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Dominion Diamond looks for potential buyers in own backyard — source

Dominion Diamond runs the iconic Ekati mine and owns 40% of Diavik (pictured), Canada’s largest diamond mine in terms of carat production. (Image courtesy of Dominion Diamond)

Dominion Diamond (TSX, NYSE: DDC), which put itself up for sale last week after receiving a $1.1 billion takeover bid from US billionaire Dennis Washington, is said to be looking to secure a deal with fellow Canadian diamond miners, a source familiar with the matter who wishes to remain anonymous said.

This is not the first time Dominion explores a sale. In Dec. 2015, it launched a similar process, which didn’t result in any deal.

The company, the world’s third largest producer of rough diamonds by value, has already created a special committee and is working with TD Securities to explore, review and evaluate a range of options for maximizing shareholder value.

Those alternatives, as the company informed, include selling the firm to another diamond miner, which according to one person with knowledge of the strategy, would likely be another Canadian company.

Dominion did not reply to requests for more information by the time this story was published, but previous media reports had named Stornoway (TSX:SWY), a small-size firm that recently opened its Renard mine in Quebec, as one of the miners interested in a potential merger with Dominion Diamond.

This is not the first time Dominion explores a sale. In Dec. 2015, it launched a similar process, which didn’t result in any deal.

Over the past year, the company was hit by weak global diamond prices, as well as sudden challenges, including the death of the company’s founder, Robert Gannicott, and a fire at Ekati that suspended processing for three months and cost the miner around $20 million in repairs.

In January, it announced that its chief executive officer Brendan Bell was leaving the company due to personal reasons related to the company’s planned move of headquarters to Calgary from Yellowknife.

The move, expected to be completed by mid-2017, follows a similar decision by De Beers Canada, which moved its headquarters from Toronto to Calgary in July last year.

Shares in the company were down 0.77% in Toronto to Cdn$16.83 at 12:31PM and were trading 0.95% lower in New York to $12.55 at 12:55PM ET.