My quick take, this is good news. We wil be getting a stock dividend from KWG and there will be no tax impact on us at that point. Only when we initiate a trade would we have tax consequece on either DDI or KWG, which normally how things go. In one case though, when your KWG cost is less than $0.05, there is tax... see below.

The DDI share value is not as a result of an asset transfer, but rather a transfer of paid up capital, therefore our DDI actual cost base (acb) for tax purpose will be deemed to be nil. As example, DDI share will have a deemed value of $0.30. If there was a buyer at that price and you sold it I guess your capital gain would be $0.30. Nice position to be in.

Your KWG share acb is effected by the reduction in paid up capital and the related stock dividend. Based on 6 to 1ratio, the $0.30 DDI value reduces your KWG share acb by $0.05 (.30/6). As example, if you are carrying your KWG shares at a cost of .10 then they get adjusted to .05 and the offset goes to your DDI share. No impact until you sell your KWG for say .25 when your cap gain will be .20 rather than your current .15. Now if your are KWG acb is say .04 cents then your revised acb will be nil and your will have to claim a 0.01 capital gain. I think (but not 100% sure) that will only happen when the shares are actually received so probably no impact until 2012 or so I would hope given the proximity to tax year end.

Caveat, if you have really significant holdings speak to a tax professional, as I am not one. I just know enought to be scary.

We end up with two tradeable speculative stocks: KWG that should still brings us .25 to .30 or better on buyout; and a grass roots diamond explorer with lots of core and lots of land access to explore and analize. Bet there is a DDI discovery NR shortly following the date of record to support the $0.30 market value assigned.