Monday, February 21, 2000
Fipke divorce threatens Dia Met
Diamond mine's future may hinge on division of assets
Keith Damsell
Financial Post
The future of Canada's first diamond mine rests on the outcome of a Vancouver divorce trial scheduled to begin today.
Over the next four weeks, Chuck Fipke, the 53-year-old celebrated geologist and chairman of Kelowna, B.C.'s Dia Met Minerals Ltd., and his estranged wife, Marlene, 52, will end their marriage in British Columbia Supreme Court.
Little information is available as to why their 35-year relationship has soured and is now before the courts. In B.C., divorce proceedings are sealed and company officials have refused to discuss the case.
Nevertheless, two interim court rulings show the divorce will have an impact well beyond the couple and their five children. In addition to an impressive collection of homes, boats and cars, the Fipkes will be arguing over millions of dollars of wealth generated by the Ekati mine.
Mr. Fipke discovered the spectacular Ekati deposit on the shores of Lac de Gras in the Northwest Territories almost 10 years ago, sparking a diamond rush that saw dozens of junior exploration firms staking claims across Canada's frozen North. The $900-million mine began commercial production in October, 1998. Ekati, a partnership between Dia Met and Australia's Broken Hill Pty. Co., is expected to produce about $450-million worth of precious gems annually for the next 20 years.
"The case involves a great deal of money," said Neil Bolton, master of the B.C. Supreme Court, in an Oct. 27, 1998, ruling.
"There is a lot at stake here," said one Toronto mining analyst who asked not to be identified.
Diamond watchers are well aware of the divorce proceeding but are hesitant to speak for attribution. "This is a very sensitive issue," the analyst said.
Analysts agree the divorce has already had a palpable effect on Dia Met. Since May of last year, the Fipkes substantial holdings have been frozen by the courts.
Mr. Fipke owns a 10% interest in the Ekati joint venture itself. Analysts estimate the stake could be worth as much as $750-million (US).
The couple control a total of 767,750 Dia Met class A and class B shares, representing less than 3% of the company's 30.7 million outstanding common shares. Mr. Fipke also holds a substantial number of options. The stock alone is worth about $15-million. There is agreement, however, that Dia Met and other diamond stocks are undervalued because of delays in the development of the nearby Diavik mine, a partnership between Toronto's Aber Resources Ltd. and Britain's Rio Tinto PLC.
The eventual divorce settlement could see a piece of the Ekati mine change hands, analysts suggest. In the least, the Fipkes will be finally free to sell stock. The uncertainty has left Dia Met management "somewhat constrained as to what they can do at the corporate level," said a second mining analyst.
The complex evaluation of Ekati and Dia Met shares is expected to take up the bulk of court time.
Yuck, I hate this kind of stuff. The lawyers always win.
PHIL |
