Dominion Diamond Shareholders Approve $1.2B Takeover Deal

Mining and Exploration
20/09/2017 10:25

Dominion Diamond Corporation yesterday announced that its, "Shareholders overwhelmingly approved the previously-announced plan of arrangement pursuant to which Northwest Acquisitions ULC, an entity affiliated with The Washington Companies, has agreed to acquire all of the issued and outstanding common shares of the Company for US$14.25 per share in cash." In other words, shareholders are expected to receive $14.25 US per share in cash when the acquisition closes. The aquisition arrangement is worth a total of US$1.2 billion.

Assuming certain closing conditions are met, the deal is expected to close in the fourth quarter of calendar 2017. Investors in the Northwest Territories diamond producer voted more than 99 percent in favor of the deal announced in July. The sale gives Washington Companies a 100 percent interest in the Ekati diamond mine and a 40 percent stake in the Diavik diamond mine operated by Rio Tinto, both in the Northwest Territories.

According to CBC News, the Canadian head office of Dominion Diamond is to remain in Calgary, said Larry Simkins, president of the Montana-based acquirer, who attended Dominion's special meeting. He said afterwards it wouldn't make sense to relocate the 100 employees of Dominion in Calgary after the head office was moved from Yellowknife earlier this year. "It just moved here and the last thing we would do is uproot families and move them back to Yellowknife or some other place," he said. "We're going to execute on the plan that management already presented," said Simkins, adding that his privately-owned company will follow Dominion's plans to extend the life of the Ekati diamond mine and invest in exploration.

CBC News also reports that Dominion chairman Jim Gowans said the purchase of his company illustrates the high value the rest of the world sees in the diamond mining industry in Canada. "The diamond industry over the past couple of years has gone through a flat cycle but it's looking up now," he said. "Most of the growth is actually here in Canada for the world diamond supply so I'm very optimistic." Simkins said Washington Companies is not currently interested in bidding for any other Canadian mine assets.