Harry Winston Diamond Corporation HWD

kinross

[OceanRanger1]

Kinross is paying $3.00 US (around $3.75 Cdn) and I don't see it as a bad deal for HW at this stage. HW is over-leveraged right now and they needed to come up with their share of the capex in relation to the preparation for underground mining. They would have been forced to go to the market at the current share price and would have been forced to discount the shares to boot which would have driven the share-price down even further with added dilution.

At least this way they have gained a partner with extensive mining expertise, deep pockets and they were able to get a premium to the recent trading range of the shares. The shares were under pressure because the market knew that HW was in need of capital and debt equity is just not available right now. They were forced to do it this way and considering the position they were in this deal is good for HW - in my opinion.

We will find out in the morning if the market agrees.

Kinross will also be a useful in terms of further exploration potential as well. As I had mentioned before HW has alot of ground staked with another Diavik possibly waiting to be found. Plus this partnership was struck with the hint of further acquisitions of diamond developments to be pursued. There are several other diamond juniors who are having liquidity and cash-flow problems. Shore Gold is one that comes to mind. Trading at 30c right now but there are many others in need of a partner with financial strength.

HW may have given up a small piece of the pie but the pie will likely grow. I like the deal and I believe it was the best solution to a difficult situation.


OceanRanger

[ljones1]

I agree, it was a deal that had to be done.     Getting money at a nice premium to market, getting a strategic partner that is interested in potentially other diamond opportunities for HW, the shares being subscribed for will never hit the market...overall, while we may not like to see dilution at these levels, it is a deal that will benefit us as HW was likely going to be

[pinseeker]

I think the deal should be good for the stock price. The stock looked to be priced for bankruptcy it had been beaten down to ridiculously low level giving the company had a market cap of about $200million while their portion of diamond production is worth around $400million/yr (for example).The markets now have some clarity on HW going out about two years: debt will be cleaned up, they've

[greatemailslob]

kinross had tax pool allowing them to pay apremium

[puma1]

this would have been a stupid deal if they had only raised the minimum $75 million they needed. by doubling that they have cleaned up things way out on the horizon.the company was not  overly debt laden - kind of stupid of mgmt to let it get this way given they went to the markets in the early summer 2008. taking the minimum at that time was stupid and i would love to see if any of their

[puma1]

Kinross basically bought 9% of the mine for US$104 million - that places the whole mine in this beaten down enviroment at about US$ 1.2 billion and so HW's remaining interest is US$360 million or about CDN$ 450 million.with 75 million shares outstanding - i get a CDN$ target of CDN$6 - shockingly close to the RBC target released a few weeks ago! the difference is that is what they should be

[puma1]

the ugly paper only downside of the deal is that their current mining assets are on the books at some CDN$ 750 million. if their share of the mine is now only worth CDN$450 million, i suspect someone is looking hard at a CDN$300 million non-cash write down of the mining assets.i think this would freak out the markets when announced, but it really has no effect on the company.