in  an 
operating profit  of $10.3  million  compared to  an  operating loss  of  $2.0 
million in the comparable  quarter of the prior  year. Gross margin  increased 
49% to $65.7 million from $44.2 million in the comparable quarter of the prior
year. Consolidated EBITDA was $34.8 million  compared to $21.2 million in  the 
comparable quarter of the  prior year. The Company  had 0.8 million carats  of 
rough  diamond  inventory   with  an   estimated  current   market  value   of 
approximately $110 million  at October  31, 2012, of  which approximately  $60 
million represents rough diamond inventory available for sale.

The mining segment recorded sales of $84.8 million, a 134% increase from $36.2
million in the  comparable quarter of  the prior year.  The increase in  sales 
resulted from a  286% increase in  volume of carats  sold during the  quarter, 
offset by a 39% decrease in  achieved rough diamond prices. In the  comparable 
quarter of the prior year, the Company  chose to hold inventory due to  market 
conditions. Rough diamond  production during  the third  calendar quarter  was 
consistent with the comparable  period of the prior  year. The mining  segment 
recorded operating profit  of $9.2 million  compared to an  operating loss  of 
$1.1 million in  the comparable  quarter of the  prior year.  Included in  the 
operating loss 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. EBITDA for the mining  segment 
was $29.8 million compared to $18.8  million in the comparable quarter of  the 
prior year.

The luxury brand segment recorded sales  of $95.6 million, an increase of  14% 
from sales of $83.5 million  in the comparable quarter  of the prior year  (an 
increase of 17% at constant exchange rates). Operating profit was $5.3 million
for the quarter  compared to  $1.5 million in  the comparable  quarter of  the 
prior year. EBITDA for the luxury  brand segment was $9.1 million compared  to 
$4.5 million in the comparable quarter of the prior year.

The corporate segment recorded selling, general and administrative expenses of
$4.3 million compared to $2.3 million  in the comparable quarter of the  prior 
year.

The Company recorded a consolidated net profit attributable to shareholders of
$3.4 million  or $0.04  per share  for the  quarter, compared  to a  net  loss 
attributable to shareholders of $4.7 million  or $0.06 per share in the  third 
quarter of the prior year.

                     Management's Discussion and Analysis

  PREPARED AS OF DECEMBER 6, 2012 (ALL FIGURES ARE IN UNITED STATES DOLLARS
                         UNLESS OTHERWISE INDICATED)

The following is management's discussion and analysis ("MD&A") of the  results 
of operations for  HarryWinston Diamond  Corporation ("HarryWinston  Diamond 
Corporation", or the "Company")  for the three and  nine months ended  October 
31, 2012, andits  financial position  as at October  31, 2012.  This MD&A  is 
based on  the Company's  unaudited  interim condensed  consolidated  financial 
statements prepared  in  accordance  with  International  Financial  Reporting 
Standards ("IFRS")  and  should be  read  in conjunction  with  the  unaudited 
interim condensed consolidated financial statements and notes thereto for  the 
three and nine  months ended  October 31,  2012 and  the audited  consolidated 
financial statements  of the  Company and  notes thereto  for the  year  ended 
January 31, 2012.  Unless otherwise  specified, all  financial information  is 
presented in United States dollars. Unless otherwise indicated, all references
to "third  quarter"  refer  to  the three  months  ended  October  31.  Unless 
otherwise indicated,  references  to  "international"  for  the  luxury  brand 
segment refer to Europe and Asia.

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 and the demand for  luxury goods, expected cost of sales  and 
gross margin trends in the mining segment, targets for compound annual  growth 
rates of sales  and operating income  in the luxury  brand segment, plans  for 
expansion of the luxury brand retail salon network, expected sales trends  and 
market conditions in the luxury brand  segment, and the ability to obtain  the 
necessary regulatory approvals to complete the Ekati transactions and the time
frame required to do so and to satisfy the other conditions to closing. Actual
results  may  vary  from  the  forward-looking  information.  See  "Risks  and 
Uncertainties" on page 21  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, the worldwide demand  for luxury goods, and  the timeline for  the 
funding of  the Ekati  transaction. In  making statements  regarding  expected 
diamond prices and expectations concerning  the diamond industry and  expected 
sales trends and market  conditions in the luxury  brand segment, the  Company 
has made assumptions regarding, among other things, the state of world and  US 
economic conditions,  worldwide  diamond  production levels,  and  demand  for 
luxury goods. 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 21.

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, and risks of changes to  the 
mine plan  for the  Diavik  Diamond Mine,  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,  the  risks relating  to  the 
Company's expansion strategy, the  risk of competition  in the luxury  jewelry 
business as well  as changes in  demand for high-end  luxury goods, and  risks 
relating to the timing of and ability to obtain necessary regulatory approvals
for, and to satisfy  the other closing conditions  of, the Ekati  transactions 
and the mining segment's related new credit facilities. Please see page 21  of 
this Interim Report, as well as the Company's current Annual Information Form,
available at www.sedar.com,  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 
www.sedar.com and www.sec.gov, respectively.

Summary Discussion
Harry Winston Diamond Corporation is a diamond enterprise with premium  assets 
in the mining  and retailing  segments of  the diamond  industry. 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's luxury  brand  segment  is  a premier  diamond  jeweler  and  luxury 
timepiece retailer with  salons in  key locations including  New York,  Paris, 
London, Beijing, Shanghai, Tokyo, Hong Kong and Beverly Hills.

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  HarryWinston Diamond  Limited  Partnership ("HWDLP")  (40%)  where 
HWDLP 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 HWDLP 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 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, including receipt of  required 
regulatory and Competition Act 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. Pursuant  to 
the joint venture agreements, BHP Billiton will first separately offer to  the 
joint venture parties its interest in each of the Core and Buffer Zones on the
same terms as those agreed to by  the Company. The joint venture parties  will 
then have 60 days to elect to  acquire either or both of those interests.  Any 
interests that the joint venture parties  do not elect to acquire within  that 
time period can then be transferred to the Company in the following 60  days. 
If the  Core Zone  transaction is  not completed  because the  minority  joint 
venture parties  exercise  their  pre-emptive  rights,  the  Company  will  be 
entitled to be paid a termination fee of $30 million by BHP Billiton.  Closing 
of the transactions is  currently expected to occur  before the end of  March, 
2013. The purchase  price for  the acquisitions  will be  satisfied from  cash 
resources on hand and from new debt financing that has been arranged with  two 
banks. The  new facilities  will comprise  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 in support of the Core  Zone environmental reclamation bond. The  new 
facilities will  be secured  and  will replace  the Company  mining  segment's 
current $125  million facility  with Standard  Chartered Bank,  which will  be 
repaid and terminated on closing.

Market Commentary
The Diamond Market
During the third quarter, improved retail  sales, especially in India and  the 
US, have given a  boost to the diamond  market, resulting in stabilization  of 
both rough  and  polished  diamond  prices,  despite  continued  macroeconomic 
uncertainty. In China,  renewed activity  in the retail  market together  with 
changes in the political landscape are  expected to have a positive impact  on 
demand from this region.  In light of this  improvement, the industry  lending 
banks appear more relaxed  about the current  level of credit  notwithstanding 
some concerns  about  profitability  among diamond  manufacturers.  In  recent 
months, the industry has taken a more pragmatic approach to both rough diamond
buying and diamond manufacturing and is generally better positioned to benefit
from an improved market over the holiday season.

The Luxury Jewelry and Timepiece Market
The global  luxury market  for jewelry  and timepieces  continued to  generate 
healthy growth during the third  quarter. Consumer demand for luxury  products 
from  strong  European  and  North  American  brands  continues  to  increase, 
supported by tourism from emerging markets. Expansion of luxury brand networks
in emerging markets combined with targeted marketing campaigns is  translating 
into growing numbers of  new luxury consumers.  Against these general  trends, 
Hurricane Sandy negatively impacted retail  businesses in the northeastern  US 
at the  end of  the Company's  third quarter,  with store  closures and  power 
outages of up to a week.  This, together with continuing economic  uncertainty 
in Europe, softening demand in China and  budget policy issues in the US,  are 
likely to result in slower  growth in the near  term. Longer term, demand  for 
luxury products is expected to continue to grow as a result of the anticipated
economic recovery  in the  US, increasing  mobility of  consumers and  growing 
demand from emerging markets.  The Chinese market is  expected to continue  to 
provide the strongest growth in demand  for luxury products, both directly  in 
China as well as through tourism abroad.

Condensed Consolidated Financial Results
The following is a summary of the Company's consolidated quarterly results for
the eight quarters ended October 31, 2012 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)
                                                                                                                        Nine         Nine
                                                                                                                      months       months
                                                                                                             ended       ended
                                                                                                                     October      October
                      2013       2013       2013       2012       2012       2012       2012       2011         31,         31,
                      Q3        Q2        Q1        Q4        Q3        Q2        Q1        Q4       2012       2011
Sales            $ 180,399  $ 176,897  $ 192,461  $ 216,017  $ 119,716  $ 222,378  $ 143,932  $ 215,358  $  549,757  $  486,026
Cost of sales     114,690   104,694   119,134   129,807    75,524   150,177    96,452   141,391    338,518    322,153
Gross margin       65,709    72,203    73,327    86,210    44,192    72,201    47,480    73,967    211,239    163,873
Gross margin                                                                                                        
(%)                  36.4%      40.8%      38.1%      39.9%      36.9%      32.5%      33.0%      34.3%       38.4%       33.7%
Selling,                                                                                                            
general and
administrative
expenses            55,387     55,819     54,669     55,500     46,155     49,101     42,795     52,722     165,875     138,051
Operating                                                                                                           
profit (loss)       10,322     16,384     18,658     30,710    (1,963)     23,100      4,685     21,245      45,364      25,822
Finance                                                                                                             
expenses           (4,811)    (4,028)    (3,880)    (3,481)    (4,040)    (5,183)    (3,983)    (3,727)    (12,719)    (13,206)
Exploration                                                                                                         
costs                (673)      (568)      (254)      (177)      (600)      (781)      (212)      (351)     (1,495)     (1,593)
Finance and                                                                                                         
other income            96         90         65         81        164         83        258        278         251         505
Foreign                                                                                                             
exchange gain
(loss)                 767        153      (364)        458        436        288      (177)      1,392         556         547
Profit (loss)                                                                                                       
before income
taxes                5,701     12,031     14,225     27,591    (6,003)     17,507        571     18,837      31,957      12,075
Income tax                                                                                                          
expense
(recovery)           1,687      7,278      2,615     11,001    (1,272)      7,519    (3,027)      5,137      11,580       3,220
Net profit                                                                                                          
(loss)            $   4,014   $   4,753   $  11,610   $  16,590   $ (4,731)   $   9,988   $   3,598   $  13,700   $   20,377   $    8,855
Attributable to                                                                                                     
shareholders      $   3,397   $   4,755   $  11,610   $  16,602   $ (4,728)   $   9,986   $   3,596   $  13,693   $   19,762   $    8,854
Attributable to                                                                                                     
non-controlling
interest               617        (2)          -       (12)        (3)          2          2          7         615           1
Basic earnings                                                                                                      
(loss) per
share             $    0.04   $    0.06   $    0.14   $    0.20   $  (0.06)   $    0.12   $    0.04   $    0.16   $     0.23   $     0.10
Diluted                                                                                                             
earnings (loss)
per share         $    0.04   $    0.06   $    0.14   $    0.19   $  (0.06)   $    0.12   $    0.04   $    0.16   $     0.23   $     0.10
Cash dividends                                                                                                      
declared per
share             $    0.00   $    0.00   $    0.00   $    0.00   $    0.00   $    0.00   $    0.00   $    0.00   $     0.00   $     0.00
Total assets                                                                                                        
^(i)              $   1,733   $   1,660   $   1,716   $   1,637   $   1,656   $   1,671   $   1,671   $   1,609   $    1,733   $    1,656
Total long-term                                                                                                     
liabilities
^(i)              $     682   $     461   $     472   $     670   $     661   $     633   $     613   $     603   $      682   $      661
Operating                                                                                                           
profit (loss)     $  10,322   $  16,384   $  18,658   $  30,710   $ (1,963)   $  23,100   $   4,685   $  21,245   $   45,364   $   25,822
Depreciation                                                                                                        
and
amortization
^(ii)               24,453     16,980     25,546     27,512     23,121     20,716     20,291     24,635      66,980      64,129
EBITDA ^(iii)    $  34,775  $  33,364  $  44,204  $  58,222  $  21,158  $  43,816  $  24,976  $  45,880  $  112,344  $   89,951

(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 Measure" on page 19.

