Diamond & Specialty Minerals Summary for May 15, 2017
2017-05-15 20:20 ET - Market Summary
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Will, any comment on these ideas?
CPPI as an investment partner with DDC might make the best sense, take over Rio's diavik share, optimally utilize Diavik for Jay, (where there is possibly a significant boost to Jay economics over the life of mine) and free Ekati for stranded DB's pipes around Hardy (whatever they might contain) DBs has arguably been slayed in Canadian diamond investments, and unlikely to build anything new anytime soon. That said, there has always been a 'friendly' relationship between DBs and DDC, from ex DBs directors and officers, to the timely but now long ago Aber-saving deal on Snap. Argyle is done, Diavik will finish too, Rio pays lip service to the diamond business but has revealed no apparent long term production replacement. Either Rio buys DDC to revive the business unit, or DDC grows through diavik into the next diamond major, facilitating stranded potential of both DBs/RTP ( erstwhile marketing foes)
Simply selling DDC is just too 'Simple' imo.
Borson
Posted by Borson at 2017-05-16 13:12
"Will, any comment on these ideas?"
Always!
First, let me say that I'm not a fan of consolidation in the diamond sector. Or, for that matter, am I a fan of merging any company I think is a good investment with a larger one -- especially a private one.
If there's a need for development capital, I could see CPPI making a big investment in Dominion, whilst keeping it public. That wouldn't annoy me too much, I guess. My worry is that they intend to take the company semi or fully private and bring in their own management group.
There's a danger there. Gannicott always said he would stick with his strengths -- mining in the North -- and others should do the same. Which is an intriguing segue into....
You say: "DBs has arguably been slayed in Canadian diamond investments, and unlikely to build anything new anytime soon. That said, there has always been a 'friendly' relationship between DBs and DDC, from ex DBs directors and officers, to the timely but now long ago Aber-saving deal on Snap."
I respond: Too bad De Beers never learned the Gannicott strategy. The North has killed them. They're investing gods in Africa, but dogs in Canada.
One must always look ahead. In diamonds, far ahead.
With regard to your conclusion: "Simply selling DDC is just too 'Simple' imo"
Aha! We agree completely!
Cheers,
Will
Posted by Will Purcell at 2017-05-17 10:32
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