Harry Winston to Buy Ekati Mine for $500 Million from BHP

The purchase price for the acquisitions will be satisfied from cash resources on hand and from new debt financing that has been arranged with The Royal Bank of Canada and Standard Chartered Bank.

The new facilities will comprise a $400 million term loan, a $100 million revolving credit facility (of which $50 million will be available for purposes of funding the Ekati acquisition) and a $140 million letter of credit facility in support of the Core Zone environmental reclamation bond.

All BHP Billiton employees working at Ekati, in Yellowknife and in Diamonds Marketing in Antwerp will become employees of Harry Winston as part of the transaction.

Completion is expected in the first quarter of calendar year 2013.

"Completion of this acquisition will bring the opportunity to marry our Canadian diamond sorting and marketing skills with an experienced mine operating and development team, a world class operating asset, and future growth potential,” said Harry Winston chairman and CEO Robert A. Gannicott. “Together with our existing mining business, these assets will serve as our platform for sustained, disciplined growth in the upstream diamond sector."

“Harry Winston has long experience in the Canadian diamond industry and their commitment to study further development at Ekati could help extend the mine’s contribution to Northern Canada for many years to come,” said BHP Billiton Diamonds & Specialty Products president Time Cutts.

The current Ekati mine plan calls for a further seven years of production, but there are additional resources that could become economic with increased diamond prices.

Explaining the decision to exit the diamond business, BHP Billiton chief executive Non-Ferrous Andrew Mackenzie said, “The divestment of Ekati is consistent with our focus on large, long-life, low-cost, expandable, upstream assets and, together with the recent sale of our interests in Richards Bay Minerals and Yeelirrie, reflects our ongoing pursuit of a simpler business.”

The Ekati diamond mine, Canada’s first, is located 310 kilometers northeast of Yellowknife and 200 kilometers south of the Arctic Circle. It is situated near the Diavik diamond mine in which Harry Winston holds a 40 percent interest.

BHP Billiton sold Ekati (above) for $0.5 billion to Harry Winston, ending its involvement in the diamond sector