      The comparability of quarter-over-quarter results is impacted by
       seasonality for both the mining and luxury brand segments. Harry
       Winston Diamond Corporation expects that the quarterly results for its
       mining segment 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. The quarterly results for the luxury brand segment are
       also seasonal, with generally higher sales during the fourth quarter
       due to the holiday season. See "Segmented Analysis" on page 10 for
       additional information.
      

Three Months Ended October 31, 2012 ComparedtoThree Months Ended October 31,
2011
CONSOLIDATED NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS
The Company recorded a third  quarter consolidated net profit attributable  to 
shareholders of  $3.4  million or  $0.04  per share  compared  to a  net  loss 
attributable to shareholders of $4.7 million  or $0.06 per share in the  third 
quarter of the prior year. Excluding the $8.4 million after-tax de-recognition
in the prior year  of certain paste production  assets in the mining  segment, 
the Company would have recorded a  net profit attributable to shareholders  of 
$3.7 million or $0.04 per share.

CONSOLIDATED SALES
Sales for  the third  quarter  totalled $180.4  million, consisting  of  rough 
diamond  sales   of  $84.8   million  and   luxury  brand   segmentsales   of 
$95.6million. This  compares to  sales of  $119.7 million  in the  comparable 
quarter of theprior  year (rough diamond  sales of $36.2  million and  luxury 
brand segment sales of $83.5million). See"Segmented Analysis" on page 10 for
additional information.

CONSOLIDATED COST OF SALES AND GROSS MARGIN
The Company's  third quarter  cost of  sales was  $114.7 million  for a  gross 
margin of 36.4%  compared toa  cost of  sales of  $75.5 million  and a  gross 
margin of 36.9% for  the comparable quarter of  the prior year. The  Company's 
cost of sales includes  costs associated with the  Diavik Diamond Mine,  rough 
diamond sorting  and  luxury brand  activities.  See "Segmented  Analysis"  on 
page10 for additional information.

CONSOLIDATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The principal  components  of  selling, general  and  administrative  ("SG&A") 
expenses  include  expenses  for   salaries  and  benefits,  advertising   and 
marketing, rent and related costs. The Company incurred SG&A expenses of $55.4
million for the  third quarter, compared  to $46.2 million  in the  comparable 
quarter of the prior year.

Included in  SG&A expenses  for the  third quarter  was $3.9  million for  the 
mining segment compared  to $3.3  million for  the comparable  quarter of  the 
prior year,  $47.2 million  for the  luxury brand  segment compared  to  $40.6 
million for the comparable quarter of the prior year, and $4.3 million for the
corporate segment compared to $2.2 million  for the comparable quarter of  the 
prior year. See"Segmented Analysis" on page 10 for additional information.

CONSOLIDATED INCOME TAXES
The Company recorded a net income tax expense of $1.7 million during the third
quarter, compared  to  a  net income  tax  recovery  of $1.3  million  in  the 
comparable quarter  of the  prior  year. The  Company's combined  federal  and 
provincial statutory income 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, and the recognition of previously unrecognized benefits. 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 third quarter,  the Canadian  dollar 
strengthened against  the US  dollar. As  a result,  the Company  recorded  an 
unrealized foreign exchange  loss of $0.7  million on the  revaluation of  the 
Company's Canadian  dollar denominated  deferred  income tax  liability.  This 
compares to  an  unrealized foreign  exchange  gain  of $8.1  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  third quarter,  the 
Company also recognized  a deferred  income tax  expense of  $1.0 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  $11.4 
million recognized in the comparable quarter  of the prior year. The  recorded 
tax provision during the third quarter also included a net income tax recovery
of $2.1 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  $0.7 million recognized in  the comparable quarter  of 
the prior year.

The rate of income tax payable  by Harry Winston Inc. varies by  jurisdiction. 
Net operating losses are available  in certain jurisdictions to offset  future 
income taxes  payable in  such  jurisdictions. The  net operating  losses  are 
scheduled to expire through 2032.

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
Included in finance expenses  for the third quarter  was $2.3 million for  the 
mining segment compared  to $2.6  million for  the comparable  quarter of  the 
prior year and  $2.5 million  for the luxury  brand segment  compared to  $1.5 
million for the comparable quarter of the prior year. Also included in finance
expense for the mining  segment is accretion expense  of $0.6 million (2012  - 
$0.7 million) related  to the  Diavik Diamond Mine's  future site  restoration 
liability.

CONSOLIDATED EXPLORATION EXPENSE
Exploration expense  of $0.7  million was  incurred during  the third  quarter 
compared to $0.6 million in the comparable quarter of the prior year.

CONSOLIDATED FINANCE AND OTHER INCOME
Finance and other income of $0.1 million was recorded during the third quarter
compared to $0.2 million in the comparable quarter of the prior year.

CONSOLIDATED FOREIGN EXCHANGE
A net foreign exchange  gain of $0.8 million  was recognized during the  third 
quarter compared  to  a net  foreign  exchange gain  of  $0.4 million  in  the 
comparable quarter of the prior year. TheCompany does not currently have  any 
significant foreign exchange derivative instruments outstanding.

Nine Months Ended October 31,  2012 ComparedtoNine Months Ended October  31, 
2011
CONSOLIDATED NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS
The Company recorded a consolidated net profit attributable to shareholders of
$19.8 million or $0.23 per share for  the nine months ended October 31,  2012, 
compared to a net profit attributable to shareholders of $8.9 million or $0.10
per share  in the  comparable period  of the  prior year.  Excluding the  $8.4 
million after-tax de-recognition in the prior year of certain paste production
assets in the  mining segment, the  Company would have  recorded a net  profit 
attributable to shareholders of $17.3 million or $0.20 per share.

CONSOLIDATED SALES
Sales totalled $549.8  million for  the nine  months ended  October 31,  2012, 
consisting  of  rough  diamond  sales  of  $235.3  million  and  luxury  brand 
segmentsales of $314.5million. This compares  to sales of $486.0 million  in 
the comparable period of theprior year (rough diamond sales of $187.9million
and luxury brand segment sales of $298.1 million). See"Segmented Analysis" on
page 10 for additional information.

CONSOLIDATED COST OF SALES AND GROSS MARGIN
The Company's  cost of  sales was  $338.5 million  for the  nine months  ended 
October 31, 2012, for a gross margin  of 38.4% compared toa cost of sales  of 
$322.2 million and a gross  margin of 33.7% for  the comparable period of  the 
prior year. The  Company's cost of  sales includes costs  associated with  the 
Diavik Diamond Mine, rough  diamond sorting and  luxury brand activities.  See 
"Segmented Analysis" on page10 for additional information.

CONSOLIDATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The principal components of  SG&A expenses include  expenses for salaries  and 
benefits, advertising  and  marketing, rent  and  related costs.  The  Company 
incurred SG&A expenses of $165.9 million for the nine months ended October 31,
2012, compared to $138.1 million in the comparable period of the prior year.

Included in SG&A expenses for the nine months ended October 31, 2012, was $9.4
million for the mining  segment compared to $11.4  million for the  comparable 
period of the prior year, $144.0 million for the luxury brand segment compared
to $118.7  million for  the comparable  period of  the prior  year, and  $12.4 
million for the corporate segment compared to $8.0 million for the  comparable 
period of the prior year. See"Segmented  Analysis" on page 10 for  additional 
information.

CONSOLIDATED INCOME TAXES
The Company recorded a net income tax expense of $11.6 million during the nine
months ended October 31, 2012,  compared to a net  income tax expense of  $3.2 
million in the  comparable period of  the prior year.  The Company's  combined 
federal and provincial  statutory income tax  rate for the  nine months  ended 
October 31, 2012 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, and  the recognition of  previously 
unrecognized benefits. 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 nine  months ended October 31,  2012, 
the Canadian  dollar strengthened  against the  US dollar.  As a  result,  the 
Company recorded an unrealized  foreign exchange loss of  $0.8 million on  the 
revaluation of the Company's Canadian  dollar denominated deferred income  tax 
liability. This  compares  to an  unrealized  foreign exchange  loss  of  $1.7 
million in the  comparable period of  the prior year.  During the nine  months 
ended October 31, 2012, the Company  recognized a deferred income tax  expense 
of $3.5 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 period of the prior year.
The recorded tax provision during the nine months ended October 31, 2012  also 
included a  net  income tax  recovery  of  $4.0 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 $3.8  million 
recognized in the comparable period of the prior year.

The rate of income tax payable  by Harry Winston Inc. varies by  jurisdiction. 
Net operating losses are available  in certain jurisdictions to offset  future 
income taxes  payable in  such  jurisdictions. The  net operating  losses  are 
scheduled to expire through 2032.

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
Included in finance expenses  for the nine months  ended October 31, 2012  was 
$6.7 million  for  the  mining  segment  compared  to  $9.1  million  for  the 
comparable period of  the prior  year and $6.0  million for  the luxury  brand 
segment compared to $4.2 million for the comparable period of the prior  year. 
Also included in finance expense for  the mining segment is accretion  expense 
of $1.9 million  (2012 - $2.3  million) related to  the Diavik Diamond  Mine's 
future site restoration liability.

CONSOLIDATED EXPLORATION EXPENSE
Exploration expense of $1.5 million was incurred during the nine months ended
October 31, 2012, compared to $1.6 million in the comparable period of the
prior year.

CONSOLIDATED FINANCE AND OTHER INCOME
Finance and other income of $0.3  million was recorded during the nine  months 
ended October 31, 2012, compared to  $0.5 million in the comparable period  of 
the prior year.

CONSOLIDATED FOREIGN EXCHANGE
A net foreign  exchange gain of  $0.6 million was  recognized during the  nine 
months ended October  31, 2012,  compared to  $0.5 million  in the  comparable 
period of the prior year. TheCompany does not currently have any  significant 
foreign exchange derivative instruments outstanding.

Segmented Analysis
The operating  segments  of  the  Company include  mining,  luxury  brand  and 
corporate segments.  The corporate  segment  captures costs  not  specifically 
related to operations of the mining or luxury brand segments.

Mining
The mining segment includes the production, sorting and sale of rough
diamonds.

(expressed in thousands of United States dollars)
(unaudited)
                                                                                                                Nine        Nine
                                                                                                              months      months
                                                                                                     ended      ended
                                                                                                             October     October
                    2013      2013      2013       2012       2012      2012      2012      2011        31,        31,
                    Q3       Q2       Q1        Q4        Q3       Q2       Q1       Q4      2012      2011
Sales                                                                                             
    America    $  7,697  $  2,269  $  7,432  $   2,727  $   8,835  $    447  $  3,009  $  2,689  $  17,398  $  12,291
    Europe      57,438   50,514   54,370    78,846    21,993   80,131   50,752   75,715   162,322   152,876
    Asia        19,683    8,690   27,207    20,659     5,411    9,030    8,274    4,293    55,580    22,715
Total sales      84,818   61,473   89,009   102,232    36,239   89,608   62,035   82,697   235,300   187,882
Cost of sales    71,663   46,784   70,099    72,783    34,112   67,613   53,443   61,822   188,546   155,168
Gross margin     13,155   14,689   18,910    29,449     2,127   21,995    8,592   20,875    46,754    32,714
Gross margin                                                                                                
(%)                15.5%     23.9%     21.2%      28.8%       5.9%     24.5%     13.9%     25.2%      19.9%      17.4%
Selling,                                                                                                    
general and
administrative
expenses           3,932     2,966     2,525      2,061      3,274     3,489     4,630     3,017      9,423     11,393
Operating                                                                                                   
profit (loss)    $  9,223   $ 11,723   $ 16,385   $  27,388   $ (1,147)   $ 18,506   $  3,962   $ 17,858   $  37,331   $  21,321
Depreciation                                                                                                
and
amortization
^(i)              20,588    13,160    22,172     24,284     19,932    17,461    17,083    20,669     55,921     54,476
EBITDA ^(ii)    $ 29,811  $ 24,883  $ 38,557  $  51,672  $  18,785  $ 35,967  $ 21,045  $ 38,527  $  93,252  $  75,797

^(i)  Depreciation and amortization included in cost of sales and selling,
       general and administrative expenses.
^(ii) Earnings before interest, taxes, depreciation and amortization
       ("EBITDA"). See "Non-IFRS Measure" on page 19.
      

Three Months Ended October 31, 2012 ComparedtoThree Months Ended October 31,
2011
MINING SALES
During the third quarter  the Company sold  approximately 0.88 million  carats 
for a total of $84.8 million for an average price per carat of $96 compared to
approximately 0.23 million carats for a total of $36.2 million for an  average 
price per carat of $159 in the comparable quarter of the prior year. The  286% 
increase in  the quantity  of carats  sold  was primarily  the result  of  the 
Company's decision in  the prior  year to hold  some inventory  of lower  than 
average price items until stability returned to the rough diamond market.  The 
39% decrease in the Company's achieved average rough diamond prices during the
third quarter  resulted from  the sale  of a  higher portion  of smaller  size 
diamonds due to an improved market for these goods.

