Global resources giant BHP Billiton (BIL) has signed definitive agreements to sell its diamonds business‚ comprising its interests in the EKATI Diamond Mine and Diamonds Marketing operations‚ to Harry Winston Diamond Mines Ltd for an aggregate cash consideration of US$500 million.

The transactions are subject to regulatory approval and other customary conditions. Completion is expected in the first quarter of calendar year 2013.

Under the terms of the agreements‚ Harry Winston will assume all of BHP Billiton’s obligations under EKATI’s Environmental Agreement with the Government of Canada and the Northwest Territories‚ Socio-Economic Agreement with the Government of the Northwest Territories‚ Impact and Benefit Agreements with Aboriginal Groups and pension liabilities linked to the mine’s defined benefit scheme.

Harry Winston is also committed to maintaining EKATI’s environmental standards and will continue to work with local businesses and communities in the Canadian North. All BHP Billiton employees working at EKATI‚ in Yellowknife and in Diamonds Marketing in Antwerp will become employees of Harry Winston as part of the transaction.

BHP Billiton Diamonds & Specialty Products President Tim Cutt said: “We are very proud of EKATI’s track record and the substantial value it has created for the region and our shareholders. The mine’s success is a credit to the people who work there‚ at Yellowknife and with the marketing team in Antwerp. Harry Winston has long experience in the Canadian diamond industry and their commitment to study further development at EKATI could help extend the mine’s contribution to Northern Canada for many years to come.”

BHP Billiton Chief Executive Non-Ferrous Andrew Mackenzie said: “The divestment of EKATI is consistent with our focus on large‚ long-life‚ low-cost‚ expandable‚ upstream assets and‚ together with the recent sale of our interests in Richards Bay Minerals and Yeelirrie‚ reflects our ongoing pursuit of a simpler business.”

The EKATI joint venture parties holding the minority interests in the EKATI mine hold pre-emptive rights to purchase BHP Billiton's interests and have 60 days from the date they are provided with notice to exercise such rights.

Harry Winston's agreements to purchase BHP Billiton's EKATI interests are subject to the expiration or waiver of these pre-emptive rights and other customary regulatory and closing conditions.

The divestment of EKATI will result in an impairment of approximately US$200 million (post tax) to the carrying value of the asset which will be reflected as an exceptional item in BHP Billiton’s financial results. - I-Net Bridge