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

To: seventh_son who wrote (3844)	2/26/2006 11:01:36 AM
From: Letmebe Frank	Read Replies (1) \| Respond to of 16206

Hello Jon, Thanks for preparing the diamond charts. I hope others are also getting value from them. For those who don't read Frank Famularo's thread on SH, the following post made by Marine 2 is verrry interesting! ----------- Rumours that De Beers may take its Canadian diamond assets public by JK A story recently making the rounds suggests that De Beers is planning to take its Canadian diamond assets public through an IPO. Such a move makes a lot of sense for several reasons. Firstly, it would give De Beers access to equity capital for the development of Gahcho Kue and Victor, both of which will cost nearly $2 billion. Secondly, it would separate DeBeers' Canadian diamond production from its African diamond operations which are becoming entangled in government demands for super royalties, Black Empowerment equity transfers, and domestic cutting and polishing. This separation could prove handy if De Beers decides to go vertical by selling Canadian source branded diamonds through its own retail outlets, which it is now in a position to do in the United States after settling anti-trust actions and related civil lawsuits. Within 20 years the major African diamond mines operated by De Beers will be depleted. There is considerably more uncertainty about what the ground rules will be 20 years from now in Africa than in Canada. Thirdly, and most importantly, a North American listed diamond company could serve as an effective consolidation vehicle for the Canadian diamond industry by being able to offer otherwise unavailable tax deferral through paper based takeover bids. De Beers, and for that matter Rio Tinto and BHP-Billiton also, can only offer cash to buy out juniors that make a major discovery. The oversight of diamond production by Canadian regulators and tax authorities does not give De Beers any room for secrecy about its diamond production, so what would it matter if its diamond operations became subject to North American securities disclosure rules? It is interesting to note that Mountain Province Diamonds Inc (MPV-T: $4.76) has been trickling up in recent days even though there is no imminent reason for De Beers to make a cash offer to buy out Mountain Province's 36% stake in Gahcho Kue. A publicly traded diamond company with multiple diamond mining operations would be of enormous interest to institutional markets. De Beers Canada as a public company would have a market value well above the value number-crunchers would assign to the assets in a private business context. In a bidding war to take out the next major diamond discovery by a Canadian junior De Beers Canada PubCo would have a distinct advantage over BHP-Billiton, Rio Tinto, or even Russia's Alrosa which appears to be eager to spread its wings. Is BHP-Billiton contemplating a sale of Ekati to De Beers? The idea that De Beers might take its Canadian diamond assets public is pure speculation on my part, but it is a speculation not just dreamed up in my imagination. If such plans are afoot, it would not be much of a leap to speculate that BHP-Billiton in such a scenario might sell its Ekati assets to De Beers on terms that are lucrative for both parties. Since diamonds are a useless luxury, I cannot imagine Canadian regulators raising anti-trust objections, and the Europeans have no business fussing about who controls Canadian diamond production. At the moment, apart from Aber Diamond Corp (ABZ-T: $46.25) which has shown no interest in growing its diamond production capacity through exploration or acquisitions, there are no public vehicles which are suitable as aggregation vehicles. ----------- Thanks to Marine2 on SH. Look at the monster catfish he caught! stockhouse.com