NNSL (Sep 13/99) - A socio-economic agreement between Diavik Diamond Mines Inc. and the Government of the Northwest Territories could be completed this month, Diavik spokesperson Tom Hoefer said Thursday.

The agreement will include guidelines on training, employment and business opportunities for NWT residents.

After a socio-economic agreement is reached, it is tabled in the legislature and becomes public.

"We had made a commitment to try and conclude (socio-economic agreement) discussions by the end of August (but) we are still discussing it. We are hopeful we can conclude it in September, possibly mid-September," Hoefer, Diavik's public affairs manager, said.

Resources, Wildlife and Economic Development Minister Stephen Kakfwi also said the socio-economic agreement is due "soon."

"We're working on it," he said.

Word that the agreement is nearing completion follows a Sept. 3 announcement, that Diavik Diamond Mines and the GNWT reached a memorandum of understanding on rough diamond supply.

The MOU means Diavik will support the NWT's secondary diamond industry by providing rough diamonds for Northern manufacturers.

"We've always been committed to providing Northern benefits, value-added is part of that," Hoefer said.

"We were the first to commit to a sorting and valuation facility off the mine site, two years ago," he said.

"As for percentages of diamonds we would sell to Northern manufacturers, that type of detail is not in the MOU," Hoefer said.

"From our perspective, it's premature to get into that type of detail" because the Diavik project is at least three-and-one-half years from production, he said.

"Diavik has agreed in writing and Aber has said they will make a portion available for processing," Kakfwi said.

An amount of rough diamonds has not been determined, Kakfwi said.

Kakfwi said in a release that the MOU is the first step in ensuring NWT-based diamond manufacturers have access to diamonds from the proposed Diavik diamond mine at Lac de Gras.

The GNWT will prepare an annual report on secondary diamond industry in the NWT.

With a guaranteed supply of rough diamonds, the GNWT is aiming to attract new industry to the NWT.

Currently, there is only one cutting and polishing plant, Sirius Diamonds at the Yellowknife airport, and one diamond-sorting plant, BHP's operation also at the Yk airport.

BHP, which supplies Sirius, recently said it will supply rough diamonds to Arslanian Diamond Works (NWT) Ltd., a joint-venture set up by the Dogrib and the Arslanian family, and Deton' Cho Diamonds, a joint-venture of the Yellowknives Dene and Calgary-based Goldeos Ltd.

Last month, Diavik announced not only that planned production had been pushed back a year to the first half of 2003, but also that costs would rise dramatically.

Diavik Diamond Mines revealed it will cost $1.28 billion to build the mine, well above the prior estimate of $875 million.

Aber Resources' share price plummeted on news of the price hike. Aber, 40 per cent owner of the Diavik project, saw its stock fall from $15.50 to $8.85, but has since recovered to $9.10 by Thursday afternoon.

"It's still a very good project and we are very keen to move forward with it," Alan Bayless, Aber's investor relations manager, said.

As for reports in a national newspaper about a decline in the value of the resource, Bayless said, that is not the case.

"Diavik Diamond Mines has not advised Aber of a change in reserves or reduction in reserves."

In fact, Bayless said Aber believes the current estimates are "conservative."

Aber has raised $213 million for its share of the capital costs. It will need to raise about $290 million more, possibly through debt financing.

Diavik Diamond Mines, a subsidiary of Rio Tinto, is the operator on the Diavik diamond mine project. Rio Tinto owns 60 per cent of the project. Aber, a Canadian junior mining company, owns 40 per cent of the project and retains the right to market its share of diamonds.