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Gold/Mining/Energy : Canadian Diamond Play Cafi -- Ignore unavailable to you. Want to Upgrade?

To: WillP who wrote (2652)	3/13/2005 2:30:08 PM
From: The Vet	Read Replies (1) \| Respond to of 16206

Wow, this is getting more complex... If a deal is ever done we should all charge the various companies a consulting fee just like the big banks do. ;-) Let's pick up a few of those points.... Only if lenders balk at lending De Beers $250-million to cover Mountain Province's share. That would be a big shock. It's not just $250 million. It's closer to a billion that DeBeers needs because it needs to both get rid of the present junior partners and finance the mine. There is no point in doing one without the other. They are on record as saying they are looking to borrow a billion for Snap Lake... what then... another billion for Gahcho Kue... a billion here, a billion there.... soon it starts to add up to real money! What's actually in it for De Beers? First they don't need to go through the business of trying to pry the shares out of the hands of the existing MPV and CFV shareholders; that's going to be messy unless the offer is very high (expensive). Aber would do that for them, and as Aber would be dealing in their own currency (Aber shares) it is a lot easier for them to be flexible. DeBeers don't have stock to horse trade with....they would have to borrow cash! Secondly instead of having to borrow a billion they get the mine built a lot sooner and only outlay $350 million. Thirdly DeBeers is not against Aber as a player in marketing. It was DeBeers very timely payement to Aber for their share of Snap Lake that kept Aber independent and reduced Rio Tinto's stranglehold on Diavik. DeBeers can't stop Aber but they are not a significant marketing competitor. If you can't have an absolute monopoly then it's better that you are friendly with your competitors and have some control over them. Aber as a junior partner in both Gahcho Kue and Diavik maintains some balance but doesn't threaten anyone. What's in it for Aber, and for Aber's shareholders? On raw figures, not much, but if Gahcho Kue does have a decent population of large diamonds then it is a huge advantage for Aber's retail foray into Harry Winston. Harry Winston is a top end retailer. They don't sell junk! I will bet that every decent sized stone that come Aber's way from Diavik is already going straight to Harry, and they are likely still having to buy more of those expensive large rocks on the open market. Providing Aber gets a fair share of those big Gahcho Kue diamonds, it will work, and work very well, for them.