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Diamonds Summary
Symbol C : *MKTDIAM
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Diamonds & Specialty Minerals Summary for Jan. 17, 2013

2013-01-17 16:41 ET - Market Summary

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by Will Purcell

The diamond stocks box score for Thursday was a lacklustre 50-57-122. The TSX Venture Exchange added two points to 1,233 while diamond prices rose slightly. A Rio Tinto shakeup leaves the fate of its diamond division cloudier than Argyle boart. The company is swallowing a $14-billion impairment charge on its 2012 financials, the result of huge writedowns at the Alcan and Pacific aluminum divisions, its Mozambique coal project and several smaller accounting hits. The bloodbath apparently cost Tom Albanese his job as chief executive officer: the company says he stepped down "by mutual agreement." (In other words, he did not fight being shoved out the door.) There was no mention of diamonds in Rio Tinto's accounting mea culpa but there is no reason to suspect the new CEO, former iron ore division head, Sam Walsh, will derail his predecessor's plan to get out of diamonds.

Indeed, a recent decision by Robert Gannicott's Harry Winston Diamond Corp. (HW) to sell its retail diamond division suggests the company is chasing Rio Tinto's 60-per-cent share of Diavik. (Swatch Inc. will pay $750-million in cash and assume $250-million in debt to acquire Harry Winston Inc.) That would heave Harry essentially debt free and holding a big pot of cash. Mr. Gannicott, who says he wants to acquire additional diamond mining ventures, wants to keep to his area of expertise: Canada's North. Mr. Gannicott, who was probably taught that it is better to say nothing at all than to say something derogatory, says nothing at all about most rival diamond projects in Canada. For years, he eagerly has said he would like to acquire a greater interest in Diavik, should Rio Tinto ever decide to sell. Most analysts dismissed that possibility, since Rio's 60-per-cent share of Diavik was priced out of Harry's reach, but that is no longer the case. Rio Tinto's turmoil and Harry Winston's unexpectedly quick sale of its retail division suggest a deal for Diavik could be imminent.

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