Dominion Diamond's (TSE:DDC) shares dropped Thursday after the diamond producer announced its chief executive officer and chairman Robert Gannicott is taking medical leave, which is expected to last until mid-February.
Dundee Capital Markets said it sees the development as significant, as Gannicott has been CEO of the company since 1999, and has played a "key role" in directing its strategy over the long term.
Analyst Matthew O'Keefe retiterated his buy rating and C$21.00 price target on the Canadian diamond company, saying the acting CEO, Brendan Bell, will keep its Jay project on track.
Bell is currently the executive VP of community affairs for the company, and was previously the Minister Responsible for Energy and Mines, Minister Responsible for the Environment and Minister of Justice and Attorney General in the Government of the Northwest Territories.
O'Keefe said Bell has been an important part of the permitting process for Jay, with the acting CEO to receive support from Elliot Holland, who will be responsible for Jay and business development. Holland was previously a partner at McKinsey Consulting, and has experience in diamond mining, operations, strategy and capital projects, Dundee said.
The capital markets firm also noted the diamond company's positive upcoming catalysts, including fiscal third quarter production results this week, a prefeasibility study for Jay expected by year-end and third quarter financials in the second week of December.
The Jay project is an expansion of the company's Ekati diamond mine in the Northwest Territories. Its shares of production from its two assets, Ekati and Diavik, is approximately 4 million carats.
"An updated mine plan for Jay by year end and a construction decision on A-21 in 2015 should provide additional clarity on Dominion's long-term future which should provide a rerating of Dominion shares," O'Keefe wrote.
The company's current lead director, Dan Jarvis, will assume the role of acting chairman while Gannicott is on leave.
Shares of Dominion Diamond fell 0.55 percent to C$16.26 on Thursday afternoon.