Had the Company sold  only the last production  shipped in the third  quarter, 
the estimated  achieved price  would have  been approximately  $123 per  carat 
based on the prices achieved in the October 2012 sale.

The Company  expects that  results for  its mining  segment 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 
eachquarter.

MINING COST OF SALES AND GROSS MARGIN
The Company's third  quarter cost of  sales was $71.7  million resulting in  a 
gross margin of 15.5% compared to a cost of sales of $34.1 million and a gross
margin of 5.9% in the  comparable quarter of 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  third 
quarter included $19.8  million of depreciation  and amortization compared  to 
$19.3 million in the  comparable quarter of the  prior year. The mining  gross 
margin for the third quarter was impacted  by the sale of a higher portion  of 
smaller size goods, which carry  lower-than-average gross margins. The  mining 
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 third quarter, the Diavik cash
cost of  production  was  $42.0  million compared  to  $38.5  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 Company's 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 segment cost of  sales 
disclosed in the interim condensed  consolidated financial statements for  the 
three months ended October 31, 2012 and 2011.

                                         Three months   Three months ended
(expressed in thousands of United                 ended     October 31, 2011 
States dollars)                        October 31, 2012
Diavik cash cost of production           $     42,048       $       38,468
Private royalty                                1,632                 710
Other cash costs                               1,057                 988
Total cash cost of production                 44,737              40,166
Depreciation and amortization                 20,547              32,868
Total cost of production                      65,284              73,034
Adjusted for stock movements                   6,379            (38,922)
Total cost of sales                      $     71,663       $       34,112

MINING SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Included in the SG&A expenses for the mining segment was $1.0 million related
to the Ekati Diamond Mine acquisition.

Nine Months Ended October 31,  2012 ComparedtoNine Months Ended October  31, 
2011
MINING SALES
During the nine months ended October 31, 2012, the Company sold  approximately 
2.3 million carats  for a total  of $235.3  million for an  average price  per 
carat of $101  compared to  approximately 1.3 million  carats for  a total  of 
$187.9 million for an average price per carat of $148 in the comparable period
of the  prior year.  The  84% increase  in the  quantity  of carats  sold  was 
primarily the result of 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
the nine months  ended October  31, 2012. The  32% decrease  in the  Company's 
achieved average rough diamond prices in the nine-month period 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 comparable period of the prior year.

MINING COST OF SALES AND GROSS MARGIN
The Company's cost of  sales was $188.5 million  during the nine months  ended 
October 31, 2012, resulting in a gross  margin of 19.9% compared to a cost  of 
sales of $155.2 million and a gross  margin of 17.4% in the comparable  period 
of 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 nine months ended October 31, 2012,
included $53.8  million of  depreciation and  amortization compared  to  $52.6 
million for the comparable period of  the prior year. The mining 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 nine months ended October  31, 
2012, the Diavik cash cost of production was $126.7 million compared to $123.6
million in  the  comparable period  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 following table provides  a reconciliation of cash  cost of production  to 
the  mining  segment  cost  of  sales  disclosed  in  the  interim   condensed 
consolidated financial statements for the  nine months ended October 31,  2012 
and 2011.

(expressed in thousands of United    Nine months ended   Nine months ended
States dollars)                        October 31, 2012      October 31, 2011
Diavik cash cost of production           $     126,679       $     123,600
Private royalty                                 5,359              4,006
Other cash costs                                3,088              2,934
Total cash cost of production                 135,126            130,540
Depreciation and amortization                  50,334             66,554
Total cost of production                      185,460            197,094
Adjusted for stock movements                    3,086           (41,926)
Total cost of sales                      $     188,546       $     155,168

MINING SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
SG&A expenses  for the  mining  segment decreased  by  $2.0 million  from  the 
comparable period  of the  prior  year primarily  due to  executive  severance 
incurred in  the first  quarter of  the  prior year,  offset by  $1.7  million 
related to the  Ekati Diamond  Mine acquisition  incurred in  the nine  months 
ended October 31, 2012.

MINING SEGMENT OPERATIONAL UPDATE
Ore production for the third calendar quarter consisted of 0.8million  carats 
produced from  0.21 million  tonnes of  ore from  the A-418  kimberlite  pipe, 
0.3million carats produced  from 0.13 million  tonnes of ore  from the  A-154 
North kimberlite  pipe,  and  0.9million carats  produced  from  0.19million 
tonnes of  ore from  the A-154  South kimberlite  pipe. Also  included in  ore 
production for the third calendar quarter was an estimated 0.02 million carats
from reprocessed plant rejects ("RPR"). RPR are not included in the  Company's 
reserves and resource statement and  are therefore incremental to  production. 
Rough diamond production was consistent  with the comparable calendar  quarter 
of the prior year.

The Diavik Diamond  Mine has made  the transition to  underground mining  more 
successfully than  had  been originally  anticipated.  Expensive  cut-and-fill 
mining has been replaced by a much lower cost combination of sub level retreat
and blasthole  stoping. Production  levels  have also  ramped up  faster  than 
initially planned despite the challenge of  mining through the upper level  of 
ground impacted by  the open pit  activity above.  In the upper  level of  the 
A-418 underground  this  involved mining  through,  and processing,  ore  that 
contained large  amounts  of  steel  support  material.  This  was  a  special 
challenge for  the  processing plant  and  led to  mine  production  exceeding 
processing capacity for a while. As a  result of this, 0.35 million tonnes  of 
broken ore is now stockpiled on the  processing plant feed pad and about  half 
of this will provide incremental feed during calendar 2013.

HARRY WINSTON DIAMOND LIMITED PARTNERSHIP'S 40% SHARE OF DIAVIK DIAMOND MINE
PRODUCTION

(reported on a                                             
one-month lag)
                           Three       Three   Nine months        Nine
                            months        months           ended        months
                             ended         ended       September         ended
                         September     September             30,     September
                               30,           30,            2012           30,
                              2012          2011                          2011
Diamonds recovered            773         773         2,132       2,030
(000s carats)
Grade (carats/tonne)         3.68        3.00          3.35        3.03
                                                          

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 polished buying and rough sorting and sales expansion in
India.

Mining Segment Outlook
PRODUCTION
Diavik  Diamond  Mine's  full-year  target   production  is  expected  to   be 
approximately 7.1 million carats from the mining of 2.1 million tonnes of  ore 
and the processing of 2.0 million tonnes  of ore. The decrease in carats  from 
the original plan is primarily due to deferring the processing and recovery of
lower value  carats from  the  RPR in  favour  of processing  underground  ore 
containing higher valued carats. Open pit mining of approximately 1.1  million 
tonnes of ore was exclusively from the A-418 kimberlite pipe. Open pit  mining 
of the A-418 kimberlite  pipe concluded in  September, although processing  of 
this ore will continue into calendar 2013. Underground mining of approximately
1.0 million tonnes of ore is expected to be sourced principally from the A-154
South and  A-154 North  kimberlite  pipes, with  some production  from  A-418. 
Included in the estimated  production for calendar  2012 is approximately  0.1 
million carats  from  RPR.  These  RPR recoveries  are  not  included  in  the 
Company's reserves and  resource statement  and are  therefore incremental  to 
production. The  decrease  in  production  results from  a  combination  of  a 
reduction in  processing plant  throughput due  to changes  in the  geological 
composition of the oreand the deferral of RPR from calendar 2012.

A new mine  plan and budget  for calendar 2013  is under final  review 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 the  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  diamond 
market conditions  and  decreased  urgency  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 to  extend the life  of the existing  developed pipes  thereby 
deferring the  need for  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
Rough diamond prices  have stabilized  through the third  calendar quarter  as 
demand has improved. Based  on prices from the  Company's rough diamond  sales 
during the  third 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:

                           October 2012
                 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's share of the cash cost of production at the Diavik Diamond  Mine 
for calendar 2012 is expected to  be approximately $167 million at an  assumed 
average Canadian/US dollar exchange rate of $1.00.

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, HWDLP's 40% share  of the planned capital expenditures  at 
the Diavik Diamond  Mine is  expected to be  approximately $71  million at  an 
assumed average Canadian/US dollar  exchange rate of  $1.00. HWDLP's share  of 
capital expenditures was $12.5 million for the three months ended October  31, 
2012, and $42.9  million for the  nine months ended  October 31, 2012.  During 
fiscal 2014, HWDLP'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.

Luxury Brand
The luxury brand segment  includes sales from 22  Harry Winston salons,  which 
are located in prime markets around  the world, including eight salons in  the 
United States:  New York,  Beverly Hills,  Bal Harbour,  Honolulu, Las  Vegas, 
Dallas, Chicago and Costa Mesa; five  salons in Japan: Ginza, Roppongi  Hills, 
Osaka, Omotesando and Nagoya; three salons in Europe: Paris andtwo in London;
and six salons  in Asia outside  of Japan: Beijing,  two in Shanghai,  Taipei, 
Hong Kong and Singapore.

(expressed in thousands of United States dollars)
(unaudited)                     
                                                                                                           Nine       Nine
                                                                                                                 months      months
                                                                                                                  ended       ended
                                                                                                                October     October
                  2013       2013       2013       2012      2012       2012      2012       2011        31,        31,
                    Q3        Q2        Q1        Q4       Q3        Q2       Q1        Q4      2012      2011
Sales                                                                                                
 America       $ 30,751  $  35,759  $  32,286  $  41,537  $ 28,817  $  27,183  $ 35,487  $  46,489  $  98,796  $  91,487
 Europe         27,297    15,636    30,054    31,204   19,561    26,098   17,446    15,701    72,987    63,105
 Asia                                                                                                        
(excluding
Japan)            15,493     33,956     20,385     17,272    13,133     59,056     14,354     50,817     69,834     86,543
 Japan          22,040    30,073    20,727    23,772   21,966    20,433   14,610    19,654    72,840    57,009
Total sales      95,581   115,424   103,452   113,785   83,477   132,770   81,897   132,661   314,457   298,144
Cost of sales    43,027    57,910    49,035    57,024   41,378    82,513   42,958    79,518   149,972   166,850
Gross margin     52,554    57,514    54,417    56,761   42,099    50,257   38,939    53,143   164,485   131,294
Gross margin                                                                                                  
(%)                55.0%      49.8%      52.6%      49.9%     50.4%      37.9%      47.5%      40.1%      52.3%      44.0%
Selling,                                                                                                      
general and
administrative
expenses          47,205     49,495     47,311     49,929    40,635     43,331     34,716     47,866    144,011    118,682
Operating                                                                       $                              
profit           $  5,349   $   8,019   $   7,106   $   6,832   $  1,464   $   6,926      4,223   $   5,277   $  20,474   $  12,612
Depreciation                                                                                                  
and
amortization
^(i)               3,726      3,681      3,235      3,089     3,048      3,115      3,069      3,688     10,642      9,233
EBITDA ^(ii)    $  9,075  $  11,700  $  10,341  $   9,921  $  4,512  $  10,041  $  7,292  $   8,965  $  31,116  $  21,845

^(i)  Depreciation and amortization included in cost of sales and selling,
       general and administrative expenses.
^(ii) Earnings before interest, taxes, depreciation and amortization
       ("EBITDA"). See "Non-IFRS Measure" on page 19.
      

Three Months Ended October 31, 2012 ComparedtoThree Months Ended October 31,
2011
LUXURY BRAND SALES
Sales for the third quarter were  $95.6 million compared to $83.5  millionfor 
the comparable quarter of the prior year,  an increase of 14% (an increase  of 
17% at  constant exchange  rates).  Sales in  America  increased 7%  to  $30.8 
million, sales  in  Europe increased  40%  to  $27.3 million,  sales  in  Asia 
(excluding Japan) increased 18% to $15.5 million, and sales in Japan were flat
at $22.0 million,  each as  compared to the  comparable quarter  of the  prior 
year. The total number of units sold during the third quarter increased by  8% 
over the comparable quarter of the prior year.

LUXURY BRAND COST OF SALES AND GROSS MARGIN
Cost of sales for  the luxury brand  segment for the  third quarter was  $43.0 
million compared to  $41.4 million  for the  comparable quarter  of the  prior 
year. Gross margin  for the  quarter was $52.6  million or  55.0% compared  to 
$42.1 million  or  50.4%  for  the  third  quarter  of  the  prior  year.  The 
improvement in gross margin was primarily  due to strong growth in bridal  and 
access  product  sales  combined  with  continued  emphasis  on  supply  chain 
efficiencies.

