The United States District Court for the District of New Jersey has given preliminarily approval to Anglo American (AAUK-Q) unit De Beers’ plan to settle most of the civil class action suits filed against it in the United States for US$250 million.
The diamond miner said settlement of the suits would “allow the company to more effectively pursue its global interests by removing the cost, risk, reputational impact and distraction from the company’s core activities required to defend multiple class actions and possible further litigation.”
It added that the proposed settlement did not constitute an admission of liability on its part, and would not be funded from or have any material impact on its South African mining operations.
“We believe that settling these suits is the most sensible and responsible course of action for the company to take,” said De Beers’ managing director Gary Ralfe in a prepared statement.
The company says its decision is consistent with other actions recently taken in the U.S. and Europe to restructure and modernize its operations and business model.
Last year, De Beers plead guilty to charges under American anti-trust laws in a settlement that allowed the company to resume business in the U.S. in return for paying a US$10-million fine.
The U.S. Department of Justice had alleged that De Beers and General Electric had colluded to fix the price of industrial diamonds in the U.S. The charges against General Electric were subsequently dropped. The court heard an admission from De Beers’ Swiss subsidiary De Beers Centenary that its management had exchanged pricing information with General Electric.
Officers of De Beers had been prevented from travelling to the U.S. by warrants for their arrest.
De Beers said it hopes to receive the court’s final approval during 2006.
The company has since established a flagship retail shop in New York. The store is a joint venture with French-based consumer-goods company LVMH Moet Hennessy Louis Vuitton.
Meanwhile, in Canada, De Beers has filed an application with the Mackenzie Valley Land and Water Board for the permits required to build and operate a mine at Gahcho Ku project in the Northwest Territories.
Gahcho Ku is envisaged as an open-pit mine focussed on estimated resources of 31 million tonnes. The $825-million mine is expected to produce an average of 3 million carats of diamond annually over fifteen years.
The operation will be staffed by some 600 people during the peak of the 3-year construction period, with around 400 employed during operations.
The company expects the application to be referred to the Mackenzie Valley Environmental Impact Review Board for an environmental assessment.
Gahcho Ku is situated about 90 km east of the construction-phase Snap Lake underground diamond mine, the company’s first Canadian diamond operation.
Snap Lake is slated to yield some 1.5 million carats annually over at least 20 years, beginning in 2007. At last count minable reserves totalled 18.3 million tonnes grading 1.46 carats per tonne, for 26.7 million recoverable carats valued at US$109 per carat.
“Advancing this project is consistent with our strategy of maintaining a pipeline of projects to meet increasing global demand as well as contributing to the sustainability of the Canadian diamond industry,” said De Beers Canada chief executive Richard Molyneux in a release
“Gahcho Ku is evidence of the importance we attach to partnerships with Canadian exploration companies as a winning formula for growing the diamond industry in this country.”
Gahcho Ku is held 51% by De Beers, with Mountain Province Diamonds (MPV-T) owning 44.1%, and Camphor Ventures (CFV-V) holding the remaining 4.9%. De Beers owns the Snap Lake project outright.
The comapny’s Victor project in northern Ontario received approval for its environmental assessments earlier this fall. Construction is expected to crank up early next year, with production forecast by the end of 2008.
The $1-billion project is forecast to produce 6 million carats of high-value diamonds over a 12-year mine life, beginning in late 2008.
Shares in Mountain Province rocketed 90, or 35%, to a new 52-week high of $3.48 in Toronto on Nov. 30, following the news late on Nov. 29; Camphor ended 35, or 43%, better at $1.17 on the Venture Exchange.