History
A diamond miner with a stake in Diavik swapped its jewelry business for the Ekati mine, then was bought out for US$14.25 a share in 2017.
2004-2010: Diavik and the Harry Winston bet
The company, then called Aber, was built around a 40% interest in the Diavik diamond mine. In December 2004 Tiffany & Co. sold its 8 million Aber shares, which it had bought in a 1999 private placement that helped fund early Diavik development. The discount Tiffany enjoyed on diamond purchases was cancelled, so Aber would sell its whole Diavik share at full market prices. The 2005 annual report showed Diavik producing 7.6 million carats in the year, with Aber's share of diamonds sold at $252.7 million.
Aber also moved into jewelry. It bought 51% of Harry Winston in April 2004 for US$85 million, and in September 2006 agreed to buy out the minority holders for about US$157 million, to be paid from cash and a larger credit facility. That brought forward a purchase option that the original agreement had allowed for 2010. The record for 2007 to 2009 is quiet.
In July 2010 the company agreed to buy Kinross Gold's 9% indirect interest in the Diavik Joint Venture, bringing its stake back to 40%. The deal closed in August 2010 at US$220 million: US$50 million in cash, a US$70 million promissory note at 5% due August 2011, and about 7.1 million new shares issued to Kinross, which diluted existing holders.
2013: From jewels to mining
In January 2013 the company agreed to sell Harry Winston Inc., its luxury jewelry and timepiece division, to The Swatch Group for US$750 million plus Swatch's assumption of up to US$250 million of net debt. It said it would rename itself Dominion Diamond Corporation and keep supplying polished diamonds to Swatch. By April it was operating under the new name as a mining-only business.
It used the change to buy Ekati. In April 2013 it completed the purchase of BHP Billiton's interests in the Ekati mine and the sorting and sales facilities in Yellowknife and Antwerp for US$553 million. It also posted about Cdn$127 million in letters of credit to the Government of Canada for reclamation, meaning cleanup, obligations on the Core Zone. The price and letters of credit were covered from, or secured by, cash on hand. Ekati came with about US$65 million of cash and about 10 weeks of diamond inventory.
2015-2016: Planning Ekati's next mines
The next phase was working out what would replace Ekati's ageing pits. A January 2015 pre-feasibility study on the Jay pipe, in the Buffer Zone, estimated 84.6 million carats of reserve and a US$610 million after-tax value on a 100% basis, with about US$657 million of development capital. Brendan Bell was named Acting CEO that month.
Sable, in the Core Zone, followed. A September 2015 preliminary study showed 11.7 million carats of indicated resources. The February 2016 pre-feasibility study cut the value from US$233 million to US$137 million, with the base diamond price assumption lowered from about US$190 to about US$140 per carat. It showed 10.1 million carats of probable reserves.
Jay moved through approvals. In May 2016 the Northwest Territories Minister of Lands accepted the review board's recommendation to approve the environmental assessment. In June the company pushed the schedule back, with mining of Jay kimberlite by late 2022. Then, on June 23, a fire damaged the Ekati process plant. The company estimated about three months of repairs costing roughly Cdn$25 million, a very preliminary figure, and cut fiscal 2017 guidance from 5.6 to 4.7 million carats. About 330 people were temporarily laid off. How much insurance would cover was not stated.
In July 2016 the board approved developing Jay, with initial capital of US$647 million and a US$398 million value on a 100% basis. It expected to fund the project from existing cash and internal cash flow. The Toronto Stock Exchange also approved a buyback of up to 6,150,010 shares, about 10% of the public float, with 85,335,979 shares outstanding at July 6, 2016. The record does not say how many were bought.
2017: Exploration, approvals and a takeover
In May 2017 the company announced a renewed focus on exploration, with a success-based five-year budget of about C$50 million. It gave a first inferred resource for the Leslie pipe of 51 million tonnes and 16 million carats, not yet shown to be economic. A study of an underground mine below the Misery pit followed, with 8.7 million carats of probable reserve and a US$94 million initial cost. In July the Jay water licence received final approval, which the company called the final major step in Jay permitting. The land use permit status was not stated. A September study of an underground mine at Fox Deep showed a US$187 million value but rested on indicated resources only.
In September came a takeover. Two proxy advisers recommended that shareholders back a plan for Northwest Acquisitions ULC, affiliated with The Washington Companies, to buy all shares for US$14.25 in cash, following an auction process. A court approved the arrangement on September 22. The deal closed on November 1, 2017, after shareholder, Investment Canada Act and Competition Commissioner approvals. Dominion became a private company led by CEO Patrick Evans. Its New York listing was to be suspended after trading on November 1, and its Toronto listing delisted after trading on November 2.
Written from the 23 story beats below (2004 to 1 Nov 2017), which come from the company's own announcements and filings.