As interest in Canadian diamonds continues to grow, De Beers announced today that it intends to make an offer to acquire Winspear Diamonds Inc. (formerly Winspear Resources Ltd.), a Canadian diamond-mining firm.
The move marks De Beers' first significant effort to establish a serious presence among the growing list of Canadian diamond producers. It is offering $175 million (C$259 million) in exchange for all outstanding common shares of Winspear. De Beers says the offer represents a 77% premium over Winspear's June 23 stock closing price of C$2.40. "We believe that our offer provides full and fair value to the Winspear shareholders," Richard Molyneux, president and CEO of De Beers Canada Corporation, says. "The envisaged mine at Snap Lake is potentially the first underground diamond mine for Canada. De Beers has unrivaled expertise and experience in underground diamond mining which has contributed to our confidence in making this offer."
Independent feasibility studies and samples commissioned by Winspear throughout 1999 indicated "economically robust potential" at the Snap Lake Diamond Project in Canada's Northwest Territories, about 150 miles northeast of Yellowknife. The estimated value for the diamonds increased in 1999-2000 from $105 per carat to an estimated $118 per carat, thanks to a strong world-wide demand for diamonds.
On June 20, Winspear sought to raise $20 million through new stock issues to begin developing the Snap Lake Project. Production was slated to begin late in 2002. However, De Beers says that pending further feasibility studies it intends to apply the full weight of its financial and technological resources to bring Snap Lake into production as soon as possible.
- by Robert Weldon, G.G.