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Gold/Mining/Energy : SOUTHERNERA (t.SUF) -- Ignore unavailable to you. Want to Upgrade?

To: Goalie who wrote (1051)	5/7/1998 9:45:00 AM
From: Goalie	Read Replies (2) \| Respond to of 7235

BUSINESS DAY: 07 May 1998 De Beers flexes muscles in Canada De Beers' reputation has been somewhat sullied by the SouthernEra Resources battle, writes Washington correspondent Simon Barber THE battle between Toronto-based SouthernEra Resources and NGS Minerals over diamond rights on Marsfontein farm in Northern Province is causing rude things to be said about "bully" De Beers in the Canadian mining fraternity. However, George Burne, director of De Beers' newly opened office in Vancouver, says he does not believe the controversy will hamper the company's ability to find local partners as it scrambles to make up lost ground in the chase for Canadian diamonds. SouthernEra has openly accused De Beers of being behind NGS, a company formed by a group claiming to be the heirs to Marsfontein mineral rights. The heirs came forward last December as SouthernEra was about to start mining on the farm, and then sold the rights to De Beers for a reported R70m. Canada is widely projected to account for between 6% and 10% of world diamond output within the next several years as projects in kimberlite-rich regions of the Northwest Territories just short of the Arctic circle go into production. The $800m Ekati mine, a joint venture between Kelowna, British Columbia-based junior Dia Met Minerals and BHP Diamonds, a division of Australian heavyweight Broken Hill Proprietary, is scheduled to open in October and put stones on the market by the end of the year. Analysts see Ekati's production as being equivalent to 3% of world output, which would put it on a par with De Beers' Venetia mine in the Transvaal. A second and potentially even larger Northwest Territories mine, Diavik, owned by junior Aber Resources and Rio Tinto, is scheduled to come on stream by 2002. De Beers and its wholly owned Toronto unit, Monopros,have been prospecting in Canada for 30 years and have identified more than 100 kimberlites in that time. Yet, as Burne put it in an interview last week, "we have not been particularly lucky". Although the first discoveries in the Northwest Territories were made by De Beers, according to Burne, the serious detective work - and stake-claiming - was left to supposedly eccentric geologists like Charles Fipke, founder of Dia Met. When they needed partners with the capital and expertise to develop what they found, they turned not to De Beers but to the likes of Broken Hill and Rio Tinto. "That put us behind the eight ball," Burne said. It also caused De Beers to lose its disdain for the juniors, whom it is now actively courting. Burne did not think bad press from the SouthernEra affair would get in the way. "Our partners on the whole speak very highly of us." De Beers has interests in several projects, all in much earlier stages of development than Ekati and Diavik. The most advanced is a joint venture with Mountain Province Mining, not far from the Dia Met-BHP and Aber-RioTinto properties. De Beers has the right to earn up to a 60% interest. Mountain Province announced last week samples from four kimberlite pipes in its claim had been sent to SA for evaluation. It said De Beers had previously estimated one pipe to contain 15-million tons of ore reserves "with a potential revenue of $82,50 per ton based on modelled average carat value". Burne warned the figures were "soft", but Canadian analysts like what they are hearing about Mountain Province. "It is one of the better properties," said one. Near the Mountain Province claim, De Beers is partnered with Gerle Gold. It also has joint exploration ventures with Troymin Resources in Alberta, with Kensington Resources and a German firm, Uranetz, in Saskatchewan and with Dia Met in Greenland. Dia Met and BHP are playing hard to get on whether they will market via De Beers. Gerald Prosalendis, Dia Met's manager for investor relations, said BHP has already opened an office in Antwerp "to co-ordinate sales". He said Broken Hill had "a large asset base" in the US,where De Beers remains under the threat of antitrust proceedings. It therefore had qualms that dealing through De Beers could lead to "possible exposure to the US justice department". Burne, while not dismissing BHP's worries out of hand, said "there is a continuing debate between us and BHP. We have one opinion and they have another." BHP announced last week that it would establish a sorting andevaluation facility in the Northwest Territories, and would sell stones to local cutters and polishers in the event that the government managed to attract them to the remote, inhospitable region. In return, the authorities had agreed "not to impose other demands or to pursue additional taxes" on the Ekati mine.