BHP could get less than half a billion for Ekati

BHP Billiton could receive less than $500 million for its Ekati diamond mine in Canada's Northwest Territories.

Asset management firm Investec said Friday that the mine, in which BHP owns 80%, is worth between $300 million and $500 million because of its limited remaining life and declining earnings:

“It’s a short-life mine, its best years are well and truly behind it,” Tim Gerrard, a Sydney-based analyst at Investec, told Bloomberg. He predicted the mine will cease production by 2020. “Its profit will be a lot lower” than the $537 million in pretax earnings posted in the year ended June 30."

BHP Billiton (NYSE:BHP) said in November it is reviewing its diamond business, which includes two large diamond mines in northern Canada, for a potential sale of all or parts of the business.

BHP sold its 51% interest in the Chidliak diamond project to Peregrine Diamonds (TSE:PGD), which has been exploring the 860,000-hectare property on Baffin Island since 2006, for CAD$9 million on Dec. 20. Peregrine had owned 49% of the project.

Credit Suisse Group valued BHP's diamond business, including Ekati and Chidliak, at about $2 billion, Bloomberg reports.