By Susan Taylor and John Tilak
TORONTO (Reuters) - Anglo American Plc's <AAL.L> De Beers has put its Snap Lake diamond mine in Canada up for sale after suspending operations at the unprofitable mine last December, a spokesman said on Friday.
De Beers has hired Bank of Montreal <BMO.TO> to market the underground mine in Northwest Territories, said spokesman Tom Ormsby, but he did not provide financial details.
- PHOTOS: Filipino devotees nailed to crosses to re-enact crucifixion4 Pictures
- PHOTOS: Memorial spotlights the man behind Nipsey Hussle rap persona14 Pictures
Snap Lake, which has not made money since production began in 2008, produced 1.2 million carats last year and was initially planned to operate until 2028.
In June, De Beers Canada received approval to flood the mine tunnels, reducing maintenance costs, under a revised suspension plan. The flooding has not yet happened but planning work continues.
"Before we get into that actual flooding of the mine ... we thought it would be prudent, certainly, to see if there was an interest," Ormsby said.
De Beers Canada spent C$2.2 billion ($1.67 billion) on mine construction and operation up to year-end 2014.
If no qualified buyer is found, De Beers Canada may proceed with the flooding plan in the fourth quarter, Ormsby said.
De Beers, 85 percent owned by Anglo American and 15 percent by the government of Botswana, has been hurt by waning demand and slumping prices in the diamond industry.
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.
Accessible only by air and an ice road that operates for two months of the year, the mine was plagued with groundwater problems from extracting diamonds below Snap Lake. It employed 595 staff and 200 contractors before its suspension.
The level of interest is unclear, said one legal source familiar with the matter, with another person adding that the mine's remote location, technical challenges and high reclamation liability have diminished its luster.
The sources said potential buyers could include Stornoway Diamond Corp <SWY.TO>, which is poised to open Quebec's first diamond mine, and Peregrine Diamonds Ltd <PGD.TO>, which is exploring for diamonds in Canada's Arctic and is backed by high-profile miners Eric and Robert Friedland.
Other diamond miners operating in Canada's Arctic include Rio Tinto Ltd <RIO.L> and Dominion Diamond Corp <DDC.TO>.
De Beers Canada also operates the Victor diamond mine in Ontario, which is set to close in 2018 unless an expansion proceeds. It is also building the Gahcho Kue diamond mine in the Northwest Territories.
Gahcho Kue, 49 percent owned by Mountain Province Diamonds Inc<MPV.TO>, is expected to start production within the next month with annual output averaging 4.5 million carats.
(Editing by Amran Abocar and Jeffrey Benkoe)