Dominion Diamond still hoping to own Diavik mine
Dominion Diamond (TSX, NYSE:DDC), the world’s largest diamond mining company by market cap, has not abandoned its dream of controlling Diavik mine, which it jointly owns with mining giant Rio Tinto (ASX, LON:RIO).
The Toronto-based company, trying to grow its share of the North West Territories diamonds pie, was very close to acquiring Rio’s part in the $2.6 billion diamond mine last year. However talks were cancelled when the diversified miner halted sale plans.
Based on the mine’s current reserves, Diavik could support mining until 2023, after which Rio and Dominion would have to spend about Cdn$188 million in reclamation costs, unless they decide to invest an even higher sum on extending the mine’s life.
According to a corporate presentation, Rio Tinto — which owns 60% of Diavik — is expected to make a decision before the end of the year on whether to invest hundreds of millions of dollars in developing a diamond-producing pipe, known as A21, which would allow to sustain output at the mine.
According to FT.com (subscription required) Dominion’s lack of interest in buying Argyle, another diamond mine owned by the Anglo-Australian group, fraught previous negotiations between the Diavik partners.
Dominion, formerly known as Harry Winston, has first refusal rights to Diavik, which makes it a strong favourite to buy the diamond mine if Rio decides to sell the Canadian asset.