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Diamond & Specialty Minerals Summary for May 1, 2019

2019-05-01 19:36 ET - Market Summary

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by Will Purcell

The diamond and specialty minerals stocks box score on Wednesday was a mediocre 56-93-151 as the TSX Venture Exchange fell one point to 609 and polished diamond prices were flat. Guy Bourassa's Nemaska Lithium Inc. (NMX) continued its rebound today, then was hit by selling, ending the day down one cent to 32.5 cents on 10.35 million shares. The company needs a lot more cash to complete its billion-dollar Whabouchi lithium mine in Quebec.

A big 2014 investment in Stornoway Diamond Corp. (SWY) and its then fledgling Renard diamond mine by Orion Mine Finance Management I Ltd. will go down in the books as one of the worst investments in Canada's diamond sector. (Tiffany and Co. and Teck Resources Ltd. (TECK.A: $31.18), which lost all their multimillion-dollar investments in Tahera Diamond Corp. a decade ago might beg to differ but their loss, although total, was much less than what Orion lost.)

Orion paid 70 cents per share for 171.25 million Stornoway shares, just under $120-million, as a key part of Stornoway's $944-million financing for Renard. (Orion also received an additional 10.28 million shares as a "placement fee.") It sold 38.4 million of its shares in the spring of 2015 at 64 cents, in a private transaction worth $24.5-million, and it transferred 13 million shares through an in-kind distribution early in 2017. Now, the company has dumped 108 million shares at four cents for $4.3-million, leaving it with just 22 million shares. As a result, Orion received less than $29-million in cash for its $120-million investment -- and its remaining stock has a market value of just over $500,000.

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