Doug Ashbury
Northern News Services

Yellowknife (Oct 25/00) - Three companies may consider buying Dia Met Minerals -- BHP Diamonds, De Beers and Rio Tinto.

None of the companies have announced they will make offers as of press time Monday, and Dia Met spokesperson Gerald Prosalendis said the company is not going to comment until there is something material to announce.

Dia Met, which owns 29 per cent of Ekati diamond mine, put itself up for sale last week after shareholders Marlene Fipke, who received a chunk of Dia Met shares in a divorce settlement with company founder Chuck Fipke, and Edmonton businessman David Mackenzie, who controls 38 per cent of the company, said they planned to sell their stock.

"It's easy to see why all three (BHP, De Beers and Rio Tinto) might want to throw an offer on the table," said TD Evergreen investment advisor Todd Ferguson in Edmonton.

BHP has a 51 per cent stake in Ekati and may want to up its controlling interest to 80 per cent. After BHP, and Dia Met, geologists Chuck Fipke and Stewart Blusson each own 10 per cent of Ekati.

De Beers has shown interest in Northern diamond production with its recent acquisition of Winspear Resources. Winspear was majority owner and operator of the Snap Lake diamond property northeast of Yellowknife.

De Beers also markets 35 per cent of Ekati's rough diamonds through its central selling organization. Intimate knowledge of one-third of Ekati's run of mine might prompt the diamond giant to go after the remaining stake.

BHP markets the remaining two-thirds of Ekati run of mine through its sales office in Antwerp.

Under a five-year deal, BHP markets all Ekati rough diamonds. But that deal expires in about two-and-a-half years.

BHP spokesperson Graham Nicholls could not be reached in Vancouver for comment Monday.

The third possible suitor could be Rio Tinto, which has a 60 per cent stake in the Diavik diamond mine, currently under construction at Lac de Gras.

Stocks rise

News that Dia Met was for sale drove the company's shares to $23.95 -- a 52-week high. As of Monday morning, the company's stock was trading at around $22. At $22, with about 31 million shares outstanding, Dia Met would cost about $680 million.

"But as with any bidding process, that (price) might prove only to be starting point," Ferguson said.

Aber, which owns 40 per cent of the Diavik mine, also saw its share price jump eight per cent with the announcement.

"History suggest takeovers of this kind happen in good times or at times when the stocks are somewhat neglected," Ferguson said. In the case of Dia Met, Ferguson leans toward the latter.

It will be interesting to see how Dia Met's shares are valued by the three companies, if, in fact, they make bids, he said.

Ferguson added it also remains to be seen if an unexpected suitor emerges.

Fipke and Mackenzie have agreed to temporarily refrain from selling their shares privately so the company can have a full bidding process for the benefit of all shareholders, Dia Met said Tuesday.

Dia Met has retained Credit Suisse First Boston Corp. as investment advisor for the process.