Toronto-based Kinross Gold is purchasing an indirect interest in the Diavik diamond mine, along with 19.9 per cent of Harry Winston, one of the mine’s owners.
The $150-million US deal means the bullion producer will subscribe for a 22.5 per cent interest in the partnership that holds Harry Winston’s 40 per cent stake in the Diavik mine, a joint venture operated by Rio Tinto. The net effective subscription price is $104.4 million US. Kinross will buy 15.2 million common shares in Harry Winston at a price of $3 US per share, for a total of $45.6 million.
“We are acting on a rare opportunity to acquire a stake in one of the world’s great diamond mines operating in northern Canada, with a long mine life and a record of strong cash flows,” said Kinross president and chief executive officer Tye Burt.
“For Kinross, this represents a strategic investment that is accretive and has the potential to create excellent long-term value for our investors.” As part of the agreement, Thomas M. Boehlert, Kinross’ executive vice-president and chief financial officer, has been invited to join Harry Winston’s board of directors.
“We view diamond mining as complementary to our core business of gold mining, which remains our primary focus,” Burt said. “We believe that, as with gold, the long-term supply and demand fundamentals for high-quality diamonds are strong. Harry Winston occupies a unique and respected place in the global diamond business and we look forward to working with them in the future.”
Harry Winston will continue to market the partnership’s share of diamond production from the Diavik mine, including the portion attributable to Kinross’ interest. The companies have agreed to look at future investment opportunities in the diamond mining industry on a case-by-case basis.
