TORONTO (CP) -- Tahera Diamond Corp. (TSX:TAH) is consolidating its shares on a five-for-one basis to drum up interest from institutional investors as it begins to mine diamonds for Tiffany & Co., its CEO said Friday.
Peter Gillan told analysts on a conference call that the equity move will have numerous benefits for the Toronto-based miner, ''including broadening the institutional interest in the company's affairs.''
Tahera owns the Jericho diamond mine in Nunavut, which will have its first quarter of full production in the three months between April and June.
It also has a marketing and financing agreement with New York-based jeweler Tiffany & Co. for the project. Under the deal, Tiffany is to buy or market all of the diamond production, and it has given Tahera a C$35 million loan.
''We've undertaken several equity financings in the last couple of years, and not infrequently we've been told that some institutions have policies that they don't purchase shares that trade for less than a dollar,'' Gillan said Friday.
''We think that this (stock consolidation) will attract some of that group. In addition, we will have enhanced eligibility for inclusion in stock market indices, enhanced eligibility for margin amongst the brokerage firms trading in our shares, enhanced eligibility for the potential listing on international stock exchanges,'' he said.
Tahera will go from having more than 830 million fully diluted shares outstanding to about 167 million shares if its stockholders approve the reorganization at a meeting May 15.
The diamond miner's stock has been falling for about a month and a half, even as Tahera gears up for full production, an analyst said on the conference call.
''We can't comment day-to-day as to why the stock price moves where it does,'' Gillan replied. ''I think the latest downdraft, if I can call it that, has occurred as a result of the winter road news, primarily.''
Late last month, Tahera announced that the winter ice road serving its Jericho mine, and other miners' projects north of Yellowknife, had been closed indefinitely because of unusually warm weather.
Tahera uses the road to resupply Jericho with bulk supplies and heavy equipment, fuel and explosives.
Despite lower supplies, Tahera said it's confident it will be able to reach its production rate of 2,000 tonnes a day in April, although extra air freight costs could amount to about C$3 million.
Shares in the miner fell a penny, or 1.52 per cent, to close at C$0.65 cents on the Toronto Stock Exchange.
(c) The Canadian Press 2006