Dominion Diamond acquired by U.S. conglomerateThe Washington Companies ink deal worth US$1.2 billion
Northern News Services
Wednesday, July 19, 2017
Dominion Diamond Corporation is being sold for US$1.2 billion.
Larry Simkins: CEO of The Washington Companies, is taking a "very, very long term-view" of both Diavik and Ekati mines. - photo courtesy of The Washington Companies
The company announced on Monday its board of directors had unanimously recommended shareholders vote in favour of an acquisition by Montana conglomerate The Washington Companies.
The Washington Companies is a privately held variety of companies operating under one umbrella, including railroads, marine transportation and a copper and molybdenum mine in Butte, Mont.
A subsidiary of The Washington Companies will purchase Dominion's shares for US$14.25 a share under the deal, taking a controlling interest in Ekati Mine and a 40 per cent ownership in Diavik Mine.
Washington first expressed interest in Dominion in March, in a move Dominion described as "unsolicited" and "highly opportunistic." At the time, the board of directors expressed concerns about Washington's lack of credibility or experience in the diamond industry.
A week later, Dominion announced the creation of a special committee to explore, review and evaluate alternatives.
This acquisition will be Washington's first foray into diamond mining.
"Two years ago if you'd asked if we were going to be talking about a diamond mine in the Northwest Territories today, I wouldn't have ruled it out but it wasn't something that was necessarily on our radar," said Larry Simkins, CEO of The Washington Companies. "Our companies are built to go three generations and so we've got a very, very long-term view."
He added the plan is to treat the Dominion mines the same way the company handles its property in Montana, where Simkins said the life of the mine it operates has been expanded from an originally predicted 30 years in the 1980s when Washington purchased it, until 2056.
Simkins estimates the purchase will have all the needed approvals within three to four months. At which point, he said not much will change other than the fact it will be now a private, instead of public, entity.
"One of the ways that we run our companies is that each company operates separately and each one of them has a management team that's empowered to run the operation," said Simkins.
Washington stated in a news release it plans to operate Dominion as a standalone business, honouring the existing commitments to Indigenous communities, including training, recruitment and scholarship programs within communities.
Washington will also be completing the search for a new CEO, ongoing since January when former Dominion CEO Brendan Bell announced he would be leaving the role.
Simkins couldn't guarantee the successful candidate would be Canadian, but Washington has committed to having the CEO and Dominion's headquarters remain on Canadian soil.
In November, Dominion announced it's corporate office would be moving to Calgary from Yellowknife, taking around 100 staff and their families with it. Simkins couldn't say whether those jobs would be coming back.
"We want to be very cautious and not be having people move to Calgary and then uprooting them again, families and moving them back to Yellowknife," he said.
In a news release, Premier Bob McLeod stated he is pleased with the development.
"I'm encouraged by the public commitments made by Washington to important matters such as ongoing investment in exploration and jobs and benefits for Northerners, particularly Indigenous communities and governments," he stated, adding he and Industry, Tourism and Investment Minister Wally Schumann look forward to meeting with Washington in the near future.
Doug Ashbury, public awareness manager with the Nunavut and NWT Chamber of Mines had positive things to say about the news as well.
"From a chamber perspective ... this would be viewed as a good thing," he said. "Washington has indicated that they're going to stay committed to the things that Dominion has done in the North in the past."