LUXURY BRAND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
SG&A expenses increased  by 16%  to $47.2 million  from $40.6  million in  the 
comparable quarter of the prior year. The increase was due primarily to higher
advertising, marketing and  selling expenses. Fixed  costs accounted for  $5.1 
million of the  increase, while variable  expenses linked to  volume of  sales 
accounted for $1.5 million of the  increase. Fixed costs include salaries  and 
benefits, advertising and marketing, rent  and related costs and  depreciation 
and amortization. SG&A expenses included depreciation and amortization expense
of $3.3 million  compared to  $3.0 million in  the comparable  quarter of  the 
prior year.

Nine Months Ended October 31,  2012 ComparedtoNine Months Ended October  31, 
2011
LUXURY BRAND SALES
Sales for the nine months ended October 31, 2012, were $314.5 million compared
to $298.1 million for the comparable period of the prior year, an increase  of 
5% (7% at  constant exchange rates).  Sales in America  increased 8% to  $98.8 
million, sales  in  Europe increased  16%  to  $73.0 million,  sales  in  Asia 
(excluding Japan) decreased 19% to $69.8 million, and sales in Japan increased
28% to $72.8 million, each as compared  to the comparable period of the  prior 
year. The comparable period of the prior year included high-value transactions
in Asia (excluding Japan) that were not repeated in the current period. During
the nine months ended October 31, 2012, there were $19.1 million of high-value
transactions, which generally carry lower-than-average gross margins, compared
with $60.8 million in  the comparable period of  the prior year. The  Japanese 
market continued to  rebound strongly from  the impact of  the earthquake  and 
tsunami that occurred in early 2011. The total number of units sold during the
nine months  ended October  31, 2012,  increased by  24% over  the  comparable 
period of the prior year.

LUXURY BRAND COST OF SALES AND GROSS MARGIN
Cost of sales for the luxury brand  segment for the nine months ended  October 
31, 2012, was  $150.0 million compared  to $166.9 million  for the  comparable 
period of the prior year. Gross margin  for the nine months ended October  31, 
2012, was $164.5 million or 52.3% compared to $131.3 million or 44.0% for  the 
comparable period  of the  prior year.  The improvement  in gross  margin  was 
primarily due  to  strong growth  in  bridal  and access  product  sales,  the 
continued emphasis  on supply  chain  efficiencies and  a greater  portion  of 
high-value transactions  in  the comparable  period  of the  prior  year  that 
generated lower-than-average gross margins.

LUXURY BRAND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
SG&A expenses increased by  21% to $144.0 million  from $118.7 million in  the 
comparable period of the prior year. The increase was due primarily to  higher 
advertising, marketing and selling expenses.  Fixed costs accounted for  $19.9 
million of the  increase, while variable  expenses linked to  volume of  sales 
accounted for $5.4 million of the  increase. Fixed costs include salaries  and 
benefits, advertising and marketing, rent  and related costs and  depreciation 
and amortization. SG&A expenses included depreciation and amortization expense
of $9.6 million compared to $9.0 million in the comparable period of the prior
year.

LUXURY BRAND SEGMENT OPERATIONAL UPDATE
At October 31, 2012, the luxury brand segment's distribution network consisted
of 22 directly operated salons, five licensed salons (in Manila,  Philippines; 
Kiev, Ukraine; Moscow, Russia; and two in Dubai, United Arab Emirates) and 201
wholesale watch doors  around the  world. The Company  opened a  new salon  in 
Harrods in London, England, during  August, contributing to a strong  increase 
in sales  in  Europe. During  September,  Harry Winston  participated  in  the 
Biennale des  Antiquaires at  the  Grand Palais  in  Paris, France,  the  most 
important fine jewelry exhibition in the world. At the exhibition, the Company
unveiled its latest  high jewelry  collection, "Water by  Harry Winston".  The 
Company also announced  that it is  the lead sponsor  of Hollywood Costume,  a 
major new exhibition that  is appearing at the  Victoria and Albert Museum  in 
London, England,  between  October  2012  and  January  2013.  The  exhibition 
celebrates costume  design in  motion pictures  and showcases  the  connection 
between Harry Winston jewels and Hollywood.

Luxury Brand Segment Outlook
Continued economic  uncertainty  in  Europe  coupled  with  the  softening  in 
consumer demand in China and the budget policy issues in the US are likely  to 
translate into slower growth in the  near term, impacting the holiday  season. 
The Company  believes that  the  Harry Winston  brand  is well  positioned  to 
continue to increase  its market  share in  the luxury  jewelry and  timepiece 
sector. New  salons  in China  have  significantly improved  the  distribution 
network in the fastest growing luxury market in the world. During August 2012,
a new directly operated  salon was opened in  the Harrods department store  in 
London, England. A new directly operated salon is expected to be opened  early 
next year  in  Geneva, Switzerland.  In  addition,  a new  licensed  salon  is 
expected to be opened in Kuwait City, Kuwait, during the first quarter of next
fiscal year.The Company plans  to expand by 15  wholesale watch doors to  216 
doors by the end of  fiscal 2013. By the end  of the current fiscal year,  the 
Company will have built an internal wholesale infrastructure to distribute its
timepieces in Asia, Europe and Latin  America. The Company continues to  focus 
on executing  its  long-term  plan  of  growing  sales  and  profitability  by 
expanding its  distribution  network  in prime  locations  around  the  world, 
introducing new  jewelry  and  timepiece collections  supported  by  a  strong 
advertising program, and leveraging the heritage of the Harry Winston brand.

Corporate
The corporate segment captures costs not specifically related to operations of
the mining or luxury brand segments.

(expressed in thousands of United States dollars)
(unaudited)                    
                                                                                                             Nine       Nine
                                                                                                                     months      months
                                                                                                                      ended       ended
                                                                                                                    October     October
                    2013       2013       2013       2012       2012       2012       2012       2011          31,        31,
                     Q3        Q2        Q1        Q4        Q3        Q2        Q1        Q4       2012      2011
Sales           $       -  $       -  $       -  $       -  $       -  $       -  $       -  $       -  $        -  $       -
Cost of sales          -         -         -         -        34        51        51        51          -       135
Gross margin           -         -         -         -      (34)      (51)      (51)      (51)          -     (135)
Gross margin                                                                                                      
(%)                    -%         -%         -%         -%         -%         -%         -%         -%           -%         -%
Selling,                                                                                                          
general and
administrative
expenses            4,250      3,358      4,833      3,510      2,246      2,281      3,449      1,839       12,441      7,976
Operating loss  $ (4,250)  $ (3,358)  $ (4,833)  $ (3,510)  $ (2,280)  $ (2,332)  $ (3,500)  $ (1,890)  $ (12,441)  $ (8,111)
Depreciation                                                                                                      
and
amortization
^(i)                  139        139        139        139        141        140        139        278          417        420
EBITDA ^(ii)    $ (4,111)  $ (3,219)  $ (4,694)  $ (3,371)  $ (2,139)  $ (2,192)  $ (3,361)  $ (1,612)  $ (12,024)  $ (7,691)

^(i)  Depreciation and amortization included in cost of sales and selling,
       general and administrative expenses.
^(ii) Earnings before interest, taxes, depreciation and amortization
       ("EBITDA"). See "Non-IFRS Measure" on page 19.
      

Three Months Ended October 31, 2012 ComparedtoThree Months Ended October 31,
2011
CORPORATE SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
SG&A expenses for  the corporate segment  increased by $2.0  million from  the 
comparable quarter of the prior year  due to travel expenses and salaries  and 
benefits related to additional corporate employees.

Nine Months Ended October 31,  2012 ComparedtoNine Months Ended October  31, 
2011
CORPORATE SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
SG&A expenses for  the corporate segment  increased by $4.5  million from  the 
comparable period  of the  prior year  due to  severance costs  and to  travel 
expenses and salaries and benefits related to additional corporate employees.

Liquidity and Capital Resources
Working Capital
As at October 31, 2012, the Company had unrestricted cash and cash equivalents
of $110.8million compared to $78.1million at January 31, 2012. The Company
had cash on hand and balances with banks of $105.6 million and short-term
investments of $5.2million at October 31, 2012.

During the quarter  ended October  31, 2012,  the Company  reported cash  from 
operations of $18.6million compared to a use of cash from operations of $23.8
million in the  comparable quarter of  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 October 31, 2012, the Company had  0.8 
million carats of  rough diamond  inventory with an  estimated current  market 
value of  approximately  $110  million, of  which  approximately  $60  million 
represents inventory available for sale.

Working  capital  increased  to  $461.9million  at  October  31,  2012   from 
$439.0million at January 31, 2012. During the quarter, the Company  increased 
accounts receivable by $5.7  million, decreased other  current assets by  $3.5 
million, increased inventory  and supplies by  $27.0million, increased  trade 
and other payables by  $19.2million and increased  employee benefit plans  by 
$0.6 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, along with the seasonality of sales and salon expansion in the luxury
brand  segment.  The  Company's   principal  working  capital  needs   include 
investments in inventory, other current  assets, and trade and other  payables 
and income taxespayable.

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 mining segment maintains a  senior secured revolving credit facility  with 
Standard Chartered Bank. At October  31, 2012, $50.0 million was  outstanding. 
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. The purchase price for  the acquisitions will be satisfied  from 
cash resources on hand and from new debt financing that has been arranged with
The Royal Bank of Canada and Standard Chartered Bank. The new facilities  will 
comprise 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 in support of  the 
Core Zone environmental reclamation bond. The new facilities will be  secured 
and will replace the  Company mining segment's  current $125 million  facility 
with Standard Chartered Bank, which will be repaid and terminated on  closing. 
The  new  facilities  will  include  customary  covenants,  including  certain 
reporting and financial covenants, and will bear interest at market rates. The
term loan will be an amortizing facility, with principal repayments  beginning 
30 months following closing and  a final bullet payment  of 50 percent of  the 
principal amount being due on the date  that is five years after closing.  The 
$100 million portion of  the revolving facility will  be due five years  after 
closing. The letter of credit facility will expire 364 days after closing. The
facilities will be 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 October 31, 2012, $15.7  million and $2.1 million was outstanding  under 
the Company's revolving financing facility relating to its Belgian subsidiary,
Harry  Winston  Diamond  International   N.V.,  and  its  Indian   subsidiary, 
HarryWinston Diamond (India) Private Limited, respectively, compared to  $nil 
and $4.3 million at January 31, 2012.

The amount outstanding on the secured five-year revolving credit facility  for 
the Company's luxury brand subsidiary, Harry Winston Inc., was $223.0  million 
at October 31, 2012, compared to $200.5 million at January 31, 2012. On August
30, 2012, Harry Winston  Inc. refinanced its  senior secured revolving  credit 
facility by entering  into a  new secured  five-year credit  agreement with  a 
consortium of  banks led  by  Standard Chartered  Bank establishing  a  $260.0 
million facility for revolving  credit loans. Harry  Winston Inc. amended  its 
senior secured revolving  credit facility  on November  7, 2012  by adding  an 
additional $40.0 million increasing the total facility to $300.0 million.  The 
facility has a maturity date of  August 30, 2017. See Contractual  Obligations 
below.

Investing Activities
During the quarter,  the Company  purchased property, plant  and equipment  of 
$19.2million, of which $13.4million was purchased for the mining segment and
$5.8 million for the luxury brand segment.

Contractual Obligations
The  Company   has   contractual   payment   obligations   with   respect   to 
interest-bearing loans and  borrowings and, through  its participation in  the 
JointVenture, 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,  HWDLP 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  2012 to  2016 of  approximately 
$135million assuming a Canadian/US average exchange rate of $1.00 for each of
the fiveyears  relating to  HWDLP'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 transaction. The  most 
significant contractual obligations  for the ensuing  five-year period can  be 
summarized as follows:

CONTRACTUAL                      Less      Year      Year     After
OBLIGATIONS                           than
(expressed in         Total     1 year       2-3       4-5   5 years
thousands of
United States
dollars)
Interest-bearing   $ 399,880  $   61,114  $  70,943  $ 243,429  $  24,394
loans and
borrowings (a)(b)
Environmental and    93,686     82,990     4,864         -     5,832
participation
agreements
incremental
commitments (c)
Operating lease     254,927     25,276    53,977    47,900   127,774
obligations (d)
Total contractual  $ 748,493  $  169,380  $ 129,784  $ 291,329  $ 158,000
obligations

    
(a)   (i) Interest-bearing loans and borrowings presented in the foregoing
      table include current and long-term portions. The mining segment
      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
      October 31, 2012, $50.0 million was outstanding.
    
