Dominion Diamond open to offers
In wake of purchase proposal, company announces it will 'explore, review and evaluate' options
Jessica Davey-Quantick
Northern News Services
Wednesday, March 29, 2017
SOMBA K'E/YELLOWKNIFE
Dominion Diamond Corporation announced on Monday it is on the market and ready to mingle.
In a news release on Monday, the company announced the creation of a special committee to explore, review and evaluate alternatives.
"The board is committed to maximizing shareholder value through a fair and open process and we look forward to engaging constructively with all parties," stated James Gowans, chairman of board, in the news release.
The announcement comes in the wake of a proposal from The Washington Corporations to purchase all outstanding common shares of Dominion. Dominion described the proposal as "unsolicited" and "highly opportunistic," but now the company seems interested to see who else might want to bite.
After news of the Washington proposal was released, Dominion stock prices skyrocketed, peaking again on Monday after the announcement.
Dominion declined to comment further.
Richard Morland, president of the NWT Chamber of Commerce, said this is a pretty normal thing to happen.
"They're required to consider offers," he said. "It's not a matter of being open to be bought out. A board's responsibility is to work in the best interests of shareholders, and if being bought out in the opinion of the board maximizes shareholder value, then they're obliged to consider it."
Dominion owns 40 per cent of the Diavik diamond mine through a joint venture with Rio Tinto and operates the Ekati Diamond Mine. In November, Dominion announced it would be tightening its belt by moving its corporate office to Calgary in the middle of this year - a move estimated to save the company approximately $19 million annually.
Dominion's most recent projections estimate sales of between US$875 and $975 million in 2018, a 62 per cent increase over 2017 fiscal sales, with its two mines producing between 9.1 and 10 million carats. The last year wasn't so rosy however, thanks to a fire last summer at Ekati that led to temporary layoffs and negatively effected the quarterly results.
But Morland said Dominion's current status as the belle of the ball is a good thing.
"What it says is that people out there think that there's value in the Ekati asset. And in the Dominion Diamond Corporation. So I think that's a good sign," he said.
