Legal Challenge to Harry Winston's Acquisition of Ekati Stake Dropped

The purchase by Harry Winston Diamond Corp of BHP Billiton's 80-percent stake in the Ekati diamond mine for $500 million is to go proceed after a possible legal hurdle was overcome.

A formal Notice of Discontinuance of the legal action, brought by C. Fipke Holdings Ltd against BHP Billiton Canada Ltd, Harry Winston, Stuart Blusson, Archon Minerals and various associated companies, has been received, said Harry Winston in a media statement.

Geologists, Chuck Fipke and Stuart Blusson, who found the diamond deposit in Canada's NorthWest Territories in 1991 and who own 20 percent of it, had rights of first refusal for BHP Billiton's stake.

C. Fipke Holdings Ltd. had filed a lawsuit in Ontario Superior Court of Justice saying offers made by BHP to Fipke were not in line with his rights under joint-venture agreements for Ekati. Fipke said that Harry Winston's debt-financing deal for its acquisition of BHP's interests harmed Fipke's power to secure his own financing.

BHP Billiton advised Harry Winston that all of its joint venture partners were in agreement about renouncing their rights of first refusal regarding the sale by BHP Billiton to Harry Winston regarding their purchase agreement.

The discontinuance of the action and waivers of the rights of first refusal permit the transactions between Harry Winston and BHP Billiton to proceed, subject to satisfaction of closing conditions, including regulatory approvals.

The minority shareholders, Chuck Fipke and Stewart Blusson, have pre-emptive rights to acquire BHP's stake in the mine within 60 days in the event of a sale, BHP said.