     (ii) The Company has available a $45.0million 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, HarryWinston
      Diamond International N.V., and its Indian subsidiary, HarryWinston
      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 12.50%. At October 31, 2012,
      $15.7 million and $2.1 million were outstanding under this facility
      relating to its Belgian subsidiary, HarryWinston Diamond International
      N.V., and its Indian subsidiary, HarryWinston Diamond (India) Private
      Limited, respectively. The facility is guaranteed by HarryWinston
      Diamond Corporation.
    
     (iii) On August 30, 2012, Harry Winston Inc. refinanced its secured
      revolving credit facility by entering into a new secured five-year
      credit agreement with a consortium of banks led by Standard Chartered
      Bank establishing a $260.0 million facility for revolving credit loans.
      The new facility expires on August 30, 2017. On November 7, 2012, Harry
      Winston Inc. signed the first amendment to its senior secured revolving
      credit agreement dated August 30, 2012. The amendment increased the
     current $260.0 million facility to $300.0 million with Manufacturers and
      Traders Trust Company agreeing to provide an additional $40.0 million
      commitment, and being added as a new lender under the current credit
      agreement. There are no scheduled repayments required before maturity.
      As with the previous agreement, the new credit facility is supported by
      a $20.0 million limited guarantee provided by Harry Winston Diamond
      Corporation. The amount available under this facility is subject to a
      borrowing base formula based on certain assets of the luxury brand
      segment. At October 31, 2012, $223.0 million was outstanding.
    
     The new Harry Winston Inc. credit agreement contains affirmative and
      negative non-financial and financial covenants, which apply to the
      luxury brand segment. These provisions include consolidated minimum
      tangible net worth, minimum coverage of fixed charges, leverage ratio
      and limitations on capital expenditures and certain investments. The new
     credit agreement also includes a change of control provision, which
      would result in the entire unpaid principal and all accrued interest of
      the facility becoming due immediately upon change of control, as
      defined. Any material adverse change, as defined, in the luxury brand
      segment's assets, liabilities, consolidated financial position or
      consolidated results of operations constitutes default under the
      agreement.
    
     The luxury brand segment has pledged 100% of Harry Winston Inc.'s common
      stock and 66 2/3% of the common stock of its foreign subsidiaries to the
     bank to secure the loan. Inventory and accounts receivable of Harry
      Winston Inc. are pledged as collateral to secure the borrowings of Harry
      Winston Inc. In addition, an assignment of proceeds on insurance
      covering security collateral was made.
    
     Loans under this new credit facility can be either fixed rate loans or
      revolving line of credit loans. The fixed rate loans will bear interest
      within a range of 2.50% to 3.25% above LIBOR based upon a pricing grid
     determined by the fixed charge coverage ratio. Interest under this
      option will be determined for periods of either one, two, three or six
      months. The revolving line of credit loans will bear interest within a
      range of 1.50% to 2.25% above the bank's prime rate based upon a pricing
      grid determined by the fixed charge coverage ratio as well.
    
     (iv) Also included in long-term debt of Harry Winston Inc. is a 25-year
      loan agreement for CHF 17.5 million ($18.5 million) used to finance the
      construction of the Company's watch factory in Geneva, Switzerland. The
      loan agreement is comprised of a CHF 3.5 million ($3.7 million) loan and
     a CHF 14.0 million ($14.8 million) loan. The CHF 3.5 million loan bears
      interest at a rate of 3.15% and matures on April 22, 2013. The CHF14.0
      million loan bears interest at a rate of 3.55% and matures on January
      31, 2033. At October 31, 2012, an aggregate of $15.7 million was
      outstanding. The bank has a secured interest in the factory building.
    
     (v) On August 21, 2012, Harry Winston S.A. entered into a credit
      facility with UBS AG establishing a CHF 7.0 million credit line. The new
      credit facility is available to Harry Winston S.A. for general corporate
      purposes. The new facility contains affirmative and negative
      non-financial and financial covenants. The Harry Winston S.A. factory
      building is pledged as collateral to secure the borrowings. Borrowings
      under the credit facility can be either fixed rate loans or revolving
     line of credit loans in CHF or any freely available and convertible
      currency. Interest under the fixed rate option will be based upon
      Euromarket rates for the relevant term and currency plus a bank margin.
      Available terms under fixed rate borrowings are one to 12 months in
      minimum denominations of CHF 250,000. Interest under the
      revolving/overdraft option will bear interest at 4% per annum for CHF
      loans, and 5.5% per annum for USD loans. A 0.25% commission will be
      charged quarterly based upon the average debit balance. At October 31,
      2012, $7.4 million was outstanding.
    
     (vi) Harry Winston S.A. has a CHF 0.5 million ($0.5 million) finance
     lease for machinery located at the watch factory in Geneva, Switzerland.
      The finance lease has an interest rate of 1.97% and matures on April 1,
      2017. At October 31, 2012, $0.4 million was outstanding.
    
     (vii) HarryWinston Japan, K.K. maintains unsecured credit agreements
      with three banks, amounting to ¥1,284 million ($16.1million).
     HarryWinston Japan, K.K. also maintains a secured credit agreement
      amounting to ¥575million ($7.2million). This facility is secured by
      inventory owned by HarryWinston Japan, K.K. At October 31, 2012, $23.3
      million was outstanding.
    
     (viii) The Company's first mortgageon 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 October 31,
      2012, $5.8 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 October 31, 2012,
      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 $11.0million.
    
(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.
      Theoperator of the Joint Venture has fulfilled such obligations for the
      security deposits by posting letters of credit, of which HWDLP's share
      as at October 31, 2012, was $81.4million 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 HWDLP 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
      DiavikDiamond Mine.
    
(d)   Operating lease obligations represent future minimum annual rentals
     under non-cancellable operating leases for HarryWinston Inc. salons and
      office space.
    

Non-IFRS Measure
In addition to discussing earnings measures in accordance with IFRS, the MD&A
provides the following non-IFRS measure, which is also used by management to
monitor and evaluate the performance of the Company and its business segments.

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.

CONSOLIDATED                                                                                                 
                                                                                                      
(expressed in thousands of United States dollars)                                                                     
(unaudited)                                                                                                  
                                                                                                           Nine       Nine
                                                                                                                   months      months
                                                                                                                    ended       ended
                                                                                                                  October     October
                   2013       2013       2013       2012       2012       2012       2012       2011         31,        31,
                   Q3        Q2        Q1        Q4        Q3        Q2        Q1        Q4       2012      2011
Operating                                                                                                        
profit
(loss)         $  10,322   $  16,384   $  18,658   $  30,710   $ (1,963)   $  23,100   $   4,685   $  21,245   $   45,364   $  25,822
Depreciation                                                                                                     
and
amortization     24,453     16,980     25,546     27,512     23,121     20,716     20,291     24,635      66,980     64,129
EBITDA        $  34,775  $  33,364  $  44,204  $  58,222  $  21,158  $  43,816  $  24,976  $  45,880  $  112,344  $  89,951
                                                                                                      
                                                                                                      
MINING SEGMENT                                                                                         
                                                                                                       
(expressed in thousands of United States dollars)                                                                     
(unaudited)                                                                                               
                                                                                                           Nine        Nine
                                                                                                                   months       months
                                                                                                                    ended        ended
                                                                                                                  October      October
                   2013       2013       2013       2012       2012       2012       2012       2011         31,         31,
                   Q3        Q2        Q1        Q4        Q3        Q2        Q1        Q4       2012       2011
Operating                                                                                                        
profit
(loss)         $   9,223   $  11,723   $  16,385   $  27,388   $ (1,147)   $  18,506   $   3,962   $  17,858   $   37,331   $   21,321
Depreciation                                                                                                     
and
amortization     20,588     13,160     22,172     24,284     19,932     17,461     17,083     20,669      55,921      54,476
EBITDA        $  29,811  $  24,883  $  38,557  $  51,672  $  18,785  $  35,967  $  21,045  $  38,527  $   93,252  $   75,797
                                                                                                       
                                                                                                      
LUXURY BRAND SEGMENT                                                                                  
                                                                                                      
(expressed in thousands of United States dollars)                                                                     
(unaudited)                                                                                               
                                                                                                           Nine       Nine
                                                                                                                   months      months
                                                                                                                    ended       ended
                                                                                                                  October     October
                   2013       2013       2013       2012       2012       2012       2012       2011         31,        31,
                   Q3        Q2        Q1        Q4        Q3        Q2        Q1        Q4       2012      2011
Operating                                                                                                        
profit         $   5,349   $   8,019   $   7,106   $   6,832   $   1,464   $   6,926   $   4,223   $   5,277   $   20,474   $  12,612
Depreciation                                                                                                     
and
amortization      3,726      3,681      3,235      3,089      3,048      3,115      3,069      3,688      10,642      9,233
EBITDA        $   9,075  $  11,700  $  10,341  $   9,921  $   4,512  $  10,041  $   7,292  $   8,965  $   31,116  $  21,845
                                                                                                      
                                                                                                      
CORPORATE SEGMENT                                                                                      
                                                                                                      
(expressed in thousands of United States dollars)                                                                     
(unaudited)                                                                                           
                                                                                                           Nine       Nine
                                                                                                                   months      months
                                                                                                                    ended       ended
                                                                                                                  October     October
                   2013       2013       2013       2012       2012       2012       2012       2011         31,        31,
                   Q3        Q2        Q1        Q4        Q3        Q2        Q1        Q4       2012      2011
Operating                                                                                                        
loss           $ (4,250)   $ (3,358)   $ (4,833)   $ (3,510)   $ (2,280)   $ (2,332)   $ (3,500)   $ (1,890)   $ (12,441)   $ (8,111)
Depreciation                                                                                                     
and
amortization        139        139        139        139        141        140        139        278         417        420
EBITDA        $ (4,111)  $ (3,219)  $ (4,694)  $ (3,371)  $ (2,139)  $ (2,192)  $ (3,361)  $ (1,612)  $ (12,024)  $ (7,691)

Risks and Uncertainties
Harry Winston  Diamond  Corporation  is  subject to  a  number  of  risks  and 
uncertainties as  a  result  of  its  operations.  Inaddition  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
HWDLP 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 HWDLP (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  the mining the  A-21 pipe  or may otherwise  change the  mine 
plan. Byvirtue 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 HWDLP that the
Company may  not have  sufficient cash  to  meet. A  failure to  meet  capital 
expenditure requirements imposed by DDMI  could result in HWDLP'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  and  on  the results  of  the  operations of  its  luxury  brand 
operations. Each, in turn, is dependent in significant part upon 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 and jewelry. 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  and  jewelry,  thereby 
negatively  affecting  the  price  of  diamonds  and  jewelry.  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, along with the seasonality of  sales 
and salon  refurbishment  and  expansion  in the  luxury  brand  segment.  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  the fall of  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 across both  of its business  segments 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 USdollar price,  and 
although the Company reports its financial  results in US dollars, a  majority 
of the costs and expenses of the DiavikDiamond 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 primarily to expenses and obligations incurred by it
in Canadian dollars  and, secondarily, to  revenues of Harry  Winston Inc.  in 
currencies other than the US dollar.  The appreciation of the Canadian  dollar 
against the US dollar, and the depreciation of other currencies 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 theCompany will receive from diamond sales, and will decrease the  US 
dollar revenues received by Harry Winston Inc. Fromtime to time, the  Company 
may use a  limited number of  derivative financial instruments  to manage  its 
foreign currencyexposure.

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 October31,  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 
Diavikproperty.

Regulatory and Environmental Risks
The operation of the Diavik Diamond Mine, exploration activities at the Diavik
property and the manufacturing of jewelry  and watches 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 
DiavikDiamond Mine and in the manufacture of jewelry and watches. As well, as
the Company's international operations expand,  it or its subsidiaries  become 
subject to laws andregulatory regimes that could differ materially from those
under which they operate in Canada and the US.

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 and jewelry 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, the closing of Harry Winston Inc.'s manufacturing facilities
or salons, 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 transportedto 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.

Thecost of  the fuelpurchased  is  based on  the then  prevailingprice  and 
expensed into  operating  costs  ona usage  basis.  TheDiavik  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 DiavikDiamond Mine.

The Company's success in marketing  rough diamonds and operating the  business 
of Harry  Winston Inc.  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 and  operating 
its luxury brand segment.

