BHP Billiton, the world's largest mining company, will sell its majority stake in the Chidliak exploration project in northern Canada to joint venture partner Peregrine Diamonds, for C$9 million ($8.7 million).

The sale, which is part of the Anglo-Australian miner's wider review of its diamond business, BHP Billiton is selling its 51 per cent stake in the Chidliak diamond exploration project in Baffin Island, Canada.

The sale will see Peregrine taking full control of Chidliak, which covers 860,000 hectares of property about 140kms from Iqaluit.

Vancouver-based Peregrine has also acquired BHP Billiton's Canadian regional diamond exploration database and diamond marketing rights on certain Canadian mineral properties in which Peregrine has an interest.

Peregrine, which already owns 49 per cent and operates the project, will pay C$9 million over 3 years and give BHP Billiton a 2 per cent royalty on any future production from Chidliak.

"We are pleased to sell our interest in Chidliak to its natural owner. Peregrine has been a good partner and we believe they are a strong operator that is well positioned to advance this promising exploration opportunity," BHP Diamonds and Specialty Products President Tim Cutt said in a statement.

BHP Billiton, which generated a record net profit of $22.3 billion in the 2011 financial year, said last month it would review its diamond assets and examine whether its presence in the diamond industry is consistent with its strategy of investing in expandable assets.

Diamonds represent only a fraction of the mining giant's global portfolio. The diamonds and speciality products division accounted for around 2.5 per cent of its 2010 operating profit.

BHP Billiton also holds an 80 per cent interest worth around $2.7 billion in the Ekati diamond mine in Canada's Northwest Territories, which is the miner's only operating diamond mine.

BHP Billiton said it was still reviewing its interest in Ekati, and would continue to operate it in a sustainable manner if it does not find a suitable buyer.

According to analysts, Rio Tinto, which owns the nearby own Diavik mine, would be the most likely buyer for Ekati, whose sales account for around 11 per cent of the global rough diamond supply by value.