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The Quebec government agreed to provide up to $100-million in long-term loans in 2009 as part of CAE’s program to invest up to $274-million in research and development over seven years in the three new growth areas.

THOMAS PETER/Reuters

Five years after placing a bet that entering the mining sector would pay off handsomely as a smart diversification move, flight simulator manufacturer CAE Inc. is selling its mining division.

The Montreal-based company said on Monday that Constellation Software Inc. has acquired its CAE Mining unit for an undisclosed amount, which one analyst estimates is slightly below the asset's net book value of $47-million.

CAE had been carrying CAE Mining on its books as discontinued operations for the past year. The company had been looking for a buyer for about a year and chief executive officer Marc Parent said at the time that the division would not be sold at a fire-sale price.

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CAE Mining, whose main brand name is Datamine, provides technology and services for the management of mining operations, including exploration data management and ore-body modelling.

Of the three areas CAE touted in 2009 as promising avenues for diversification – mining, energy and health care – only health care remains today as part of its operations. The company's core businesses are simulation, modelling and pilot training in civil and defence aviation.

The Quebec government agreed to provide up to $100-million in long-term loans in 2009 as part of CAE's program to invest up to $274-million in research and development over seven years in the three new growth areas.

CAE spokeswoman Hélène Gagnon said in an interview on Monday that the program ends next year. The terms of the agreement with Quebec do not permit disclosure of how much has so far been lent to the company, a second CAE spokeswoman said.

Energy and mining did not pan out because of insufficient "synergies" with CAE's core businesses but health care is performing well, Ms. Gagnon said. For example, armed forces that buy jet-fighter simulators or training services from CAE might also be interested in the company's cyber-mannequins used to stage fictional battlefield crisis situations.

"If we were to open new markets, we needed to have a strategic fit," she said about the mining business, which was profitable and not really affected by the downturn in global commodities prices. The mining unit's revenue in fiscal 2015 was $34.6-million, according to Desjardins Securities analyst Benoît Poirier.

The health-care unit posted $94.3-million in revenue in fiscal 2015, compared with $79.2-million a year earlier. Operating margins reached 7.1 per cent, up from 2.1 per cent a year earlier, Ms. Gagnon said. CAE's total revenue in fiscal 2015 was $2.2-billion

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"As reported last year, we decided to sell our mining business in order to concentrate our capital investment and management resources on our three core markets: civil aviation, defence and security, and health care," Mr. Parent said in a news release on Monday.

"In light of the current tough mining conditions, we view positively the fact that the company was finally able to complete the divestiture after an approximate one-year process, and close to its [net book value]," Mr. Poirier said in a research note.

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