Dominion Diamond pays reasonable price for Ekati stake, analyst says

Dominion Diamond (DDC +2.2%) agrees to acquire C. Fipke Holdings' 10% participating interests in the Ekati Diamond Mine at a price equivalent to the price paid to BHP Billiton in 2013 for its interests.

BMO analyst Edward Sterck thinks it's a good deal for Dominion, as he values 10% of the core zone at $91M, a significant premium to the $50M - plus another $17M for a stake in the buffer zone - DDC is offering.

The big unknown is the buffer zone, where the undeveloped "Jay pipe” offers potential for the future; a feasibility study is ongoing, but Sterck estimates development of Jay for ~$1B could boost DDC’s net present value by 25%.

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