Harry Winston eyes growth in northern Canada
TORONTO (Reuters) - Harry Winston, jeweler to the rich and famous, is looking for new opportunities to mine diamonds in northern Canada, where it already owns a large stake in a project operated by Rio Tinto Plc, one of the world's largest miners.
Toronto-based Harry Winston confirmed it has right of first refusal for Rio Tinto's 60 percent interest in their joint Diavik diamond mine in Canada's Northwest Territories, but it would not comment further on Rio's statement it might sell its stake.
Harry Winston Chief Executive Robert Gannicott, in a conference call with investors on Thursday, said the jeweler is interested in projects that have well-defined resources, with a focus on pre-production stage properties.
"Obviously we're interested in any assets like that that are relevant to our sphere of expertise, which has certainly become northern Canadian-focused," said Gannicott.
Rio Tinto said last month that it is considering selling its diamond business to focus on more profitable metals. But analysts say the asset is likely beyond Harry Winston's reach.
"In my view I think it would be a challenge for them," said Edward Sterck, a mining analyst with BMO Capital Markets. "Their existing finances are not sufficient to buy out Rio's stake."
Because Harry Winston does not have experience operating a mine, he added, a development-stage project would be a better acquisition as it would give the company time to build up an operations team.
Rio's review follows a similar announcement by BHP Billiton and strongly suggests the sector -- dominated by De Beers and Russia's Alrosa -- is heading toward its most significant shake-up in more than a decade.
With four major diamond operations on the block between Rio and BHP, the market is abuzz with talk that smaller miners, jewelers and private equity funds could catapult themselves into the diamond industry's major league. Continued...