BHP Billiton's sale of Ekati diamond mine hits roadblock

18 Jan 2013

BHP Billiton's sale of Ekati diamond mine in Canada to Harry Winston Diamond for $500 million has hit a roadblock after a minority stakeholder filed a lawsuit to try to block the deal.

C Fipke Holdings Ltd (Fipco) , a company run by geologist Charles Fipke, which holds a 10-per cent stake in the mine and has a right of first refusal on the sale, has filed a lawsuit in the Ontario Superior Court of Justice alleging that BHP Billiton failed to comply with their joint venture agreement.

London-based BHP Billiton, the world's largest mining company, had in November 2012 agreed to sell its 80-per cent stake  in the Ekati diamond mine and Diamonds Marketing operations to Harry Winston for $500 million. (See: BHP Billiton exits Diamond business with sale of Ekati mine to Harry Winston for $500 mn)

The remaining 20-per cent is held  equally by geologists Charles Fipke and Dr. Stewart Blusson, who discovered the mine in 1961.

Harry Winston had earlier said that it would fund the acquisition through cash on hand and new debt financing, which includes a new $400-million term loan, a $100-million revolving credit facility of which $50 million will be available for the Ekati acquisition and a $140-million letter of credit.

Fipke Holdings is alleging that the offers made by BHP Billiton to Fipco ''do not comply with Fipco's pre-emptive rights under the joint venture agreements for the Ekati Mine, and that the company was complicit in this alleged non-compliance.''