Harry Winston buying Ekati mine for $500M US

Toronto-based Harry Winston Diamond Corporation says it is buying BHP Billiton’s Ekati diamond mine in the Northwest Territories for $500 million US.

The deal, announced Tuesday, includes associated diamond sorting and sales facilities in Yellowknife and Antwerp.

Under the deal, BHP Billiton's employees working at Ekati, in Yellowknife and in diamonds marketing in Antwerp, Belgium, will join Harry Winston.

"The mine's success is a credit to the people who work there, at Yellowknife and with the marketing team in Antwerp," said Tim Cutt, BHP Billiton Diamonds & Specialty Products president.

"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."

Part of the purchase price includes $100 million for an area adjacent to the mine which may have diamond mining development potential.

Mine has 7 years left at current prices

"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," Harry Winston CEO Robert Gannicott said in a release.

Ekati produced, on average, rough diamonds worth $750 million US annually over the last five years, or six per cent of the world supply of rough diamonds by value.

The mine is estimated to have seven years of production left, but the companies say there could be additional resources which could become economical with increased diamond prices.

Ekati is 310 kilometers northeast of Yellowknife and is Canada’s first diamond mine, opened in 1998.

Harry Winston already owns a 40 per cent share of the Diavik mine in the Northwest Territories in a joint venture with Rio Tinto.

Last month, Harry Winston cut its 2012 production target for the Diavik mine to 7.4 million carats as the operation shifts its efforts to concentrate on processing higher-valued diamonds.

As recently as the company's second-quarter financial report issued in September, the 2012 production target for Diavik had been eight million carats.