Diamond play revives Ateba

Ordered to cease trading on The Toronto Stock Exchange almost three years ago, Ateba Mines expects to resume trading, this time on the unlisted market, within the next couple of weeks.

“What has made all the difference to our revival is the diamond play,” said President Peter Howe, addressing his shareholders for the first time since 1989. “Judging by the number of calls I’ve had lately, I suspect there is going to be quite a demand for these shares.”

Subject to approval from the Ontario Securities Commission, Ateba will begin trading on the Canadian Dealing Network, and may apply for a TSE listing. Howe expects the shares to trade at about $1.

Ateba is optioning its diamond concession in the Central African Republic to United Reef Petroleums (TSE). The latter has paid Ateba $18,750 and has agreed to spend $250,000 on the property. In June, United will be required to pay Ateba $37,500 cash and commit to a further $500,000 in exploration expenditures to earn a 60% interest.

If a production decision is made, United will pay Ateba $750,000 plus a 2.25% royalty on the gross sale of diamonds, increasing to 3% after 500,000 carats have been produced.

But at least one shareholder is unhappy about the way in which the diamond concession ended up in the hands of United Reef, of which Howe is a director. The shareholder, who asked not to be named, says Ateba did not have the shareholders’ interests at heart when it vended the property to Sherwood (NASDAQ), then to United Reef, leaving Ateba with only a small royalty. United Reef, which recently recovered 32 diamonds weighing up to 2.6 carats from the concession, expects to produce at least 100,000 carats per year initially, using a bulldozer and a gravity separation plant. The average value of diamonds sold in the Central African Republic in 1991 was $170 per carat.

Ateba has applied for a separate exploration permit next to the United Reef ground.

At the meeting, Ateba received approval from shareholders to issue shares and warrants to its creditors, thereby relieving almost $4 million in debt. If all the warrants are exercised, Ateba’s issued and outstanding shares will jump to about 60 million from 38 million.