Financial PostNot sure if anyone posted this yet.
Saskatoon's Shore Gold buying out minority investors
Canwest News Service
Tuesday, September 26, 2006
Byline: Drew Hasselback
Dateline: TORONTO
Source: CanWest News Service
TORONTO - Saskatoon-based Shore Gold Inc. Monday announced four deals that will buy out minority investors in the company's Saskatchewan diamond property and will bring in Denver-based Newmont Mining Corp. as a strategic partner.
Shore Gold is paying $246.1 million in cash to buy out three minority investors in the Fort a la Corne Joint Venture, a diamond exploration property located 65 kilometres east of Prince Albert, Sask.
In a fourth transaction, Newmont will pay $170.4 million in cash to buy a 40 per cent stake in the joint venture.
The transactions will cost Shore a net price of $75.7 million and enable Shore to increase its position in the joint venture from a minority holding to a controlling 60 per cent stake.
The ownership shakeup ends an often testy partnership between Shore and De Beers, the South Africa-based diamond giant.
Before the transactions, both Shore and De Beers each had a 42.245 per cent stake in the joint venture. The two companies had clashed over strategy. Earlier this year, De Beers even took Shore to court.
The matter was later settled, but the dispute troubled those hoping to see Fort a la Corne give rise to a mine.
Fort a la Corne Forest is home to a large network of diamond-bearing deposits, known as kimberlites.
If consolidated, some believe the location could some day be the world's largest tonnage diamond mine.
Until Monday, Shore controlled 100 per cent of a property making up the eastern half of the area, but only a minority stake in the western portion. Now Shore has a controlling position on both sides of the line, advancing hopes for a mine.
``I'm a little surprised it's taken this long,'' said Jim Mustard, a mining analyst with Haywood Securities Inc. in Vancouver. ``When you start to see consolidation and cleanup of minority interests like this, it's setting the stage for more news and more value-added opportunities down the road.''
De Beers said it is selling off its position in Fort a la Corne so it can concentrate on the ongoing construction of two diamond mines.
Snap Lake, located in the Northwest Territories, should be in production by the second half of next year. De Beers expects its Victor mine in northern Ontario to start operation in late 2008.
Newmont, one of the world's largest gold miners, has minority stakes in numerous gold juniors, but Pierre Lassonde, president of Newmont, said he ``loves'' the diamond business.
``I think that this is a tremendous opportunity,'' Lassonde said. ``Down the road, I really think this will be a mine.''
Cameco Corp. is selling its 5.5 per cent stake in Fort a la Corne for $23.5 million.
Cameco said the diamond project doesn't mesh with its focus on the uranium and nuclear energy business.
The other seller was UEM Inc. It will receive $42.6 million for its 10 per cent interest.
Financial Post
dhasselback@nationalpost.com