FREE ARTICLE PREVIEW: You are enjoying a free sample of exclusive
subscriber content. There is a limit of three free articles per week.

DAILY NEWS Jan 17, 2013 5:10 PM - 0 comments

Fipke takes legal action to stop Ekati sale

TEXT SIZE bigger text smaller text
2013-01-17

Chuck Fipke, a minority shareholder in the Ekati joint venture, is trying to block BHP Billiton (BHP-N, BLT-L, BHP-A) from selling its majority interest in the Ekati diamond mine to Harry Winston (HW-T, HWD-N) for US$500 million.

Fipke, who owns 10% of the Ekati joint venture through Fipco, has started an action in the Ontario Superior Court of Justice against BHP, Harry Winston and Ekati’s other minority shareholders in an attempt to defer the acquisition.

The veteran geologist, who discovered Ekati which was Canada’s first diamond mine, claims that BHP violated his pre-emptive rights under the joint-venture agreement and that Harry Winston was involved in this alleged non-compliance.

BHP agreed to sell its stake in the Ekati joint venture to Harry last November, including an 80% interest in the Core Zone joint venture, constituting existing operations and a 58.8% interest in the Buffer Zone joint venture, focusing on exploration targets. As part of the agreement, Ekati’s minority shareholders — Fipke, geologist Stewart Blusson and Archon Minerals — were given the right of first refusal to buy BHP’s interests and had 60 days to exercise the right, which recently expired.

But Fipke, with a 10% interest in both the Core Zone and Buffer Zone agreements, claims that Harry’s financing arrangements for Ekati hindered his ability to line up funds for Fipco. As a result, he is seeking a court order to stop Harry from buying Ekati until BHP provides him with revised offers.

In a statement, Harry notes that Blusson, who holds 10% of the Core Zone, and Archon, which owns 31.2% of the Buffer Zone, are not seeking legal action against BHP or Harry Winston. The two companies maintain that Fipke’s claim is without merit and aim to defend their position.  

All the parties involved have agreed to have the trial and appeal conducted on an “expedited basis” with a final ruling expected by April 15. If the ruling favours Harry and BHP, it would allow the Ekati sale to be completed by May 15.

BMO Capital Markets analyst Edward Sterck notes that if BHP and Harry win the case, the acquisition will close no later than 60 days after the original date.  

The Ekati mine is located in the Northwest Territories, 310 km northeast of Yellowknife. Diamond production started in 1998, seven years after its discovery.



© 1915 - 2014 The Northern Miner. All Rights Reserved.

Related News
Dominion Diamond shines with Q2 profits of US$27M
Weakness dominates TSX, Sept. 2-5
Peregrine shares drop on dilutive $15M financing
Related Press Releases
Dominion Diamond Corporation reports Fiscal 2015 Second Quarter Results
Dominion Diamond Corporation's Fiscal 2015 Second Quarter Results to be Released Wednesday, September 3, 2014
Dominion Diamond Corporation's Fiscal 2015 Second Quarter Results to be released Wednesday, September 3, 2014
 



Horizontal ruler
Horizontal Ruler

Post A Comment

Disclaimer
Note: By submitting your comments you acknowledge that Northern Miner has the right to reproduce, broadcast and publicize those comments or any part thereof in any manner whatsoever. Please note that due to the volume of e-mails we receive, not all comments will be published and those that are published will not be edited. However, all will be carefully read, considered and appreciated.

Your Name (this will appear with your post) *

Email Address (will not be published) *

Comments *



* mandatory fields