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

To: don jackson who wrote (26020)	6/27/2000 9:33:00 AM
From: MrsNose	Respond to of 26850

And here's today's National Post Report De Beers in $259M bid for Winspear May end 30-year search for American diamond supply Keith Damsell National Post De Beers Consolidated Mines Ltd. tried to break its run of bad luck in Canada yesterday with a $259-million takeover offer for Winspear Diamonds Inc., an unsolicited bid that was immediately rejected by the Vancouver junior. The Canadian arm of the South African diamond giant is offering $4.25 cash for each Winspear share, a 77% premium on the Vancouver company's Friday close of $2.40. Winspear's key asset is majority control of Snap Lake, a promising $269-million project in the Northwest Territories. The property, scheduled to begin diamond production in 2003, contains an estimated 22 million recoverable diamond carats. The offer may end De Beers' long and frustrating search for a North American diamond supply. Despite close to 30 years of exploration and partnerships with a handful of Canadian juniors, the company has yet to find an economically viable source of precious gems. Meanwhile, rivals BHP Inc. of Australia and Rio Tinto PLC, relative newcomers to the diamond trade, added to De Beers' anxiety by securing controlling interests in the two-year old Ekati mine and the proposed Diavik mine. "De Beers has a large war chest and they would like to participate in the North American diamond production," said Glenn Brown, analyst at Toronto's Haywood Securities Inc. But De Beers' patience may be tested once more. In a tersely worded statement released late yesterday, Winspear's board of directors described the bid as "opportunistic, hostile, highly conditional" and does not represent a permitted bid under the company's shareholder protection rights plan. The offer is "an attempt to acquire Winspear just as the viability of the Snap Lake project is being further evidenced," the company said. The Winspear offer is expected to trigger a shakeup across this country's sleepy diamond sector. Several analysts speculate De Beers may be chasing Winspear in a bid to secure a foothold in Aber Resources Ltd. Aber, a Toronto junior that owns a minority stake in the proposed Diavik mine, owns 32% of Winspear's Snap Lake. "Aber in my mind is the logical next victim," said one Toronto analyst. Aber shares rose 85½ to $9.30 yesterday. Analysts widely expect De Beers will have to sweeten its offer if it hopes to secure the conditional 50.1% of Winspear shares. The takeover offer values the Snap Lake carats at US$11.80 each, a steep discount to the estimated market value of US$118 per carat. But perhaps more importantly, the Snap Lake story may only get better. The results of a bulk sample program will be released in October, data that is widely expected to boost the size of the 12.6 million tonne kimberlite deposit. The largely unexplored property may host more diamond-bearing kimberlite pipes, analysts say. "There's a lot more upside on the stones and there's good exploration potential in this resource," said Art Ettlinger, analyst at Calgary's Yorkton Securities Inc. "It's a 77% premium only because nobody cares about junior miners or junior diamonds right now. If this were five years ago, it would be $10 per share." De Beers claims its $4.25 offer represents "full and fair value" due to the project's underlying risks, said Tom Beardmore-Gray, senior vice-president of Vancouver's De Beers Canada Corp. The Snap Lake project must still pass a series of hurdles, including a lengthy permitting process and technical review, Mr. Beardmore-Gray said. Expectations of a higher bid helped push Winspear shares up $1.77 to $4.17 in heavy trading yesterday. It is unlikely a rival bid will surface. There are only a handful of major diamond players in the world and analysts believe no one will want to get caught in a bidding war with the well-heeled -- and well-connected -- De Beers. The company controls an estimated 60% of the world's diamond trade and has remarkable influence across sales and marketing channels.