Harry Winston boosts stake in Diavik mine in $220-million deal
John Shmuel, Financial Post · Friday, Jul. 23, 2010
Harry Winston Diamond Corp. has struck a US$220-million deal with Kinross Gold Corp. to buy a 9% stake in the Diavik mining venture in the Northwest Territories.
The deal will involve US$50 million in cash, while the rest will be paid through the transfer of 7.1 million in shares and $70 million in debt securities, according to a release from Harry Winston.
"The transaction represents an opportunity for Harry Winston to consolidate its interest in the Diavik mine, Canada's largest diamond producer and one of the most profitable diamond mines in the world," said CEO Robert Gannicott.
The agreement is expected to boost Harry Winston’s overall stake in the Diavik mine, located 300 kilometres north of Yellowknife, to 40%. Mining giant Rio Tinto Ltd. & PLC owns the rest.
Toronto-based Kinross originally acquired the 9% interest in Diavik in March 2009, as part of a deal that saw the company also gain a 19.9% stake in Harry Winston for US$150 million. The company said it would now look to sell those shares to a group of financial institutions, lowering its stake in Harry Winston to roughly 8.5%.
It’s not clear how much Kinross would make from the sale of its nearly 20% stake in Harry Winston, but based on the diamond company’s share price of $14.55 on Thursday, the deal could be worth about $221 million.
Shares in Harry Winston were down over 10% in early morning trading on the TSX, hovering around $13.
Read more: http://www.financialpost.com/news/Harry+Winston+reacquires+stake+Diavik+mine+from+Kinross/3313461/story.html#ixzz0uXEAhq6o
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