Diamond miners linked to Dermot Desmond seek support for merger

Nasdaq-listed diamond producer Mountain Province Diamonds (MPD) and exploration group Kennady Diamonds, both of which are linked to Irish financier Dermot Desmond, have urged shareholders to back a merger deal worth 176 million Canadian dollars.

Mr Desmond, who has a 24 per cent stake in MPD and a 28 per cent shareholding in Kennady, has previously indicated he will back the deal, which will be voted on next month.

MPD is a 49 per cent participant with De Beers Canada in the Gahcho Kué diamond mine, the world's largest new diamond mine, located in Canada's Northwest Territories. Kennady Diamonds, meanwhile, is exploring for diamonds in the Canadian tundra adjacent to the Gahcho Kué project.

Both companies issued a circular late last week urging shareholders to back the deal.

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Mountain Province said there was significant potential to develop resources at Kennady’s mine. It also noted that the deal would add [to Mountain Province’s landholding of] 67,000 hectares of highly prospective and 100 per cent owned exploration ground strategically located near the Gahcho Kué mine.

Strong complement

MPD chief executive David Whittle said previously the Kennady assets were a strong complement to Mountain Province's interest in the Gahcho Kué project.

“Kennady’s exploration efforts have been very successful and we have high confidence in our ability to continue that success, not only through expanding the existing resources at Kelvin and Faraday but through the potential for further discoveries, not just in the Kelvin-Faraday corridor but elsewhere across the property,” he said.

From the perspective of Kennady shareholders, the company said the deal will see Mountain Province provide financing to Kennady of up to 10 million Canadian dollars through an equity private placement at $2.50 a share designed to coincide with Kennady’s budget for the current work programme.

Both MPD and Kennady are chaired by Mr Desmond's close associate, Jonathan Comerford, who works for the financier's International Investment and Underwriting vehicle in Dublin.

Mr Comerford has previously noted his “conflicts” in relation to the deal, and will abstain from the vote.

Both sets of shareholders will vote on the deal on April 9th.