Exclusive: De Beers puts Canadian Snap Lake diamond mine up for sale

Fri Jul 22, 2016 2:32pm EDT
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By Susan Taylor and John Tilak

TORONTO (Reuters) - Anglo American Plc's (AAL.L: Quote) De Beers has put its Snap Lake diamond mine in Canada up for sale after suspending operations at the unprofitable mine last December, a spokesman said on Friday.

De Beers has hired Bank of Montreal (BMO.TO: Quote) to market the underground mine in Northwest Territories, said spokesman Tom Ormsby, but he did not provide financial details.

Snap Lake, which has not made money since production began in 2008, produced 1.2 million carats last year and was initially planned to operate until 2028.

In June, De Beers Canada received approval to flood the mine tunnels, reducing maintenance costs, under a revised suspension plan. The flooding has not yet happened but planning work continues.

"Before we get into that actual flooding of the mine ... we thought it would be prudent, certainly, to see if there was an interest," Ormsby said.

De Beers Canada spent C$2.2 billion ($1.67 billion) on mine construction and operation up to year-end 2014.

If no qualified buyer is found, De Beers Canada may proceed with the flooding plan in the fourth quarter, Ormsby said.

De Beers, 85 percent owned by Anglo American and 15 percent by the government of Botswana, has been hurt by waning demand and slumping prices in the diamond industry.   Continued...

The logo of diamond merchant De Beers is seen on the front of their boutique on Rodeo Drive, home to boutiques of major designers in Beverly Hills, California  August 5, 2008. REUTERS/Fred Prouser