Well, that didn’t take long. Just over three weeks after a group of activist investors required change at Dominion Diamond Corp., the 2 sides reach a standstill agremeent. Dominion has appointed mining veteran Jim Gowans and activist fund manager Josef Vejvoda to the board, and intends to make Gowans its next chairman. He will replace Robert Gannicott after April.
“Whilst a change in board leadership could be disruptive, the appointment of Mr. Gowans like a director and non-executive chairman in waiting provides some comfort that the transition should be smooth,” BMO Capital Markets analyst Edward Sterck said inside a note.
Sterck noted that Gowans has extensive experience within the mining industry, and also the diamond sector in particular. He was formerly the chief executive of De Beers Canada and chairman from the Mining Association of Canada.
Given the activists expressed concern about Dominion’s capital allocation decisions and overall business strategy, Sterck expects the board to review paying for the “Jay” pipe at the Ekati mine within the Northwest Territories. Yellowknife-based Dominion wishes to proceed with development of this pipe, which could extend the mine life with a decade or even more.
“In our opinion, this (review) does not mean that Jay won’t be coded in the near future, simply that a more complete and public analysis is probably,” he said.
Sterck also suggested there are opportunities to increase the mine’s life that don’t involve the Jay pipe. Theoretically, this can be pursued in the shorter-term to allow a deeper analysis of Jay, he explained.