Doug Ashbury
Northern News Services

NNSL (July 26/99) - A deal struck last week between Aber Resources and jewelry retailer Tiffany & Co. is good news for the NWT's diamond industry, according to a deputy minister.

Joe Handley, with Resources, Wildlife and Economic Development, said any development that gives Aber stability is a positive.

"Having a company like Tiffany & Co. involved is a big plus," Handley said.

He suggested this might open a door to bringing part of Tiffany & Co. to the NWT.

In a deal announced last Monday, Tiffany, one of the world's most prestigious jewelry retailers, will pay $104 million for eight million new Aber shares. With the $104 million, Aber has $214 million of working capital for its 40 per cent share of building the proposed $875 million Diavik diamond mine.

Aber anticipates raising the balance of its share of the capital cost without equity financing.

The deal will give Tiffany a 14.3 per cent stake in Vancouver-based Aber. Tiffany also gets control of a "substantial" portion of Aber's 40 per cent share of rough diamonds from the proposed mine.

Asked if Aber's deal with Tiffany jeopardizes the NWT's efforts to secure a portion of Aber's rough diamonds for NWT manufacturers, Handley said he did not anticipate such a development.

Handley said Tiffany is acquiring about 15 per cent of Aber so it may be acquiring 15 per cent of its rough diamonds.

There is still plenty of room for the GNWT to negotiate some of Aber's 40 per cent share of rough diamonds from the proposed Diavik diamond mine, he said.

The GNWT wants Aber, and Diavik's 60 per cent owner Rio Tinto, to make rough diamonds available for cutting and polishing in the NWT.

Last week, TD Evergreen investment analyst Todd Ferguson said: "The deal with Tiffany & Co. assures a market for mine output (and) provides Aber with capital for its share of costs associated with building the mine, should they get permits to go ahead."

Investors gave the deal the thumbs up. Aber's stock rose to a 52-week high in the wake of the announcement. Tiffany's stock also gained.

Aber spokesperson Alan Bayless could not be reached for comment.

The deal also means Tiffany's top accountant will join the Aber board of directors.

James Fernandez, executive vice-president and chief financial officer, will be appointed to the board immediately following Aber's annual general meeting July 30, 1999.

Diavik's owners, Aber and Rio Tinto, expect regulatory approvals this year. With permits and shareholder approval, construction of the mine could begin next year with production starting in 2002.

Tiffany is the second company to take a significant stake in Aber.

Earlier this year, Franco-Nevada, the world's largest public gold and precious metals royalty company, announced it had acquired a 9.6 per cent stake in Aber.

Royalty companies offer money to assist in project construction in exchange for a royalty arrangement.

Toronto Stock Exchange-listed Franco-Nevada paid $41 million for 4.4 million Aber shares acquired in November and December 1998.

The company, which bought the shares on the open market, paid an average of $9.35 a share.

Franco-Nevada has assets and working interests in Ontario and Nevada gold camps.