Gem of a deal
In 1863, Canada’s first diamond on record was found in glacial debris in Ontario. However, it wasn’t until 135 years later, in 1998, that Canada’s first diamond mine officially opened in the Northwest Territories. Despite this slow start, the Canadian diamond industry has seen aggressive growth over the last 14 years.
Leading the growth charge is Crossworks Manufacturing, the operator of three Canadian-based (Vancouver, Sudbury and Yellowknife) diamond polishing facilities. In 2008, Crossworks successfully applied in a Government of Ontario tender to purchase 10 per cent of the annual mine production—valued at 35 million worth of rough diamonds per year for three years—from the De Beers Canada Victor Mine in northeastern Ontario. In late 2011, this contract was renewed for another three-year period.
“We're proud to be a Canadian company operating at the highest echelons of the diamond industry,” says Crossworks’ Reut Rothstein. “Last year, we successfully renewed our exclusive access to the diamonds from the Victor Mine and cemented our position as the only company with purchasing rights for Victor Mine diamonds until 2015. As the largest manufacturer of Canadian diamonds in the world and the largest diamond manufacturer in Canada, we're excited about our current expansion.”
Recognizing growth opportunities
Originally focused on diamond trade and distribution, Crossworks foresaw the growth opportunities in cutting and polishing when the diamond industry started to take off in Canada. To continue expanding in a sustainable way during the renewed Victor Mine contract period, Crossworks was in need of additional financing, provided by First West Capital.
“After successfully renewing and expanding our access to rough diamonds, we found we needed additional working capital,” says Rothstein. “As part of our growth plan, we found First West Capital to excel in providing the necessary solutions to our business needs. When partnering with financing providers, we look for lenders with practical solutions. First West Capital has shown that they are a practical and business-forward lender. Our partnership will enable us to continue to compete on the international stage.”
Choosing the right financing partner
Established in November 2010, First West Capital’s flexibility and responsiveness has allowed them to quickly become one of B.C.’s leading providers of subordinated debt financing. It's this flexibility and responsiveness that helped First West Capital land the Crossworks deal.
“The diamond industry is very capital intensive,” says First West Capital vice-president Kristi Miller. “After learning more about the Crossworks management team, the diamond industry and Crossworks’ existing partners, we were able to put together a financing package that allowed them to pursue this expansion opportunity. Understanding Crossworks’ history, performance and people were critical, as a financing partnership is more than just a question of figures and repayment terms.”
The partnership with Crossworks is a great example of First West Capital working collaboratively with both the client and the country’s largest bank in the most sophisticated way, Miller explains.
“We took the time to understand the industry and the company’s growth strategy. Our agile and responsive approach to due diligence and adjudication allowed us to efficiently and effectively put together the capital Crossworks needed."
“When any business is selecting a financing partner, they should look beyond the dollars. It’s important to find a partner that fits your industry, has the flexibility to create the right financing package for you and is committed to managing the lender-borrower relationship respectfully and responsively over the long term.”
Canada is currently the world’s third-largest producer of diamonds and within a decade it is expected to become the largest producer of diamonds, as well as the largest producer of ethically-traded diamonds.
“Ten years ago this industry didn’t exist in Canada; look where it is now,” says Miller. “For First West Capital to be financing not only business growth but industry growth is really exciting. Crossworks is a great company with a great story and we're thrilled to be a part of that story.”
The First West Capital advantage
First West Capital provides:
- Innovative and flexible subordinated debt solutions;
- A client-centred approach that results in exceptional service; and
- Responsive, firm and clear commitments that allow you to get on with what you do best—run your business.