Dia Met soars as company climbs on to auction block

Dia Met Minerals took the market by surprise during the Oct. 11-17 report period by announcing it was looking to sell both the company and its 29% interest in the Ekati diamond mine in the Northwest Territories.

Two major shareholders, Marlene Fipke and David Mackenzie, who together own a 38% interest in Dia Met, triggered events by saying they were willing to sell their shares, but only after a full, open auction can be held.

Fipke, Dia Met’s largest shareholder, with a 25.5% interest, acquired her shares as part of a recent divorce settlement from Dia Met founder Charles Fipke, who retains his 10% interest in Ekati. Mackenzie is a long-time Dia Met director.

Immediately following the announcement, Dia Met shares jumped about 30%, with class A shares ending the period up $4.35 to $21.35 and the class B shares up $3.85 to $23.

The remainder of Ekati is held by Stewart Blusson, with 10%, and Broken Hill Proprietary, which closed down US$1.62 to US$19.38.

One likely bidder for Dia Met is diamond giant De Beers Consolidated Mines, which is taking over Canada’s Winspear Resources and, for the moment, outbidding Rio Tinto for Australian diamond junior Ashton Mining. De Beers ended the period down US$1.56 to US$27.06 while Rio Tinto fell US88 to US$57.

Aber Diamond, the junior that is speculated to be the diamond industry’s next takeover target, rose 40 to $12.60.

With nickel, copper, zinc and lead prices all in decline, Canada’s base metal producers suffered across the board: Inco dropped $2.50 to $21.75; Falconbridge fell $1.20 to $15.85; Sherritt International eased down 19 to $4.66; Noranda fell 35 to $13.75; Teck‘s B shares slipped 85 to $9.80; Cominco was down $1.10 to $18; Boliden shed another 20 to hit $1.12; and Breakwater Resources was off 10 to $2.10.

The precious metals sector fared no better, with gold down US$1.70 to reach a London morning fix of US$271.30 per oz. on Oct. 18, despite a 1-day rally related to growing violence in the Middle East.

Canada’s gold majors were all down: Barrick Gold fell $1.25 to $20.25; Placer Dome was off 40 to $12.25; Franco-Nevada Mining plummetted $2.70 to $12.50 on no news; Kinross Gold slipped 10 to 70; TVX Gold fell 14 to $2.15; and Cambior lost 9 to hit just 50.

Among the juniors, the biggest new was the implosion of former market darling Pacific Rim Mining, led by Catherine McLeod-Seltzer, Thomas Shrake and Anthony Petrina. The first-ever exploration drilling at the company’s Luicho gold prospect in Peru produced only moderate results, causing the high-flyer to plummet to just 37 at the end of the report period from $4.50 in early September, down 68 from the prior week. Pacific Rim has now suspended drilling at Luicho until all assays from previous holes are obtained.

McWatters Mining held steady at 24 as the gold miner announced it had finally ended underground mining at its flagship Sigma-Lamaque complex, in Val d’Or, Que. All valuable underground equipment has been brought to surface, and surface buildings, including the headframe, have been dismantled. To fund ongoing open-pit operation at Sigma-Lamaque, the company says it is trying to reinstate its bank loan to US$10 million from the current level of US$5.3 million.

Pentland Firth Ventures dropped 19 to 16 a month after declaring it had hired Yorkton Securities to help it unload its 29,000-ha portfolio of mineral properties near Timmins, Ont. The junior says it will then review opportunities in other industries.

Wheaton River Minerals closed down unchanged at 40, despite announcing record earnings for the nine months ended Sept. 30. The company did say that production in the next two years would be lower as a result of mining leftover reserves in the Kodiak B deposit ahead of schedule. Wheaton also announced its intention to make a normal course issuer bid for its common shares. Over the next year, the company may buy back and cancel up to 10% of its shares.