May 18, 2016 / 8:47 PM / 3 years ago

De Beers enters C$20 million Canadian diamond exploration deal

TORONTO (Reuters) - De Beers Canada said on Wednesday it would spend up to C$20.4 million ($15.8 million) under a diamond exploration agreement with CanAlaska Uranium Ltd (CVV.V) for target areas in Canada’s Athabasca Basin.

CanAlaska has staked claims covering 75 areas detected in an airborne magnetic survey of the region, which extends over the northern Canadian provinces of Saskatchewan and Alberta.

De Beers, which is 85 percent owned by Anglo American (AAL.L) and 15 percent by the government of Botswana, is a core asset for Anglo. The global mining group has decided to concentrate on diamonds, platinum and copper, while selling its iron ore, coal and nickel units.

Under a four-phase agreement, De Beers will operate a detailed airborne survey, indicator sampling and drill testing on CanAlaska’s 43,000 acre claim.

De Beers reduced its output and prices last year amid declining demand in China and an industry credit squeeze. De Beers Canada suspended operations at its unprofitable Snap Lake diamond mine in the Northwest Territories in December.

De Beers Canada operates the Victor Mine in northern Ontario and expects to begin production later this year at Gahcho Kue mine in Northwest Territories that it is developing with 49-percent owner Mountain Province Diamonds MPV.TO.

De Beers sees subdued prices in 2016, but production is likely to peak in 2017 after two diamond mines in Canada come on stream.

Reporting by Susan Taylor, editing by G Crosse

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