Sunday 15 December 2019

Desmond ups his stake in diamond company to 30pc

Dermot Desmond has no plans for a takeover
Dermot Desmond has no plans for a takeover
Donal O'Donovan

Donal O'Donovan

Billionaire financier Dermot Desmond has raised his stake in Canada's Mountain Province Diamonds above 30pc for the first time, but is not looking to take over the businesses.

Under Irish stock market rules, anyone with a 30pc stake in a listed company is obliged to bid for the entire company, indeed Mr Desmond has actively avoided allowing his stake in troubled Irish software provider Datalex to hit that trigger level - including by supporting a rescue of the Irish firm with a mix of loans and equity.

The mandatory takeover rules don't apply in the case of Canada-headquartered Mountain Province Diamonds, which is listed in Toronto and New York.

In a stock market filing announcing its latest stake build, Mr Desmond's investment vehicle Vertigol said that it has "no current or planned intent" to increase the stake beyond the current holding or "of changing or influencing control" of Mountain Province.

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A filing lodged with the US Securities and Exchange Commission shows the Desmond stake is now 63,044,799 shares, or 30.006pc of the company.

Like earlier stake building, the purchases were funded by way of loans from a company called Nebraska Holdings, owned by Mr Desmond.

Just over a year ago, Mr Desmond increase his stake to 29pc in a number of stages.

Mountain Province Diamonds owns a 49pc stake in the large Gahcho Kué mine in Canada's remote Northwest Territories, alongside 51pc co-owner De Beers, which also operates the mine.

Earlier this month, Mountain Province Diamonds reported third-quarter figures that showed net revenue fell 27pc to CA$54.8m (€37.5m), compared with $74.9m in the same period of 2018.

The sharp fall reflects low demand across the diamond industry, Mountain Province president and CEO Stuart Brown said at the time of the results.

"2019 was always going to be a difficult year," he said.

However, in a follow-up analyst call Mr Brown said he does expect 2020 to be a better year for the sector. Prices for rough diamonds have fallen about 3.8pc this year and the price of finished diamonds is down as much as 9pc.

Mountain Province has cut costs, including reducing how much it pays to process ore to a level of between $95 and $105 per tonne this year from as much as $120 per tonne previously. Even so, shares have been under pressure. From a high of CA$7.15 in 2016 to under CA$1 each in August this year, a low that prompted Nasdaq to warn the share price no longer met the exchange's listing requirements.

Mountain Province was in danger of a mandatory delisting if the stock had remained on the floor, but shares have since staged a recovery. By Friday last week the stock closed at CA$1.20 (82c) a share, comfortably above the Nasdaq imposed danger zone.

Irish Independent

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