Aber sells its holdings of one mine to fund another

Aber Diamond Corp. said that it will sell its minority interest in the Snap Lake diamond project to De Beers Canada Mining Inc. for C$173 million ($115 million), freeing up cash for the development of its massive Diavik diamond project, Reuters news agency reported.

The Toronto-based diamond miner said in a Dec. 21 press release that when the transaction is completed in February, its cash reserves will grow to C$311 million, based on third-quarter figures.

The completion of the Snap Lake sale will enable Aber to fund about 70% of its financial requirements for the Diavik project out of equity.

Two days earlier, the partners in the Diavik project, located about 190 miles northeast of Yellowknife, agreed to begin construction of the C$1.3 billion mine after completing a slew of environment and other agreements with native groups and the federal and territorial governments.

Construction could finish six months earlier than the originally projected two and a half years, which may push forward production to the end of 2002 instead of mid-2003.

Current production estimates for Diavik are 3 million carats for the first year and up to 8 million carats annually after that.

Diavik Diamond Mines Inc., a subsidiary of Rio Tinto Plc. and operator of the Diavik project, has completed a detailed construction program for 2001 and 2002 with an eye to commercial production into early 2003.

The cost of the Diavik project in Canada’s Northwest Territories remains unchanged at C$1.3 billion, Aber said in Thursday’s release. Aber holds a 40% stake, while the Rio Tinto unit holds a 60% stake.

Aber was a minority partner in the Snap Lake project with De Beers. In October, De Beers bought a majority interest in the project from Winspear for C$305 million in a hostile takeover, giving the diamond giant its first major asset in North America.