YELLOWKNIFE, NWT – The management of Dominion Diamond Corp. has agreed to accept the sweetened takeover offer of the Washington Companies, the private company based in Missoula, Montana.
In March, Washington offered US$13.50 per share, and the Dominion board turned down the deal. Now offering US$14.25 per share, Washington looks to be the new, sole owner of the Ekati diamond mine (Canada’s first) and 40% of the Diavik diamond mine (operated by 60% owner Rio Tinto). The offer is a 44% premium over the March 17, 2017, share price and puts a value of US$1.2 billion on Dominion.
When that news hit my desk this morning, I thought, “There goes another one.” Readers will remember 10 years ago when Vale bought up Inco and Xstrata (now Glencore) scooped up Noranda/Falconbridge. Most of the writers who marked that anniversary recently thought the change in ownership did little to further Canadian mining or our place in the global minerals industry.
I do understand that the Dominion board has a duty to its shareholders to maximize the value of their holdings. By that standard, Dominion has done a great job: a huge premium over the recent closing price of its shares.
What makes me unhappy about the deal is first that the buyer is foreign; second as the owner will be a private enterprise, there is no requirement for public reporting; and three the deal includes Canada’s first diamond mine, a part of our heritage.
Washington vows to operate Dominion as a stand-alone company as it does its other similar businesses. Washington owns Montana Resources that operates a copper-molybdenum mine in Butte, Mont. That company’s website is thin on information of the nuts-and-bolts type that describe the mine, resources, mineral processing plant or outlook. Even a phone call to Montana Resources could not elicit a name for the mine beyond “Montana Resources”.
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