December 16, 2016 / 2:03 AM / 7 months ago

De Beers to flood Canada diamond mine after failing to find buyer

2 Min Read

The company name of De Beers is displayed in Hong Kong, China September 14, 2016. Picture taken September 14, 2016.Bobby Yip

TORONTO (Reuters) - Anglo American Plc's (AAL.L) De Beers said on Thursday it failed to find a buyer for its money-losing Snap Lake mine in Canada's Arctic and would start flooding the underground operation in early January.

De Beers, which hired Bank of Montreal to market the mine this summer, said there were parties interested in buying the mine, but they could not reach an agreement.

It will take six to eight weeks to complete flooding the mine, which will then employ about 35 workers and remain suspended until improved market conditions and technical methods make the mine more economical to operate, De Beers said.

Flooding the mine tunnels will cut costs to pump out water at the remote site, accessible only by air and an ice road that operates for two months of the year.

In the first quarter of 2017, De Beers will run an ice road to remove inventory and equipment, while delivering fuel to the site.

The problem-plagued mine, which currently has 55 workers, had 595 employees and 200 contractors before it was shuttered last December due to poor market conditions. De Beers then mulled whether to sell, close, reopen or continue suspending the mine.

Snap Lake, which has not made money since production began in 2008, produced 1.2 million carats last year and was initially projected to operate until 2028.

Snap Lake was De Beers' first mine built outside Africa and is 220 kilometers (137 miles) northeast of Yellowknife, the capital of the Northwest Territories. De Beers is 85 percent owned by Anglo American and 15 percent by the government of Botswana.

Reporting by Susan Taylor in Toronto, Additional reporting by Vishal Sridhar in Bengaluru; Editing by Gopakumar Warrier

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