Canada's CPPIB pension fund studies bid for Dominion Diamond -sources

By Susan Taylor and Nicole Mordant

TORONTO/VANCOUVER, May 11 (Reuters) - The Canada Pension Plan Investment Board (CPPIB) is considering a bid for Dominion Diamond Corp and is studying the miner's books, people familiar with the process told Reuters.

The move comes after Dominion, the world's third largest diamond producer by market value, put itself up for sale in late March, following an unsolicited $1.1 billion approach by U.S. billionaire Dennis Washington.

CPPIB, the country's biggest public pension fund based on assets of C$298 billion ($217 billion) under management, declined to comment, as did Dominion Diamond. The sources did not want to be identified as the talks are confidential.

It is unlikely that CPPIB will make an Dominion offer on its own. If it proceeds with a bid, it may financially back a partner with mine operation expertise, the sources said.

CPPIB is one of more than five parties that have signed an agreement with Dominion to get access to its confidential data, one source said.

Canadian small producer Stornoway Diamond Corp held merger talks with Dominion earlier this year, Reuters reported, but it is unclear if it will make a formal bid.

Stornoway declined to comment. ($1 = 1.3737 Canadian dollars) (Additional reporting by John Tilak and Matt Scuffham in Toronto, and Barbara Lewis in London; Editing by Denny Thomas and Jeffrey Benkoe)