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Gold/Mining/Energy : Winspear Resources -- Ignore unavailable to you. Want to Upgrade?

To: MrsNose who wrote (25995)	6/26/2000 5:11:00 PM
From: don jackson	Respond to of 26850

Globe and Mail website article "De Beers out to bag Winspear Resources The $259-million takeover bid for Vancouver-based diamond miner Winspear Resources by De Beers Consolidated Mines shows that, after blowing several early chances to get in on the ground floor of the Canadian diamond industry, the South African cartel isn't about to let another potential mine slip through its grasp. Even if its offer starts a bidding war, De Beers is likely to go to the wall in order to bag this one. That's because the diamond industry is changing dramatically, and De Beers is focused on making sure it retains its traditional status as the world's number one diamond seller. Part of the change stems from the fact that some producers ? such as Canada's Ekati mine in the Northwest Territories, run by Broken Hill Pty. and Dia Met Minerals ? have chosen to bypass the South African cartel and sell some of their diamonds themselves. This change creates a number of potential problems for the industry: for one thing, De Beers' control of the supply is what has kept the price of diamonds as high and stable over the years. As the South African giant reduces its stockpiles ? something it says it plans to do over the next few years ? that could make the business more volatile. At the same time, De Beers has started to market itself as a retail name, effectively moving from being a producer and wholesaler to a competing retailer. Amid all those changes, Canada's emerging diamond supply is becoming even more valuable to both the cartel and its competitors, because it avoids the kind of unpleasantness that comes with diamond mining in troubled countries such as Sierra Leone ? which produces what are often called "blood diamonds." As long as there are agreements with native communities in the Northwest Territories, marketers can sell Canadian diamonds as ethically pure. One sign of just how interested De Beers is in getting a stake of Winspear's mine project is that the diamond giant doesn't seem concerned that its target is still fighting a legal battle with its partner, fellow Canadian miner Aber Resources. Aber ? which discovered the massive Diavik diamond deposit, and is a partner in that mine with Australian mining giant Rio Tinto PLC ? has been co-financing Winspear's Snap Lake project. In 1999, according to Winspear, Aber didn't indicate in time that it wanted to continue financing the project ? so Winspear put up the money all by itself, and now claims that this increased its ownership interest to about 85 per cent from 67 per cent. Aber's position is that it wasn't given enough time to indicate that it was interested in continuing the relationship, and that it still owns 32 per cent. A B.C. Supreme Court judge ruled against Winspear in April, but the company is appealing. Although Winspear's ability to finance the project has been in doubt over the years, industry watchers say it has been obvious for years that Snap Lake had a deposit of potentially huge value. Since diamond mines are a fickle and enormously expensive venture, however, Winspear's share price has been extremely volatile ? depending on whether the market thought it was more likely a mine would be built, or less likely. Just because a miner like Winspear finds what are called "diamondiferous" deposits, for example ? that is, kimberlite pipes with micro-diamonds embedded in them ? doesn't necessarily mean there will be a mine. Diamonds of economic size have to be found in sufficient numbers to justify spending $2-billion or so on building a mine. Based on early indications, however, some experts feel Snap Lake could be as valuable as or even more valuable ? in terms of diamonds produced ? than Ekati or Diavik."