Canadian Mining Journal


Dominion Diamond grapples with activist shareholders

VANCOUVER — Yellowknife-based Dominion Diamond (TSX: DDC; NYSE: DDC) is the latest Canadian miner to be put in the crosshairs by activist shareholders. On Dec. 21 Toronto-based hedge fund K2 & Associates Investment Management emailed a letter to the company’s lead director, Daniel Jarvis, on behalf of a group of investors who believe its share price has “suffered excessively and unnecessarily” as a result of “misguided policies and missed opportunities.”

Dominion’s share price has dropped around 54% year to date versus 30% for the S&P/TSX Mining index. The struggles have been largely driven by weak fundamentals in the diamond market and relatively volatile production results at the company’s major assets, namely: the prolific Diavik and Ekati diamond mines in the Northwest Territories, which lie around 220 km due south of the Arctic Circle at Lac de Gras.

The activist investor consortium collectively owns around 5.4% of Dominion’s outstanding shares and features a few notable names outside of K2, including: Sprott Asset Management, Swiss Financier Carlo Civelli, and Hawyood Securities chairman John Tognetti.

The group claims that Dominion is “significantly undervalued by the public markets,” but thus far management has “failed to articulate a clear plan of action to remedy issues” surrounding project priorities, capital allocation, diamond marketing and corporate governance.

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