Dominion Diamond Corp. Facing Potential Sales Pressure from Shareholder Group

(IDEX Online News) – Canadian mining company Dominion Diamond Corp. has reportedly hired financial advisors to investigate its potential sale after coming under pressure from a group of shareholders that criticized the company’s management and handling.

According to Bloomberg News, the company has hired Rothschild & Co. to give it advice on the potential sales process. The shareholder group collectively holds 5.4 percent of the company’s shares.

In a letter from K2 & Associates to Daniel Jarvis, lead director of Dominion, portfolio manager Josef Vejvoda states that while the group understands that “market winds have created headwinds for the industry generally,” the group believes the company’s share prices have “suffered excessively and unnecessarily as a result of misguided policies and missed opportunities.”

Among these missed opportunities, it cites overall business strategy, diamond marketing and cost containment.

The letter goes on to say that the group believes there are a number of ways for the company to generate shareholder value, urging members of the board of directors to undertake a strategic review. “There is an immediate opportunity for us to work together to create value for all of the company’s shareholders. Inaction will only result in the continued erosion of shareholder value.”

In a statement issued in response to the letter, Dominion said it looks forward to an open dialogue with the group, which is headed by Toronto-based hedge fund K2 & Associates Investment Management Inc.

“Dominion actively engages with its shareholders and other stakeholders and values constructive input towards the goal of enhancing shareholder value…The company’s board and management team are committed to creating value for our stakeholders and we will continue to take actions to accomplish this goal and position the company for future growth and success.”

Bloomberg reported that Dominion’s share prices surged upon news of the potential sale, to their highest point since 2009 after falling 45 percent this year.

Dominion Diamond Corp. owns the Ekati mine as well as 40 percent of the Diavik mine.