Yellowknife (Mar 16/05) - With the clock ticking and losses mounting, the territorial government has found a buyer for the assets of Sirius Diamonds.

Montreal-based Basal Diamonds is offering an estimated $6 million for Sirius, Finance Minister Floyd Roland said Tuesday.

"I am very pleased," said Roland, who faced the prospect of closing the plant at the end of the month to stop losses that have mounted to more than $3 million.

The sale must be approved by the court and is subject to a 30-day appeal period.

The government hopes to eventually recover an additional $1 million from the sale of the company's inventory of cut and polished diamonds, Roland said.

Commission agreed on

The new owners of Sirius have also agreed to pay the government a one per cent commission for the next 10 years on the sale of all gems bearing the polar bear logo, he said.

Ronen Basal, president of Basal subsidiary Polar Ice Diamonds, declined to reveal details of the company's offer, but said none of the Sirius workers will lose their jobs.

Basal Diamonds also took a 75 per cent stake in Arslanian Cutting Works after the territorial government pulled $16 million in loan guarantees to Sirius and Arslanian last June.

"We intend to run the two cutting plants side-by-side," Basal said. "Our task is to make it profitable."

Basal said Arslanian and Sirius will continue to produce Ideal-cut diamonds, but will turn to automation for other products.

The government will continue to guarantee $9 million in loans on the Arslanian plant "for a few years, but Sirius has no guarantees tied to it," Roland said.

The government is also owed $2 million in loan guarantees to Deton Cho Diamonds. The principal is to be repaid, but $800,000 in interest was written off.

Summing up the government's experience with the diamond cutting and polishing industry, Roland said "it's a challenging environment to be in; it would have been nice to have federal support for establishing a diamond grading industry in Canada."