Dermot Desmond, the billionaire financier, has invested a further $25 million Canadian dollars (€17.7 million) in Mountain Province Diamonds (MPD) to protect his stake in Gahcho Kue, the world's largest and richest new diamond mine, which is being developed in the Canadian Arctic.
Mr Desmond bought the shares as part of a $100 million fund-raising by MPD this week to fund the mine’s development. It maintains his stake in MPD at about 23 per cent, held through his Bottin International Investments company.
MPD owns 49 per cent of the mine, with the rest owned by the global diamond behemoth De Beers, which will also operate it.
The mine was valued on an in situ basis, or before production costs and at current diamond prices, at $20 billion in a presentation this month by MPD, which is listed in Toronto.
Lucrative investment
Mr Desmond can effectively lay claim to about 10.6 per cent of the value of Gahcho Kue, making it possibly his most lucrative investment to date, even compared to the huge profit he made when he sold London City Airport for £750 million (€955 million) in 2006.
The presentation stated that when it enters full production, possibly in late 2016, Gahcho Kue will generate cashflow for MPD of $310 million a year.
The mine’s cash requirements come thick and fast as it nears production, so to maintain its share MPD must raise another $370 million, which it hopes to secure in debt from a consortium of banks by the end of the year.
Patrick Evans, the chief executive of MPD and a long-time associate of Mr Desmond's, told The Irish Times those bank loans are "agreed in principle".
“They are subject only to final due diligence by the banks. That will take us up to production and there will be no further requirement for us to put anything else in,” he said.
Pro rata stake
Mr Evans said Mr Desmond had invested the €17 million this week “to maintain his pro rata stake” in the company.
According to the MPD presentation, the Gahcho Kue project is 40 per cent complete and construction should finish by 2015, with a target production date in late 2016.
As part of the sampling process Mr Evans said two large diamonds, a single 25-carat rock valued at $500,000 and another 10-carat diamond worth $222,000 had been found.
Mr Desmond also invested $3.5 million this week in Kennedy Diamonds, another resource company led by Mr Evans.
