Missoula-based Washington Companies intends to add a Canadian diamond mine to its collection of industrial businesses.
“Being able to add mining into our Canadian presence was very important to us,” Washington President Lawrence Simkins said Monday shortly after the company offered $1.2 billion for Dominion Diamond Corp. “Especially since we received the building contract for ships for the Canadian Navy and Coast Guard in 2012 — that’s decades worth of work — we expect to be in Canada for a very long time.”
Simkins said Washington Co.’s experience mining copper and molybdenum at Montana Resources in Butte provided understanding of mining and its cycles. But he added that if the deal is approved, Dominion’s management would remain essentially Canadian. Its headquarters are located in Yellowknife, Northwest Territories, with offices in Calgary, Alberta.
Washington offered $14.25 per share in cash, a 44 percent premium on Dominion’s unaffected share price of $9.92 when acquisition talks began in March. The deal covers Dominion’s 100 percent owned Ekati Mine and its 40-percent stake in the Diavik Mine (co-owned by Rio Tinto). Investment Canada regulators will inspect the deal, because it involves a foreign corporation taking ownership of a Canadian firm. Dominion’s shareholders also must approve the purchase.
The Ekati Mine produced 5.2 million carats of rough diamonds in fiscal 2017. Dominion also received 2.7 million carats of rough diamonds from its share of the Diavik Mine in calendar year 2016, according to company reports. Both mines produce gem-quality diamonds. Together, they deliver the third-largest supply of diamonds by value in the world.
Mike McGivern, vice president of Human Resources for Montana Resources, said Monday that Rolin P. Erickson, MR’s president, toured the Dominion Diamond Corp. operation “a month or so ago” and provided some technical insights to the Washington Companies’ team regarding the potential purchase.
“He looked at things like mine plans, production numbers and long-range planning” in addition to touring the mine, McGivern said. “Rolin has a strong mining background.”
Coincidentally, McGivern said, a safety video that is shown to all new employees at Montana Resources was made at one of the Dominion mines, the Ekati mine. “They use the same size haul trucks we do and this is a good safety video showing the visibility limitations from the haul truck cabs.”
McGivern added that while he expects the two mining companies to be run separately — “Washington Companies tend to run very independently” — the operations obviously would help each other wherever possible, should the purchase be completed.
Simkins said an appealing aspect of the deal was Dominion’s creation of the “CanadaMark” certification confirming its diamonds are responsibly mined, tracked through production and unaltered by gem improvement methods like heat-treating and cavity-filling. The distinction separates Dominion diamonds from those mined in areas prone to conflict and employee abuse.
“We like the long-term future for diamonds,” Simkins said. “The fact that this is in Canada, in North America, is really compelling for us. Canada Mark indicates a free-world diamond, and Canadian diamonds are appealing in the worldwide market.”