Minority shareholder in Ekati diamond mine opposes sale to Harry Winston
BHP Billiton is facing a lawsuit from Fipke Holdings (Fipko), a minority stakeholder in the Ekati diamond mine that has opposed the sale of the mine to Canada-based diamond mining firm Harry Winston.
Fipko initiated legal action against BHP Billiton Canada in the Ontario Superior Court of Justice, alleging that BHP did not comply with the joint venture agreements for the Ekati Mine.
Allegations are also being made against another minority stakeholder, Dr Stewart Blusson, as well as Archon Minerals.
The claim seeks an order of the court prohibiting Harry Winston from purchasing BHP Billiton's interests unless the latter provides Fipko with revised offers.
As part of the suit, Fipko claims that Harry Winston's debt-financing arrangements for its acquisition of BHP's interests interfered with Fipko's ability to arrange its own financing.
BHP owns an 80% interest in Ekati's core zone joint venture and a 58.8% interest in the buffer zone joint venture in Canada, which comprise operations and exploration targets respectively.
Fipko holds 10% interest both in the core zone and buffer zone joint ventures.
In November 2012, BHP agreed to sell its stake in the mine and diamonds marketing operations to Harry Winston for $500m.
Following the conclusion of the agreement, the firm offered its minority stakeholders the option to purchase its interests in the mine within 60 days of notice.
Harry Winston and BHP believe that the claim by Fipko is "entirely without merit" and intend to "vigorously defend the action in order to proceed with the purchase and sale of the Ekati Mine," Harry Winston said in a statement.
BHP spokesman Ruban Yogarajah told Bloomberg that the company complied with its obligations under the Right of First Refusal provision and will work to resolve the litigation to proceed with the sale.
Image: Fipco aims to halt BHP's proposed sale of the Ekati diamond mine. Photo: BHP Billiton.