Investors looking for answers about Diavik dig a hole into Harry Winston stock
Harry Winston, jeweler and watchmaker, posted solid profits – a 17% jump for the the quarter – on Thursday, but diamond investors waiting for news about the retailer's plans for its 40%-owned Diavik mine were disappointed.
At lunchtime the luxury retailer was trading down just over 5% at $13.83 on the Toronto big board, its lowest for the day. The mining sector was generally soft with the TSX S&P Global Mining index nudging down 0.5%
Harry Winston said it was delaying the release of a new life of mine plan for Diavik located in the far north of Canada. Diavik is supposed to transform into an underground operation this year.
The company also did not provide any insights into what its partner on the project's plans were.
Rio Tinto owns 60% and operates the mine, but last month said it was considering selling its diamond business.
Rio, the globe's third largest miner, is following BHP Billiton, which last year announced it is looking at ways to completely exit the business.
Rough diamond output at Diavik is expected to rise to 8.3 million carats this year, up from 6.7 million in 2011.
Diavik is not far from BHP's Ekati mine and the two deposits were the last major diamond discoveries, back in the early 1990s.
Diavik is Canada largest diamond mine while Ekati supplies roughly 10% of the world’s diamonds by value. Ekati’s best days are behind it – its remaining life could be as short as eight years.
The world of diamond mining is undergoing fundamental changes.
Apart from BHP and Rio changing strategy, the founding family of De Beers last year sold out completely from the company most closely associated with the gems after three generations steering the business.
Russia's Alrosa overtook De Beers in 2009 as the world's number one supplier of rough and after decades of being a secretive state-owned organization is in the process of readying a global public offer.