(By Balachander) Harry Winston Diamond Corp. (NYSE: HWD) has agreed with BHP Billiton Canada Inc. to acquire Ekati diamond mine located in the Northwest Territories of Canada.
The cash deal includes US$400 million for the Core Zone interest and US$100 million for the Buffer Zone interest. The Core Zone includes the current operating mine and other permitted kimberlite pipes, while the Buffer Zone is an adjacent area hosting kimberlite pipes having both development and exploration potential.
BHP Billiton holds an 80 percent interest in the Core Zone and a 58.8 percent interest in the Buffer Zone.
The Ekati diamond mine, which began production in 1998, is located near the Diavik diamond mine in which Harry Winston holds a 40 percent interest.
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According to Canada-based Harry Winston, the Ekati mine has produced an average of around three quarters of a billion US dollars of rough diamonds per year over the last five years.
"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," commented Harry Winston CEO Robert Gannicott.
The current Ekati mine plan calls for a further seven years of production, but there are additional resources which could become economic with increased diamond prices, Harry Winston said.
The deal is expected to be completed before the end of March 2013.
On the NYSE, shares of HWD fell 3.35 percent to trade at $13.01.