Toronto's Kinross Gold stakes claim in N.W.T. diamond mine

A Canadian gold company, Kinross Gold Corp., is entering the diamond business by investing in the Diavik mine in the Northwest Territories.

Toronto-based Kinross is paying $150 US million for an indirect interest in the Diavik mine, as well as a 19.9 per cent stake in Harry Winston Diamond Corp., the mine's minority shareholder.

The deal came as prices for rough diamonds are plummeting, but Kinross president and CEO Tye Burt said the company is making a long-term investment.

"When do you buy a significant interest in a world class asset? When it is available, and hopefully at an attractive price, and we believe that's what's happened here," Burt told shareholders and analysts in a conference call late Thursday.

"Harry Winston's share price, if I can say this in all clarity, has been pushed down hard. You know, dramatically."

Kinross shares edged 86 cents lower to $22.28 Cdn Friday, while Harry Winston shares soared 80 cents or 35 per cent to $3.08.

Burt said he has been looking at entering the diamond market for some time. However, he added that gold will remain the company's primary focus.

Kinross is no stranger to Canada's North: it once owned the Lupin gold mine in Nunavut.

Kinross will have a seat on the Harry Winston board of directors as part of the agreement.

The Diavik mine, located 300 kilometres northeast of Yellowknife, is jointly owned by a Rio Tinto subsidiary and by the Harry Winston Diamond Corp.