Expansion and Refurbishment of the Existing Salon Network
A key component  of the Company's  luxury brand strategy  in recent years  has 
been the expansion  of its  salon network.  The Company  currently expects  to 
expand its retail  salon network to  a total  of 35 salons  and 300  wholesale 
doors worldwide by fiscal 2016. An additional objective of the Company in  the 
luxury brand segment is to achieve a  compound annual growth rate in sales  in 
the mid-teens and an operating profit in the low to mid-teens, in each case by
fiscal 2016. Although the Company considers these objectives to be reasonable,
they are subject to a number of  risks and uncertainties, and there can be  no 
assurance that these objectives will  be realized. This strategy requires  the 
Company to make ongoing capital expenditures to build and open new salons,  to 
refurbish existing salons from time to time, and to incur additional operating
expenses in order to operate the new  salons. To date, much of this  expansion 
has been financed  by Harry  Winston Inc. through  borrowings. The  successful 
expansion of the Company's global salon network, and achieving an increase  in 
sales and in operating profit, will depend on a variety of factors,  including 
worldwide economic conditions, market demand for luxury goods, the strength of
the Harry Winston brand and the availability of sufficient funding. There  can 
be no assurance that the expansion of the salon network will continue or  that 
the current  expansion will  prove successful  in increasing  annual sales  or 
earnings from  the  luxury  brand  segment,  and  the  increased  debt  levels 
resulting from this expansion could negatively impact the Company's  liquidity 
and its  results  from  operations  in the  absence  of  increased  sales  and 
earnings.

The Company has to date licensed five retail salons to operate under the Harry
Winston name and currently expects to  increase the number of licensed  salons 
to 15 by fiscal 2016. There is no  assurance that the Company will be able  to 
find qualified third parties  to enter into  these licensing arrangements,  or 
that the licensees  will honour the  terms of the  agreements. The conduct  of 
licensees may have a negative impact  on the Company's distinctive brand  name 
and reputation.

Competition in the Luxury Brand Segment
The Company is exposed  to competition in the  luxury brand market from  other 
luxury goods,  diamond, jewelry  and  watch retailers.  The ability  of  Harry 
Winston Inc. to successfully compete with such luxury goods, diamond,  jewelry 
and watch  retailers is  dependent upon  a number  of factors,  including  the 
ability to  source high-end  polished  diamonds and  protect and  promote  its 
distinctive brand  name and  reputation. If  HarryWinston Inc.  is unable  to 
successfully compete in the luxury  jewelry segment, the Company's results  of 
operations will be adversely affected.

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, financial  data,  or  credit  cardholder  data,  it  could  cause 
significant damage to the Company's reputation, affect relationships with  our 
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.

Intellectual Property
The success of the luxury brand segment depends on the value and reputation of
the Harry Winston brand and other proprietary property. The Company relies  on 
various intellectual  property rights,  including copyrights,  trademarks  and 
trade secrets, to establish its proprietary rights. While the Company  devotes 
considerable efforts and resources to protecting its intellectual property, if
these efforts are not successful the value  of the brand may be harmed,  which 
could have a material adverse effect on the Company's financial position.

Risks relating to the Ekati transactions
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. As  set out in  the share  purchase 
agreements, the Company's acquisition of BHP Billiton's interest in the  Ekati 
Diamond  Mine  is  subject  to  the  occurrence  of  certain  events  and  the 
satisfaction of certain closing conditions.

BHP Billiton's interests  in the Ekati  Diamond Mine are  subject to  separate 
joint venture  agreements.  Pursuant  to the  joint  venture  agreements,  BHP 
Billiton will first separately offer to the joint venture parties its separate
interests in the Ekati Diamond  Mine on the same terms  as those agreed to  by 
the Company. The  joint venture parties  will then  have 60 days  to elect  to 
acquire either  or both  of  those interests.  Any  interests that  the  joint 
venture parties do not elect  to acquire within that  time period can then  be 
transferred to the Company in the following 60 days. There can be no assurance
that the  joint venture  parties  will not  elect  to acquire  BHP  Billiton's 
interests in the Ekati Diamond Mine.  In addition, the Ekati transactions  are 
subject to typical closing conditions including the receipt of Competition Act
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. The Company  plans to satisfy the  total 
purchase price for the Ekati transactions from cash resources on hand and from
new debt financing that has  been arranged with The  Royal Bank of Canada  and 
Standard Chartered Bank. The new debt financing facilities will be subject  to 
customary closing conditions, including closing of the Core Zone  acquisition. 
There can be  no assurance that  all of  the closing conditions  to the  Ekati 
transaction will be  satisfied or as  to the  timing of closing  to the  Ekati 
transactions.

Completion of the Ekati transactions and the integration of the Ekati  Diamond 
Mine into the  Company's operations will  require significant management  time 
and resources.

Changes in  Disclosure  Controls  and Procedures  and  Internal  Control  over 
FinancialReporting
During the  third  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
reported resultsor financial position.

The critical accounting estimates applied in the preparation of the  Company's 
unaudited interim condensed consolidated  financial statements are  consistent 
with those applied  and disclosed  in the Company's  MD&A for  the year  ended 
January 31, 2012.

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 
inSIC-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.  Proportionate 
consolidations 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  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 assessing the impact of IFRS 13 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 assessing  the 
impact of IAS 19 on its consolidated financial statements.

Outstanding Share Information

As at November 30, 2012           
Authorized                         Unlimited
Issued and outstanding shares     84,874,781
Options outstanding                2,229,727
Fully diluted                     87,104,508
                                 

Additional Information
Additional information relating to the Company, including the Company's most
recently filed Annual Information Form,can be found on SEDAR at
www.sedar.com, and is also available on the Company's website at
http://investor.harrywinston.com.

                    Condensed Consolidated Balance Sheets
        (EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS) (UNAUDITED)
                                                       
                          October 31,     January 31,    January 31,
                                    2012               2012              2011
                                                  (Recast -         (Recast -
                                                   note 10)          note 10)
ASSETS                                                            
Current assets                                                    
 Cash and cash           $     110,810   $       78,116   $     108,693
  equivalents (note 3)
 Accounts receivable           34,749          26,910         22,788
 Inventory and supplies       513,558         457,827        403,212
  (note 4)
 Other current assets          37,808          45,494         41,317
                              696,925         608,347        576,010
Property, plant and            724,146         734,146        764,093
equipment - Mining
Property, plant and             70,371          69,781         61,019
equipment - Luxury brand
Intangible assets, net         126,919         127,337        127,894
Other non-current assets        12,907          14,165         14,521
Deferred income tax            101,924          82,955         65,833
assets
Total assets              $   1,733,192   $    1,636,731   $   1,609,370
                                                                 
LIABILITIES AND EQUITY                                            
Current liabilities                                               
 Trade and other         $     136,084   $      104,681   $     139,551
  payables
 Employee benefit plans         7,623           6,026          4,317
 Income taxes payable          41,290          29,450          6,660
 Promissory note                    -               -         70,000
 Current portion of                                     
  interest-bearing loans
  and borrowings (note
  6)                              50,054             29,238            24,215
                              235,051         169,395        244,743
Interest-bearing loans         288,098         270,485        235,516
and borrowings (note 6)
Deferred income tax            321,175         325,035        309,868
liabilities
Employee benefit plans           9,273           9,463          7,287
Provisions                      63,339          65,245         50,130
Total liabilities              916,936         839,623        847,544
Equity                                                            
 Share capital                507,975         507,975        502,129
 Contributed surplus           19,052          17,764         16,233
 Retained earnings            280,790         261,028        235,574
 Accumulated other              7,569          10,086          7,624
  comprehensive income
 Total shareholders'          815,386         796,853        761,560
  equity
 Non-controlling                  870             255            266
  interest
Total equity                   816,256         797,108        761,826
Total liabilities and     $   1,733,192   $    1,636,731   $   1,609,370
equity
Subsequent events (note                                           
1)

The accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements.

                                                        
                    Condensed Consolidated Income Statements
    (EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT PER SHARE AMOUNTS)
                                    (UNAUDITED)
                                                                 
                       Three          Three           Nine           Nine
                        months           months           months           months
                         ended            ended            ended            ended
                       October          October          October          October
                          31,             31,             31,             31,
                       2012          2011          2012          2011
Sales            $    180,399   $    119,716   $    549,757   $    486,026
Cost of sales        114,690        75,524       338,518       322,153
Gross margin          65,709        44,192       211,239       163,873
Selling,                                                     
general and
administrative
expenses               55,387          46,155         165,875         138,051
Operating                                                    
profit (loss)          10,322         (1,963)          45,364          25,822
Finance                                                      
expenses              (4,811)         (4,040)        (12,719)        (13,206)
Exploration                                                  
costs                   (673)           (600)         (1,495)         (1,593)
Finance and                                                  
other income               96             164             251             505
Foreign                                                      
exchange gain             767             436             556             547
Profit before                                                
income taxes            5,701         (6,003)          31,957          12,075
Net income tax                                               
expense
(recovery)              1,687         (1,272)          11,580           3,220
Net profit                                                   
(loss)            $      4,014     $    (4,731)     $     20,377     $      8,855
Attributable to                                              
shareholders      $      3,397     $    (4,728)     $     19,762     $      8,854
Attributable to                                              
non-controlling
interest          $        617     $        (3)     $        615     $          1
Earnings (loss)                                              
per share                                                                
     Basic      $       0.04   $     (0.06)   $       0.23   $       0.10
     Diluted    $       0.04   $     (0.06)   $       0.23   $       0.10
Weighted                                                     
average number
of shares
outstanding        84,874,781      84,809,781      84,874,781      84,597,861

The accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements.

                                                       
          Condensed Consolidated Statements ofComprehensiveIncome
        (EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS) (UNAUDITED)
                                                             
                       Three        Three        Nine        Nine
                         months          months         months         months
                          ended           ended          ended          ended
                        October         October        October        October
                            31,             31,            31,            31,
                        2012         2011        2012        2011
Net profit (loss)    $   4,014   $   (4,731)   $   20,377    $   8,855
                                                             
Other comprehensive                                       
income                                                                   
  Net gain (loss)                                        
   on translation
   of net foreign
   operations (net
   of tax of nil)         3,452         (7,337)        (2,517)          8,440
Other comprehensive                                       
income, net of tax        3,452         (7,337)        (2,517)          8,440
                                                             
Total comprehensive  $           $             $             $
income                    7,466        (12,068)         17,860         17,295
Attributable to      $           $             $             $
shareholders              6,849        (12,065)         17,245         17,294
Attributable to      $           $             $            $
non-controlling
interest                    617             (3)            615              1

The accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements.

                                                          
            Condensed Consolidated Statements ofChangesinEquity
        (EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS) (UNAUDITED)
                                                          
                                                       Nine               Nine
                                           months ended    months ended
                                                October 31,        October 31,
                                                   2012            2011
Common shares:                                                        
Balance at beginning of period             $      507,975   $      502,129
Issued during the period                               -           5,163
Transfer from contributed surplus on                       
exercise of options                                       -              2,300
Balance at end of period                         507,975         509,592
Contributed surplus:                                                  
Balance at beginning of period                    17,764          16,233
Stock-based compensation expense                   1,288           1,602
Transfer from contributed surplus on                       
exercise of options                                       -            (2,300)
Balance at end of period                          19,052          15,535
Retained earnings:                                                    
Balance at beginning of period (Recast -                   
note 10)                                            261,028            235,574
Net profit attributable to common                          
shareholders                                         19,762              8,854
Balance at end of period                         280,790         244,428
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)                                             (2,517)              8,440
Balance at end of period                           7,569          16,064
Non-controlling interest:                                             
Balance at beginning of period                       255             266
Non-controlling interest                             615               1
Balance at end of period                             870             267
Total equity                               $      816,256   $      785,886

The accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements.

