Canadian shareholders approve Dermot Desmond-backed diamond merger
Deal to merge Mountain Province and Kennady on course to close this week
Businessman Dermot Desmond indicated ahead of the deal that he planned to back the merger of Mountain Province Diamonds and Kennady Diamonds. Photograph: Joe St Leger
Shareholders of the Dermot Desmond-backed Mountain Province Diamonds (MPD) and Kennady Diamonds have “overwhelmingly” backed a 176 million Canadian dollar (€113 million) merger, bringing his two main resource plays together under one roof.
The deal to merge the two Canadian-listed resource companies is now on course to close this week, pending a court hearing in Ontario on Wednesday to approve the arrangement.
MPD, in which Mr Desmond owns a stake of close to a quarter, owns 49 per cent of a huge new De Beers-operated diamond mine, Gahcho Kue, located in the Canadian tundra. Kennady, of which he owns 28 per cent, is prospecting for diamonds on a nearby site.
Mr Desmond had already indicated ahead of the deal that he planned to back the merger. In a statement on Monday, the two companies said that 93 per cent of all shareholders who voted on Monday backed the merger. About 99 per cent of Kennady shareholders who voted also gave their imprimatur.
Under the deal, Kennady shareholders will receive 0.975 MPD shares for each of their Kennady shares.
The rationale for the deal, as set out by MPD to investors in January, includes that Kennady’s exploration activities can be funded from the cash flow MPD is generating on the back of its Gahcho Kue diamond sales.
MPD chief executive David Whittle said Kennady’s assets close to the mine “offer a compelling opportunity to . . . extend life of mine at Gahcho Kue”.
“We are deeply grateful for the level of support we have received from our shareholders on this transaction,” he said.
Kennady says that the Kelvin-Faraday kimberlite corridor that it is exploring near Gahcho Kue has potentially more than 18 million carats of diamonds, priced at between $63 and $98 per carat.
Both companies are chaired by Jonathan Comerford, a long-time associate of Mr Desmond, who works at his Dublin-based International and Investment Underwriting group.