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SOMBA K'E/YELLOWKNIFE
The sale of the Ekati Diamond Mine, which was expected to be completed this quarter, is now being blocked by one of the minority owners of the mine.

BHP Billiton Canada Inc. announced the sale of its 80 per cent stake in Ekati, which is located about 310 km northeast of Yellowknife, to Harry Winston Diamond Corporation last November.

A right-of-first-refusal provision in the $500-million US purchase agreement gave the geologists responsible for the discovery of Ekati's diamond deposits at Lac de Gras, Chuck Fipke and Stewart Blusson, who are minority interest parties in the mine, 60 days to purchase BHP's majority interest in the mine under pre-emptive rights.

The sale was on track to be completed in the first quarter of 2013 until this week, when a statement of claim was filed by Fipke Holdings Ltd. against BHP. Fipke is seeking an order of the court to prohibit Harry Winston from purchasing BHP Billiton's interest, unless and until BHP Billiton provides Fipke Holdings with "revised offers," a news release from Harry Winston stated Thursday.

The company stated that the action in the Ontario Superior Court of Justice against BHP and certain affiliates - including Harry Winston, its subsidiary Harry Winston Diamond Mines Ltd., and Blusson's company, Archon Minerals Ltd., - allege that BHP did not comply with Fipke's pre-emptive rights under the joint-venture agreements for the Ekati Mine.

BHP Billiton spokesperson Deana Twissell said the company has received information on the statement of claim and will resolve any dispute over its compliance with the right-of-first-refusal provision in court.

"We believe we have complied with our obligations under the right-of-first-refusal provision and we're working to resolve the dispute as soon as practical to ensure the sale process can be completed," Twissell said.

Yellowknifer confirmed through the Ministry of the Attorney General that Fipke Holdings Ltd. filed a statement of claim in Toronto against BHP Billiton Canada Inc. on Jan. 16. Fipke could not be reached for comment by press deadline.

Harry Winston representatives were not available for comment Thursday, but stated in the news release that the claim also alleges, among other things, that Harry Winston's debt financing arrangements for the acquisition interfered with Fipke Holdings' ability to arrange its own financing.

Harry Winston added that the parties to the litigation have entered into an agreement which provides for the trial and any appeal to be conducted on an expedited basis, in hopes of obtaining a final ruling no later than April 15.

If the ruling is in favour of BHP and Harry Winston, the purchase of BHP's stake in Ekati is now expected to be complete before May 15.

Twissell said the sale of Ekati is still "running on course," but declined to comment on the timing of the legal process.

"Obviously, it would not be prudent to comment on that process given the commercial sensitivities," Twissell said. "Any disputes, if there are any, would obviously be addressed through the appropriate mechanisms."

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