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Owner of Ekati diamond mine, partner in Diavik mine under shareholder pressure

TORONTO – A group of Dominion Diamond shareholders is pushing for the company’s independent directors to deal with what they call the “misguided policies and missed opportunities” that have hurt their investment in the Toronto-based company (TSX:DDC).

The group — led by K2 & Associates Investment Management Inc. — says it recognizes that the mining industry faces “headwinds,” but believes Dominion Diamond’s shares are “significantly undervalued by the public markets.”

Dominion Diamond owns the Ekati diamond mine and a 40 per cent share of Diavik — Canada’s largest diamond mine — both in the Northwest Territories.

The shareholder complaint lists eight areas of concern, including diamond marketing and overall business strategy, and seeks a meeting with Daniel Jarvis, Dominion Diamond’s lead director and other independent members of the board.

“To date, the company has failed to articulate a clear plan of action to remedy these issues,” says the letter, signed by K2 portfolio manager Josef Vejvoda.

“We believe there are a number of ways for the company to generate shareholder value and that the independent members of the board of directors must immediately undertake a strategic review to determine the most effective means to create such value. But, time is of the essence.”

The group says it collectively owns 5.4 per cent of the company’s common stock, sufficient under Canadian rules for them to requisition a meeting of shareholders.

Dominion Diamond issued a statement Tuesday that concludes by saying its board and management team “are committed to creating value for our stakeholders” and will continue to take actions to accomplish this goal.”

Dominion Diamond shares closed up $2.53 or 22 per cent at $14.01 Tuesday on the Toronto Stock Exchange after having traded as high as $14.29 in the morning. The shares had been worth more than $20 last June.