Ekati Sale Hits Legal Bump

The Ekati Diamond Mine

(IDEX Online News) – Fipke Holdings Ltd. (Fipco) has begun legal proceedings against Harry Winston Diamond Corporation’s purchase of the Ekati diamond mine from BHP Billiton. BHP has agreed to sale the mine and surrounding resources to Harry Winston Diamonds for $500 million.

The dispute has arisen over Fipco’s claim that offers made by BHP Billiton for it to purchase the mine did not comply with its rights of first refusal under the joint venture agreements for the Ekati mine.

BHP Billiton offered its interests in the diamond mine and surrounding area resources to Fipco, Dr. Stewart Blusson and Archon Minerals, its minority joint venture parties. However, Fipco, which holds a 10 percent interest in each of the joint ventures, alleges that, among other things, Harry Winston’s debt financing arrangements for the acquisition interfered with Fipco’s ability to arrange its own financing.

Fipco’s is asking for a court order prohibiting the purchase by Harry Winston unless and until BHP Billiton provides it with revised offers.

Blusson, who holds a 10 percent interest in the Core Zone, and Archon, which holds a 31.2 percent interest in the surrounding resource known as the Buffer Zone, have not issued a claim against BHP Billiton or the Harry Winston, nor do they intend to.

If the ruling goes in favor of Harry Winston and BHP Billiton, the purchase will be completed before May 15 without re-triggering the pre-emptive right provisions of the joint venture agreements. Fipco is asking for a ruling by April 15.

Harry Winston and BHP Billiton have said that Flipco’s claim is “entirely without merit,” and that they intend to “vigorously defend the action in order to proceed with the purchase and sale of the Ekati Mine.”

As such, they are continuing with the regulatory approval process. Harry Winston says it expects to be in a position to complete the transaction following resolution of the litigation.