                                                      
               Condensed Consolidated Statements of Cash Flows
        (EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS) (UNAUDITED)
                                                      
                          Three          Three            Nine            Nine
                         months         months          months          months
                       ended       ended        ended        ended
                        October        October         October         October
                            31,            31,             31,             31,
                        2012        2011         2012         2011
Cash provided by                                         
(used in)                                                                 
OPERATING                                                      
Net profit (loss)  $     4,014   $  (4,731)   $    20,377   $     8,855
   Depreciation                                         
    and
    amortization         24,453         23,121          66,980          64,129
   Deferred                                             
    income tax
    recovery           (12,721)        (4,781)        (18,262)         (8,200)
   Current                                              
    income tax
    expense              14,408          3,509          29,842          11,420
   Finance                                              
    expenses              4,811          4,040          12,719          13,206
   Stock-based                                          
    compensation            434            492           1,288           1,602
   Other                                                
    non-cash
    items                 (118)            125         (2,636)             124
   Foreign                                              
    exchange gain       (1,049)        (3,240)           (632)         (3,432)
   Gain on                                              
    disposition
    of assets              (49)              -           (357)               -
Change in                                                
non-cash
operating working
capital,
excluding taxes
and finance
expenses                (9,399)       (34,883)        (25,977)        (92,399)
Cash provided                                            
from (used in)
operating
activities               24,784       (16,348)          83,342         (4,695)
   Interest paid     (4,068)     (6,329)     (10,082)     (11,526)
   Income and                                           
    mining taxes
    paid                (2,145)        (1,077)        (21,183)           9,376
Net cash from                                            
(used in)
operating
activities               18,571       (23,754)          52,077         (6,845)
FINANCING                                                      
Increase in                                              
interest-bearing
loans and
borrowings                   16              -              16               -
Decrease in                                              
interest-bearing
loans and
borrowings                (193)          (178)           (563)           (532)
Increase in                                              
revolving credit        308,966        126,286         415,148         211,890
Decrease in                                              
revolving credit      (275,185)       (69,457)       (376,370)       (127,464)
Repayment of                                             
promissory note               -       (70,000)               -        (70,000)
Issue of common                                          
shares, net of
issue costs                   -            182               -           5,163
Cash provided                                            
from financing
activities               33,604       (13,167)          38,231          19,057
INVESTING                                                      
Property, plant                                          
and equipment -
Mining                 (13,446)       (10,796)        (47,383)        (35,880)
Property, plant                                          
and equipment -
Luxury brand            (5,778)        (4,050)        (12,201)         (7,338)
Net proceeds from                                        
sale of property,
plant and
equipment                     -              -           2,619               -
Other non-current                                        
assets                      654          (363)              21         (1,185)
Cash used in                                             
investing
activities             (18,570)       (15,209)        (56,944)        (44,403)
Foreign exchange                                         
effect on cash
balances                  2,616        (4,568)           (670)           6,681
Increase                                                 
(decrease) in
cash and cash
equivalents              36,221       (56,698)          32,694        (25,510)
Cash and cash                                            
equivalents,
beginning of
period                   74,589        139,881          78,116         108,693
Cash and cash      $             $            $             $
equivalents, end
of period               110,810         83,183         110,810          83,183
Change in                                                
non-cash
operating working
capital,
excluding taxes
and finance
expenses                                                                  
Accounts                                                 
receivable              (5,701)          (890)         (7,807)         (9,116)
Inventory and                                            
supplies               (26,974)       (37,522)        (59,561)        (61,958)
Other current                                            
assets                    3,474        (2,806)           6,653           (189)
Trade and other                                          
payables                 19,230          5,865          33,157        (21,307)
Employee benefit                                         
plans                       572            470           1,581             171
                  $   (9,399)   $ (34,883)   $  (25,977)   $  (92,399)

The accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements.

 



             Notes to Condensed Consolidated Financial Statements

                  OCTOBER 31, 2012 WITH COMPARATIVE FIGURES
 (TABULAR AMOUNTS IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT AS OTHERWISE
                                    NOTED)

Note 1:
Nature of Operations
Harry Winston Diamond Corporation (the "Company") is a diamond enterprise with
assets in the mining and luxury brand segments of the diamond industry.

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  HarryWinston Diamond  Limited  Partnership ("HWDLP")  (40%)  where 
HWDLP 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 HWDLP are headquartered in Yellowknife, Canada. DDMI is
a wholly  owned subsidiary  of Rio  Tinto plc  of London,  England, and  Harry 
Winston  Diamond  Limited  Partnership  is   a  wholly  owned  subsidiary   of 
HarryWinston 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 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, including receipt of  required 
regulatory and Competition Act 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. Pursuant  to 
the joint venture agreements, BHP Billiton will first separately offer to  the 
joint venture parties its interest in each of the Core and Buffer Zones on the
same terms as those agreed to by  the Company. The joint venture parties  will 
then have 60 days to elect to  acquire either or both of those interests.  Any 
interests that the joint venture parties  do not elect to acquire within  that 
time period can then be transferred to the Company in the following 60  days. 
If the  Core Zone  transaction is  not completed  because the  minority  joint 
venture parties  exercise  their  pre-emptive  rights,  the  Company  will  be 
entitled to be paid a termination fee of $30 million by BHP Billiton.  Closing 
of the transactions is  currently expected to occur  before the end of  March, 
2013. The purchase  price for  the acquisitions  will be  satisfied from  cash 
resources on hand and from new debt financing that has been arranged with  two 
banks. The  new facilities  will comprise  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 in support of the Core  Zone environmental reclamation bond. The  new 
facilities will  be secured  and  will replace  the Company  mining  segment's 
current $125  million facility  with Standard  Chartered Bank,  which will  be 
repaid and terminated on closing.

The Company also owns Harry Winston  Inc., the premier fine jewelry and  watch 
retailer with  select  locations throughout  the  world. Its  head  office  is 
located in New York City, United States.

The Company's operations 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  in each  quarter. The  quarterly results  for the  luxury 
brand segment are also seasonal, with generally higher sales during the fourth
quarter due to the holiday season.

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.

Note 2:
Basis of Preparation

(a) Statement of compliance
     These unaudited interim condensed consolidated financial statements have
    been prepared in accordance with International Financial Reporting
     Standards ("IFRS") International Accounting Standard ("IAS") 34, "Interim
     Financial Reporting".

     These unaudited interim condensed consolidated financial statements do
     not include all disclosures required by IFRS for annual consolidated
     financial statements and accordingly should be read in conjunction with
    the Company's audited consolidated financial statements and notes thereto
     for the year ended January 31, 2012. These statements have been prepared
     following the same accounting policies and methods of computation as the
     consolidated financial statements for the year ended January 31, 2012.

(b) Basis of measurement
    These unaudited interim condensed 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 unaudited interim condensed consolidated financial statements are
     expressed in United States dollars, consistent with the predominant
    functional currency of the Company's operations. All financial
     information presented in United States dollars has been rounded to the
     nearest thousand.
    

Note 3:
Cash Resources

                                        October 31,     January 31,
                                                 2012             2012
Cash on hand and balances with banks   $     105,634   $      76,030
Short-term investments ^(a)                   5,176          2,086
Total cash resources                   $     110,810   $      78,116

^(a)Short-term investments are held in overnight deposits and money market
instruments with a maturity of 30 days.

Note 4:
Inventory and Supplies

                                     October 31,    January 31,
                                                2012              2012
Luxury brand raw materials           $      67,200   $      62,188
Mining rough diamond inventory             68,332         62,472
                                         135,532        124,660
Luxury brand work-in-progress              59,159         45,407
Luxury brand merchandise inventory        245,789        218,844
Mining supplies inventory                  73,078         68,916
Total inventory and supplies         $     513,558   $     457,827

Total inventory and supplies  is net of a  provision for obsolescence of  $3.7 
million ($3.1 million at January 31, 2012).

Note 5:
Diavik Joint Venture

The following  represents  HWDLP's 40%  proportionate  interest in  the  Joint 
Venture as at September 30, 2012 and December 31, 2011:

                                             October 31,    January 31,
                                                        2012              2012
Current assets                               $     100,331   $     101,454
Non-current assets                                673,571        685,590
Current liabilities                                30,656         31,745
Non-current liabilities and participant's         743,246        755,298
account
                                                           

                                                       
                        Three       Three   Nine months   Nine months
                          months        months           ended           ended
                           ended         ended     October 31,     October 31,
                         October       October            2012            2011
                             31,           31,
                            2012          2011
Expenses net of     $    61,087  $    57,918  $     176,410  $     181,576
interest income
^(a) ^(b)
Cash flows            (28,936)    (26,920)     (126,311)     (116,815)
resulting from
(used in)
operating
activities
Cash flows              56,264      39,156       168,464       154,239
resulting from
financing
activities
Cash flows            (23,310)    (13,460)      (42,451)      (35,680)
resulting from
(used in)
investing
activities

^(a)  The Joint Venture only earns interest income.
      Expenses net of interest income for the three months and nine months
^(b) ended October 31, 2012 of $nil and $0.1 million, respectively (three and
      nine months ended October 31, 2011 of $nil and $0.1 million,
      respectively).
     

HWDLP is contingently  liable for  DDMI's portion  of the  liabilities of  the 
Joint Venture, and to the extent HWDLP's participating interest has  increased 
because of the  failure of  DDMI to make  a cash  contribution when  required, 
HWDLP 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 7.

Note 6:
Interest-Bearing Loans and Borrowings

                                             October 31,    January 31,
                                                        2012              2012
Mining segment credit facilities             $      49,284   $      48,460
Harry Winston Inc. credit facilities              234,063        217,071
First mortgage on real property                     5,804          6,342
Bank advances                                      48,570         27,850
Finance leases                                        431              -
Total interest-bearing loans and                  338,152        299,723
borrowings
Less current portion                             (50,054)       (29,238)
                                            $     288,098   $     270,485

                                                       
                                          Carrying     Face 
                                                amount     value
                                                    at        at
                        Nominal                October   October
                       interest     Date of        31,       31,
           Currency       rate    maturity       2012      2012        Borrower
Secured          US     4.09%   June 24,     $49.3    $50.0  Harry Winston
bank loan                              2013    million   million         Diamond
                                                                     Corporation
                                                                             and
                                                                   Harry Winston
                                                                   Diamond Mines
                                                                            Ltd.
Secured          US     3.51%     August    $218.3   $223.0  Harry Winston
bank loan                           30,2017    million   million            Inc.
Secured         CHF     3.15%    January      $3.7     $3.7  Harry Winston
bank loan                          31, 2033    million   million            S.A.
Secured         CHF     3.55%    January     $12.0    $12.0  Harry Winston
bank loan                          31, 2033    million   million            S.A.
First           CDN     7.98%  September      $5.8     $5.8        6019838
mortgage                            1, 2018    million   million     Canada Inc.
on real
property
Secured          US     4.80%     Due on    $ 15.7   $ 15.7  Harry Winston
bank                                 demand    million   million         Diamond
advance                                                            International
                                                                             N.V
                US    12.50%     Due on     $ 2.1    $ 2.1  Harry Winston
                                     demand    million   million         Diamond
                                                                         (India)
                                                                         Private
                                                                         Limited
Secured         CHF     4.00%     Due on     $ 7.4    $ 7.4  Harry Winston
bank                                 demand    million   million            S.A.
advance
Secured         YEN     2.55%  February      $7.2     $7.2  Harry Winston
bank                               22, 2013    million   million     Japan, K.K.
advance
Unsecured       YEN     2.98%   November      $6.5     $6.5  Harry Winston
bank                               30, 2012    million   million     Japan, K.K.
advance
Unsecured       YEN     2.98%   November      $7.0     $7.0  Harry Winston
bank                               30, 2012    million   million     Japan, K.K.
advance
Unsecured       YEN     2.48%  March 29,      $1.0     $1.0  Harry Winston
bank                                   2013    million   million     Japan, K.K.
advance
Unsecured       YEN     2.00%   November      $1.3     $1.3  Harry Winston
bank                               30, 2012    million   million     Japan, K.K.
advance
Unsecured       YEN     1.88%   November      $0.3     $0.3  Harry Winston
bank                               22, 2012    million   million      Japan, K.K
advance
Finance         CHF     1.97%   April 1,      $0.4     $0.4  Harry Winston
lease                                  2017    million   million            S.A.

(a) On August 30, 2012, Harry Winston Inc. refinanced its secured
         revolving credit facility by entering into a new secured five-year
         credit agreement with a consortium of banks led by Standard Chartered
         Bank establishing a $260.0 million facility for revolving credit
         loans. The new facility expires on August 30, 2017. On November 7,
         2012, Harry Winston Inc. signed the first amendment to its senior
         secured revolving credit agreement dated August 30, 2012. The
         amendment increased the current $260.0 million facility to $300.0
         million with Manufacturers and Traders Trust Company agreeing to
         provide an additional $40.0 million commitment, and being added as a
         new lender under the current credit agreement. There are no scheduled
         repayments required before maturity. As with the previous agreement,
         the new credit facility is supported by a $20.0 million limited
         guarantee provided by Harry Winston Diamond Corporation. The amount
         available under this facility is subject to a borrowing base formula
         based on certain assets of the luxury brand segment. At October 31,
         2012, $223.0 million was outstanding.

        The new credit agreement contains affirmative and negative
         non-financial and financial covenants, which apply to the luxury
         brand segment. These provisions include consolidated minimum tangible
         net worth, minimum coverage of fixed charges, leverage ratio and
         limitations on capital expenditures and certain investments. The new
         credit agreement also includes a change of control provision, which
         would result in the entire unpaid principal and all accrued interest
         of the facility becoming due immediately upon change of control, as
         defined. Any material adverse change, as defined, in the luxury brand
         segment's assets, liabilities, consolidated financial position or
         consolidated results of operations constitutes default under the
         agreement.

