Dermot Desmond raises bet on Canadian diamond miner

Dermot Desmond spent $18.6 million Canadian dollars (€12.3 million) in the last week buying shares in Toronto-listed Mountain Province Diamonds.

The mainly private deals have brought the financier’s stake in the miner to 28 per cent. Under stock market rules, if he surpasses 30 per cent Mr Desmond will have to mount a bid for MPD, which has a market value of $567 million.

The latest deal on Monday was conducted at a premium of about 8 per cent to MPD’s share price, which was trading at close to $2.70 on the open market. Mr Desmond paid $17.98 million for almost 3 per cent of the company in a single off-market private deal.

The share deals were conducted using a new Irish-registered company, Vertigol, which told the Toronto exchange that it is ultimately beneficially owned by Swiss resident Mr Desmond.

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Vertigol was formed in April to consolidate his stakes in MPD and another Canadian miner, Kennady Diamonds, which were subsequently merged in an all-share deal backed by the financier.

Mr Desmond has been an investor in MPD for about two decades, steadily building up his stake to become its largest investor. Jonathan Comerford, his long-time associate who works at the financier's investment firm in Dublin, is the chairman of MPD and is also a director of Vertigol.

Struggling share price

Mr Desmond’s interventions over the past week have helped to lift MPD’s struggling share price, which has fallen by 25 per cent since the Kennady deal. He has also heavily backed MPD through investing in its debt. A document circulated by MPD in April revealed he had bought $60 million worth of its bonds.

MPD owns a 49 per cent stake in Gahcho Kue, a huge new diamond mine on a remote site on the edge of the Arctic. A majority stake is held by the mine's operator, diamond behemoth De Beers.

MPD holds licences to prospect for more diamonds on vast tracts of lands close to Gahcho Kue. This week, it told investors the results of its drilling in the area were “very encouraging”.