Engineering & Mining Journal

AUG 2017

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NEWS-LEADING DEVELOPMENTS 4 E&MJ • AUGUST 2017 www.e-mj.com Washington Acquires Dominion Diamond Dominion Diamond Corp. and The Wash- ington Companies, a group of privately held North American mining, industrial and transportation businesses, announced they have entered into an arrangement where a subsidiary of Washington will acquire all of Dominion's outstanding common shares for $14.25/share, a deal worth approximately $1.2 billion. The transaction represents a 44% premium to Dominion's unaffected share price of $9.92 on March 17. The Dominion board unanimously ap- proved the arrangement and recommended that Dominion's shareholders vote in favor. "Dominion Diamond has an excellent collection of mining assets and a talented and experienced management team and workforce," said Lawrence R. Simkins, president of Washington. "We are excited to work with their team to extend the mine life of the Ekati mine and continue partner- ing with Rio Tinto in the operation of the Diavik mine, while maintaining long-term employment for Dominion employees." The Washington Companies has a long track record of building businesses throughout North America, experience in mining, as well as operating investments in Canada, Simkins said. Washington said it plans to extend the mine life of Ekati for decades, consistent with the current development plan. As part of this acquisition, Washing- ton plans to operate Dominion as a stand- alone business. It will appoint a new CEO based in Canada to the Dominion man- agement team. Dominion's headquarters will remain in Canada and it will be led by a significantly Canadian management team. Washington said it also plans to deploy capital to develop both the Jay and Fox Deep projects, while making new investments in a reinvigorated greenfield exploration program. "The Washington Companies' commit- ments to safety, operational excellence, innovation and world-class management teams position us favorably for long-term success at the Ekati and Diavik mines for the benefit of all Dominion Diamond stake- holders," added Dennis Washington, found- er of The Washington Companies. "I look forward to the next chapter of continuing to build and support successful, safe business operations in the Northwest Territories." The transaction is subject to customary non-solicitation provisions, including Do- minion's right to consider and accept su- perior proposals. In the event of a superior proposal, Washington will have a five-busi- ness-day right to match the superior pro- posal. If the arrangement is not completed as a result of a superior proposal, the com- pany will be required to pay Washington a termination fee equal to $43.9 million (or approximately 3.75% of the equity value). To fund part of the consideration pay- able in connection with the arrangement, Washington has obtained fully committed debt financing led by Credit Suisse with Citi, UBS Investment Bank and Natixis acting as joint lead arrangers. The balance of the consideration will be funded with an equity commitment from Washington and cash on Dominion's balance sheet. Should Washington be unable to com- plete the arrangement due to a funding failure, or other limited circumstances, Washington will be required to pay the company a reverse termination fee equal to $70.2 million (or approximately 6% of the equity value). Land Exchange Bill Introduced for PolyMet U.S. Rep. Rick Nolan, D-MN, has intro- duced bipartisan legislation to direct the secretary of agriculture to move forward with the land exchange between PolyMet and the U.S. Forest Service (USFS). The USFS authorized an administra- tive land exchange for the PolyMet Min- ing NorthMet project in its Final Record of Decision on January 9. The purpose of House Resolution No. 3115, The Supe- rior National Forest Land Exchange Act of 2017, is to accelerate transfer and provide certainty of process. The bill was introduced June 29 and referred to the House Natural Resources Committee. "We are committed to moving the pro- ject forward in a thoughtful and expedi- tious manner and are pleased Congress- man Nolan is taking this step to bring clo- sure to the land exchange process," said Jon Cherry, president and CEO, PolyMet Mining Corp. "In this legislation, Congress would ratify the USFS determination that the exchange is in the best public interest and moves for the exchange to be complet- ed within 90 days of the bill's enactment." The environmental review for the NorthMet project and land exchange was the largest and longest in Minnesota his- tory, concluding after 10 years. The Final Environmental Impact Statement demon- strates that the NorthMet project is ca- pable of meeting all applicable state and federal environmental standards. PolyMet is seeking to permit, build and operate the NorthMet copper-nick- el-precious metals project located in the established Mesabi Iron Range mining district in northeastern Minnesota. The land exchange was proposed jointly by the USFS and PolyMet in 2010 to con - solidate their respective land ownerships. The terms of the land exchange pro- posed in The Superior National Forest Washington plans to extend the mine life of the Ekati diamond mine (above) for decades.

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