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Diamond & Specialty Minerals Summary for March 31, 2020

2020-03-31 18:23 ET - Market Summary

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by Will Purcell

The diamond and specialty minerals stocks box score on Tuesday was a mediocre 75-78-149. The TSX Venture Exchange rose three points to 390 while polished diamond prices edged lower. Lucara Diamond Corp. (LUC) hit another multiyear low at 40 cents, ending the day down 2.5 cents to 40.5 cents on 1.15 million shares.

With Canadian diamond miners setting multiyear lows, or worse -- just ask shareholders of the now departed Stornoway Diamond Corp. just how bad it can get -- former shareholders of Dominion Diamond Corp. are left to wonder how bad their hit would have been had Dennis Washington, a Missoula-based billionaire, not taken a hankering to owning his own diamond mine in the fall of 2017. He paid $1.5-billion for Dominion, just over $18 per share at the time, largely using borrowed cash.

While Dominion's stock no longer offers a record of the tough times it is facing, the major source of the cash that Mr. Washington put up -- $550-million (U.S.) in bonds sold by the Washington Group -- does tell a worrisome tale. The bonds, which pay annual interest at 7.125 per cent until they mature in the fall of 2022, traded near par from their issue date in the fall of 2017 until early last year. Since then, they have been zigzagging steadily lower, reaching 47.45 today as worries grow about the company's ability to repay the principal. (For the brave of heart, that works out to a 29 per cent annual return.)

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