Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Toronto-based jeweller Harry Winston Diamond (NYSE:HWD), which is looking to become the sole owner of Rio Tinto’s (NYSE:RIO) Diavik Mine, in Canada’s Northwest Territories, said the mine has another 11 years to go and a current net value of $2.6 billion.
The company, which is in advanced talks to acquire Rio’s 60% stake in Diavik, added it would move ahead with the development of the A-21 diamond pipe, expected to cost about $500 million and deliver ore by 2017.
Diavik, in production since 2003, will have a total capital cost of $955 million until the end of its life, Harry Winston said in a statement.
In the first half of 2012, the mine produced 3.4 million carats from 1.1 million tonnes of ore processed compared to production of 3.1 million carats from 1.0 million tonnes of ore processed in the comparable period of the prior year.
Last June, the company reported that its fiscal first-quarter net income more than tripled as rough diamond sales increased and luxury customers continued to buy jewels and watches.
Harry Winston also said that board member Roger Phillimore is retiring to focus on other professional endeavours, after 15 years with the company.
