Zijin Mining to take 9.9% stake in Montage Gold
As part of the deal, the Lundin Family Trust also agreed increase its stake in the company from 17.7% to 19.9%.
Ekati mine aerial view, August 2010. (Image by Jason Pineau, WikiMedia Commons)
Displeased shareholders of Canada’s Dominion Diamond (TSX, NYSE:DDC), the world’s third largest producer of rough diamonds by value, are stepping up efforts to force a company overhaul.
The group, led by Toronto-based hedge fund K2 & Associates Investment Management, is criticizing the company’s business strategy and management, which they blame for the miner’s falling share price, as shown in a SEC filing from last week.
Dominion, which is the largest home-grown player in the Northwest Territories diamond industry, has lost about 40% of its value this year, amid market conditions affecting the gem industry globally.
The China-fuelled commodity slump that torn through the world’s biggest raw-materials markets from iron ore to copper, did not leave diamond miners untouched. Lower-than-expected demand from the Asian nation caused a blockage in the notoriously long diamond pipeline causing inventories to build.
Prices slid for both rough and polished diamonds, with the latter falling 15% in the first 11 months of the year.
But Dominion’s shareholders have additional reasons to complain. According to CBC News, they are also upset by a $9.8 million payout to former CEO Robert Gannicott last summer. Gannicott, who remains chairman of the board of directors, received stock benefits as a part of that package, regulatory filings show.
And while Dominion’s independent directors have agreed to meet with shareholders the first week of January, some changes are already happening. Last week, the miner confirmed it had hired Rothschild & Co. to advise on “a number of possible initiatives to maximize shareholder value,” it said, though Bloomberg reported that the company was actually mulling a possible sale.
Shortly after, two of its independent directors quit “for personal reasons.”
Dominion Diamond owns the Ekati diamond mine and a 40% stake in Diavik — Canada’s largest diamond mine — both in the Northwest Territories.
Comments
patentbs
Old story again. If the compensation for executives is all it takes for revolt —- they are too late. 8.8 is chump change for many of these folks.
Dominion has lost 40% of it’s value because it’s underlying value (diamonds) has dropped 40%.These hedge funds look for easy money on the back of a pile of diamonds and when it does not work out they cry as if they are widows and orphans!
Also I would NEVER let the CBC or any other broadcaster dictate my investment decisions.