BHP Billiton sued over sale of Ekati diamond mine to Harry Winston
A joint-venture partner is suing BHP Billiton (ASX,NYSE:BHP) over its plan to sell its stake in Canada’s Ekati diamond mine and nearby exploration properties to Harry Winston Diamond Corp (TSX:HW, NYSE:HWD), the jewellery company said in a press release.
C. Fipke Holdings Ltd. (Fipco) is accusing BHP of not complying with its pre-emptive rights to buy the assets under the joint-venture agreement and alleges Harry Winston was complicit.
Fipco also claims Harry Winston’s financing arrangements for the deal have interfered with the junior’s ability to arrange its own financing.
Both Harry Winston and BHP believe the claim is “entirely without merit, and intend to vigorously defend the action in order to proceed with the purchase and sale of the Ekati Mine.”
Last November, Harry Winston Diamond agreed to buy from BHP Billiton an 80% interest in the Core Zone JV and a 58.8% interest in the Buffer Zone JV for about $500 million.
According to recent reports, Harry Winston it is also interested in acquiring Rio Tinto’s 40% stake in Diavik, another Candian diamond mine, and so become the sole owner of that asset.
“We are aware that Rio Tinto wants to sell its 60 per cent interest in the Diavik mine where we already own the 40 per cent, that’s an obvious one for us to look at as long as the price is right,” Harry Winston’s chief executive, Robert Gannicott, was quoted as saying by Business Days.
Two months ago, Harry Winston paid $500 million to BHP Billiton for its 80% in another Canadian diamond mine, Ekati.
In August last year, the company said Diavik had another 11 years to go and a current net value of $2.6 billion. Winston also said the mine will have a total capital cost of $955 million until the end of its life.