Harry Winston Diamond Corporation has said it will purchase a nine percent interest in Canada’s Diavik diamond mine from Kinross Gold Corporation for approximately US$220 million.
Kinross acquired the Diavik diamond mine from Toronto-based Harry Winston in March 2009 for $150 million. At the time, the company said: "We've followed the diamond industry in Canada for some time and felt this was a good time to make an investment in both Harry Winston and the partnership."
Kinross, which is also based in Toronto, owns a 19.9 percent stake in Harry Winston and will sell that as well to an unnamed consortium of financial institutions.
Following these transactions, Kinross said it will only hold 7.1 million Harry Winston shares, and that it has no current intention to acquire any further securities in the company. Kinross' resulting direct ownership interest in Harry Winston following closing of the transaction will be approximately 8.5 percent.
Commenting on the deal, Robert Gannicott, Harry Winston’s chairman and chief executive officer, said: "The transaction represents an opportunity for Harry Winston to consolidate its interest in the Diavik mine, Canada's largest diamond producer and one of the most profitable diamond mines in the world."
Since it began operations in 2003, Diavik has produced over 50 million carats of rough diamonds.
Harry Winston is said to be keen to capitalize on the now surging demand for diamonds from Asia—particularly India and China. Major competitor De Beers increased sales by over 80 percent in the last half and believes things will continue to improve.
Harry Winston is a specialist diamond enterprise with assets in the mining and retail segments of the diamond industry. The company's retail division is a premier diamond jeweler and luxury timepiece retailer with salons in locations including New York, Paris, London, Beijing, Tokyo and Beverly Hills.
As of December 31 2009, Kinross had approximately 51 million ounces of gold, 103 million ounces of silver and 2.8 billion pounds of copper in its proven and probable mineral reserves. The company currently owns or has a joint venture interest in eight operating mines and three development projects. Its operating mines and projects are located in Brazil, Chile, Ecuador, Russia and the US.