        The luxury brand segment has pledged 100% of Harry Winston Inc.'s
         common stock and 66 2/3% of the common stock of its foreign
         subsidiaries to the bank to secure the loan. Inventory and accounts
         receivable of Harry Winston Inc. are pledged as collateral to secure
         the borrowings of Harry Winston Inc. In addition, an assignment of
         proceeds on insurance covering security collateral was made.

        Loans under the new credit facility can be either fixed rate loans or
         revolving line of credit loans. The fixed rate loans will bear
         interest within a range of 2.50% to 3.25% above LIBOR based upon a
         pricing grid determined by the fixed charge coverage ratio. Interest
         under this option will be determined for periods of either one, two,
         three or six months. The revolving line of credit loans will bear
         interest within a range of 1.50% to 2.25% above the bank's prime rate
         based upon a pricing grid determined by the fixed charge coverage
         ratio as well.

(b) On August 21, 2012, Harry Winston S.A. entered into a credit facility
         with UBS AG establishing a CHF 7.0 million credit line. The new
         credit facility is available to Harry Winston S.A. for general
         corporate purposes. The new facility contains affirmative and
         negative non-financial and financial covenants. The Harry Winston
         S.A. factory building is pledged as collateral to secure the
         borrowings. Borrowings under the credit facility can be either fixed
         rate loans or revolving line of credit loans in CHF or any freely
         available and convertible currency. Interest under the fixed rate
         option will be based upon Euromarket rates for the relevant term and
         currency plus a bank margin. Available terms under fixed rate
         borrowings are one to 12 months in minimum denominations of CHF
         250,000. Interest under the revolving / overdraft option will bear
         interest at 4% per annum for CHF loans, and 5.5% per annum for USD
         loans. A 0.25% commission will be charged quarterly based upon the
         average debit balance. At October 31, 2012, $7.4 million was
         outstanding.


Note 7:
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. HWDLP anticipates its share of this funding requirement will be
     approximately $0.3 million for calendar 2012. 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. HWDLP's share of the letters of credit outstanding posted by
     the operator of the Joint Venture with respect to the environmental
     agreements as at October 31, 2012, was $81.4 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. HarryWinston Diamond
     Corporation's share of the Joint Venture's participation agreements as at
     October 31, 2012 was $1.5 million.

(c) Operating lease commitments
    The Company has entered into non-cancellable operating leases for the
     rental of luxury brand salons and office premises, which expire at
     various dates through 2029. The leases have varying terms, escalation
     clauses and renewal rights. Any renewal terms are at the option of the
     lessee at lease payments based on market prices at the time of renewal.
     Certain leases contain either restrictions relating to opening additional
     salons within a specified radius or contain additional rents related to
     sales levels. Minimum rent payments under operating leases are recognized
     on a straight-line basis over the term of the lease, including any
     periods of free rent. Future minimum lease payments under non-cancellable
     operating leases as at October 31, 2012 are as follows:

                                                      
Within one year                                 $  25,276
After one year but not more than five years      101,877
More than five years                             127,774
                                               $ 254,927

(d) Capital commitments related to the Joint Venture
    At October 31, 2012, Harry Winston Diamond Corporation's share of
     approved capital expenditures at the Joint Venture was $23.5 million.
    

Note 8:
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.

On August 30, 2012, the Company's luxury brand subsidiary, Harry Winston Inc.,
refinanced its  secured  revolving credit  facility  by entering  into  a  new 
secured five-year credit agreement with a consortium of banks led by  Standard 
Chartered Bank establishing  a $260.0  million facility  for revolving  credit 
loans. Harry Winston Inc. amended its senior secured revolving credit facility
on November 7,  2012, by  adding an  additional $40.0  million increasing  the 
total facility to $300.0 million. The new facility expires on August 30, 2017.
As with the  previous agreement,  the new credit  facility is  supported by  a 
$20.0 million limited guarantee provided by Harry Winston Diamond Corporation.
The amount  available under  this  facility is  subject  to a  borrowing  base 
formula based on certain assets of the luxury brand segment.

Note 9:
Segmented Information
The Company operated in three segments within the diamond industry - mining,
luxury brand and corporate - for the three months ended October 31, 2012.

The mining  segment consists  of the  Company's rough  diamond business.  This 
business includes the 40%  ownership interest in the  Diavik group of  mineral 
claims and the sale of rough diamonds.

The luxury brand segment consists of the Company's ownership in Harry  Winston 
Inc. This segment consists of the marketing  of fine jewelry and watches on  a 
worldwide basis.

The corporate segment captures costs not specifically related to operations of
the mining or luxury brand segments.

For the three months         Mining     Luxury   Corporate       Total
ended October 31, 2012                       brand
Sales                                                             
  America                $    7,697  $   30,751  $         -  $    38,448
  Europe                    57,438     27,297           -      84,735
  Asia (excluding           19,683     15,493           -      35,176
   Japan)
  Japan                          -     22,040           -      22,040
  Total sales               84,818     95,581           -     180,399
Cost of sales                                                     
  Depreciation and          19,800        392           -      20,192
   amortization
  All other costs           51,863     42,635           -      94,498
  Total cost of sales       71,663     43,027           -     114,690
Gross margin                 13,155     52,554           -      65,709
Gross margin (%)              15.5%      55.0%          -%       36.4%
Selling, general and                                              
administrative expenses
  Selling and related          957     37,396           -      38,353
   expenses
  Administrative             2,975      9,809       4,250      17,034
   expenses
  Total selling,             3,932     47,205       4,250      55,387
   general and
   administrative
   expenses
Operating profit (loss)       9,223      5,349     (4,250)      10,322
Finance expenses            (2,308)    (2,503)           -     (4,811)
Exploration costs             (673)          -           -       (673)
Finance and other income         60         36           -          96
Foreign exchange gain         (301)      1,068           -         767
(loss)
Segmented profit (loss)   $    6,001  $    3,950  $   (4,250)  $     5,701
before income taxes
Segmented assets as at                                            
October 31, 2012
  Canada                 $  953,484  $        -  $         -  $   953,484
  United States                  -    394,366     115,657     510,023
  Other foreign             34,651    235,034           -     269,685
   countries
                         $  988,135  $  629,400  $   115,657  $ 1,733,192
Capital expenditures      $   13,446  $    5,778  $         -  $    19,223
Other significant                                                 
non-cash items:
  Deferred income tax    $ (11,087)  $  (1,577)  $      (57)  $  (12,721)
   recovery 
                                                         
                                                         
For the three months         Mining     Luxury   Corporate       Total
ended October 31, 2011                       brand
Sales                                                             
  America                $    8,835  $   28,817  $         -  $    37,652
  Europe                    21,993     19,561           -      41,554
  Asia (excluding            5,411     13,133           -      18,544
   Japan)
  Japan                          -     21,966           -      21,966
  Total sales               36,239     83,477           -     119,716
Cost of sales                                                     
  Depreciation and          19,340         57           -      19,397
   amortization
  All other costs           14,772     41,321          34      56,127
  Total cost of sales       34,112     41,378          34      75,524
Gross margin                  2,127     42,099        (34)      44,192
Gross margin (%)               5.9%      50.4%          -%       36.9%
Selling, general and                                              
administrative expenses
  Selling and related          966     30,800           -      31,766
   expenses
  Administrative             2,308      9,835       2,246      14,389
   expenses
  Total selling,             3,274     40,635       2,246      46,155
   general and
   administrative
   expenses
Operating profit (loss)     (1,147)      1,464     (2,280)     (1,963)
Finance expenses            (2,691)    (1,474)         125     (4,040)
Exploration costs             (600)          -           -       (600)
Finance and other income        256         33       (125)         164
Foreign exchange gain           285        151           -         436
Segmented profit (loss)   $  (3,897)  $      174  $   (2,280)  $   (6,003)
before income taxes
Segmented assets as at                                            
October 31, 2011
  Canada                 $  941,028  $        -  $         -  $   941,028
  United States                  -    337,501     106,215     443,716
  Other foreign             57,853    208,012           -     265,865
   countries
                         $  998,881  $  545,513  $   106,215  $ 1,650,609
Capital expenditures      $   10,796  $    4,050  $         -  $    14,846
Other significant                                                 
non-cash items:
  Deferred income tax    $  (4,190)  $    (520)  $      (71)  $   (4,781)
   recovery
                                                         
                                                         
For the nine months          Mining     Luxury   Corporate       Total
ended October 31, 2012                       brand
Sales                                                             
  America                $   17,398  $   98,796  $         -  $   116,194
  Europe                   162,322     72,987           -     235,309
  Asia (excluding           55,580     69,834           -     125,414
   Japan)
  Japan                          -     72,840           -      72,840
  Total sales              235,300    314,457           -     549,757
Cost of sales                                                     
  Depreciation and          53,754      1,052           -      54,806
   amortization
  All other costs          134,792    148,920           -     283,712
  Total cost of sales      188,546    149,972           -     338,518
Gross margin                 46,754    164,485           -     211,239
Gross margin (%)              19.9%      52.3%          -%       38.4%
Selling, general and                                              
administrative expenses
  Selling and related        2,667    114,329           -     116,996
   expenses
  Administrative             6,756     29,682      12,441      48,879
   expenses
  Total selling,             9,423    144,011      12,441     165,875
   general and
   administrative
   expenses
Operating profit (loss)      37,331     20,474    (12,441)      45,364
Finance expenses            (6,701)    (6,018)           -    (12,719)
Exploration costs           (1,495)          -           -     (1,495)
Finance and other income        179         72           -         251
Foreign exchange gain           377        179           -         556
Segmented profit (loss)   $   29,691  $   14,707  $  (12,441)  $    31,957
before income taxes
Segmented assets as at                                            
October 31, 2012
  Canada                 $  953,484  $        -  $         -  $   953,484
  United States                  -    394,366     115,657     510,023
  Other foreign             34,651    235,034           -     269,685
   countries
                         $  988,135  $  629,400  $   115,657  $ 1,733,192
Capital expenditures      $   47,383  $   12,201  $         -  $    59,584
Other significant                                                 
non-cash items:
  Deferred income tax    $ (15,246)  $  (2,845)  $     (171)  $  (18,262)
   recovery 
                                                         
                                                         
For the nine months          Mining     Luxury   Corporate       Total
ended October 31, 2011                       brand
Sales                                                             
  America                $   12,291  $   91,487  $         -  $   103,778
  Europe                   152,876     63,105           -     215,981
  Asia (excluding           22,715     86,543           -     109,258
   Japan) ^(a)
  Japan                          -     57,009           -      57,009
  Total sales              187,882    298,144           -     486,026
Cost of sales                                                     
  Depreciation and          52,572        215           -      52,787
   amortization
  All other costs          102,596    166,635         135     269,366
  Total cost of sales      155,168    166,850         135     322,153
Gross margin                 32,714    131,294       (135)     163,873
Gross margin (%)              17.4%      44.0%          -%       33.7%
Selling, general and                                              
administrative expenses
  Selling and related        2,392     90,098           -      92,490
   expenses
  Administrative             9,001     28,584       7,976      45,561
   expenses
  Total selling,            11,393    118,682       7,976     138,051
   general and
   administrative
   expenses
Operating profit (loss)      21,321     12,612     (8,111)      25,822
Finance expenses            (9,171)    (4,160)         125    (13,206)
Exploration costs           (1,593)          -           -     (1,593)
Finance and other income        411        219       (125)         505
Foreign exchange gain           154        393           -         547
Segmented profit (loss)   $   11,122  $    9,064  $   (8,111)  $    12,075
before income taxes
Segmented assets as at                                            
October 31, 2011
  Canada                 $  941,028  $        -  $         -  $   941,028
  United States                  -    337,501     106,215     443,716
  Other foreign             57,853    208,012           -     265,865
   countries
                         $  998,881  $  545,513  $   106,215  $ 1,650,609
Capital expenditures      $   35,880  $    7,338  $         -  $    43,218
Other significant                                                 
non-cash items:
  Deferred income tax    $ (12,154)  $    4,180  $     (226)  $   (8,200)
   expense (recovery)

^(a) Sales to one significant customer in the luxury brand segment totalled
     $45.0 million for the nine months ended October 31, 2011.
    

Note 10:
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.











SOURCE Harry Winston Diamond Corporation

Contact:

Mr. Richard Chetwode, Vice President, Corporate Development - +44 (0)
7720-970-762 orrchetwode@harrywinston.com
Ms. Laura Kiernan, Director, Investor Relations - (212) 315-7934
orlkiernan@harrywinston.com
Ms. Kelley Stamm, Manager, Investor Relations - (416) 205-4380
orkstamm@harrywinston.com
 
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