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ARCHIVED  August 27, 1999

Gem of a deal: Mine sale near

VIRGINIA DALE — North America’s only working diamond mine, operating on a site that hugs the Wyoming border northwest of Fort Collins, is under contract for sale.An employee at the Toronto, Canada, headquarters of the mine’s owner, Redaurum Ltd., said an agreement to purchase the Kelsey Lake mine had been negotiated with another mining concern.
A spokesman for the mine’s prospective owner, who spoke on the condition that neither he nor his company be named, said the purchase price was $1.4 million. Of that, $1.2 million will be spent to assume Redaurum’s debt in the operation of Kelsey Lake, and the remainder will come from a $200,000 stock transfer.
Documents obtained from the Ottawa Securities Commission in Canada show that Redaurum had been trying to find a buyer for the mine since December 1997 after low diamond prices and subsequent losses.
The Kelsey Lake mine made headlines in 1996, when the fifth-largest diamond ever found in North America was unearthed. The gem-quality “Colorado Diamond” weighed 28.3 carats uncut. The finished gem, at 5.4 carats, was sold to an anonymous buyer for $87,000.
Redaurum’s poor financial performance was due in part to the costs of fighting a deed challenge from the Union Pacific Railroad, a lawsuit filed soon after the discovery of the Colorado Diamond.
While the suit was settled out of court, the financial statements show that the court fight “caused the company to incur significant costs and effort by management.”
The company merged with London-based Remick Investments Ltd. in March. Under terms of the deal, Redaurum became a wholly owned subsidiary of Remick, which owns titanium, vanadium, garnet and gold mine holdings in South Africa and Angola, according to Canadian securities documents.
Redaurum’s stock, trading on the Toronto Stock Exchange, had been tumbling for five years, from a high of $2.15 per share (Canadian) in August 1994 to 3 cents per share at last week’s close.
Redaurum’s losses from mining operations, as shown in financial statements filed with the Ottawa Securities Commission, totaled $4.5 million in 1998, up from $776,000 the previous year.
Redaurum’s diamond holdings include the Kelsey Lake Mine, the River Ranch mine in Zimbabwe and the Avontuur Mine in South Africa.
The Kelsey Lake mine lies in the Stateline Mining District, with diamonds imbedded in a 350-million-year-old formation of kimberlite, a rare diamond-bearing rock.
Redaurum acquired controlling interest in the Kelsey Lake Mine in 1995, paying $2.3 million to acquire 75 percent of the stock of Colorado Diamond Corp.
In 1997, Redaurum estimated a 15-year lifespan for the Kelsey Lake Mine. Howard Coppersmith, Redaurum’s North American manager, told The Northern Colorado Business Report at that time that miners “expect to find more and larger diamonds at Kelsey Lake.”

VIRGINIA DALE — North America’s only working diamond mine, operating on a site that hugs the Wyoming border northwest of Fort Collins, is under contract for sale.An employee at the Toronto, Canada, headquarters of the mine’s owner, Redaurum Ltd., said an agreement to purchase the Kelsey Lake mine had been negotiated with another mining concern.
A spokesman for the mine’s prospective owner, who spoke on the condition that neither he nor his company be named, said the purchase price was $1.4 million. Of that, $1.2 million will be spent to assume Redaurum’s debt in the operation of Kelsey Lake, and…

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