YELLOWKNIFE: Dominion Diamond Corporation has announced that it has entered into an agreement with C. Fipke Holdings Ltd to acquire its 10% participating interests in the Ekati Diamond Mine at a price equivalent to the price paid to BHP Billiton in 2013 for its interests.
The Chairman and Chief Executive Officer of Dominion Diamond Corporation, Robert A. Gannicott, said, "Although the sale by Chuck Fipke of his interest in the Ekati Project ends his financial involvement with Canada's first diamond mine, his contribution to its discovery and success goes well beyond that. The history of Canadian mining is full of stories of accidents of fate leading to discoveries but the discovery of diamonds in the Slave Geological Province is a story of years of dedicated technical work led by a focused technical expert with unwavering belief in the outcome."
The Ekati Mine property consists of the Core Zone, which includes the current operating mine and other permitted kimberlite pipes, as well as the Buffer Zone, an adjacent area hosting kimberlite pipes with both development and exploration potential. The Company currently holds an 80% participating interest in the Core Zone, with FipkeCo holding a 10% participating interest and Dr. Stewart Blusson holding the remaining 10% participating interest. The Company holds a 58.8% participating interest in the Buffer Zone, with FipkeCo holding a 10% participating interest and Archon Minerals Limited ("Archon") holding a 31.2% participating interest.
FipkeCo will sell its 10% interest in the Core Zone for US$50 million, subject to adjustments to reflect joint venture contributions and distributions since June 30, 2012, as well as interest from that date. The base purchase price would be payable in instalments over 31 months, and the Company would have the right, but not the obligation, to satisfy one or more instalments in common shares of the Company.
FipkeCo will sell its 10% interest in the Buffer Zone for US$17 million, subject to adjustments to reflect joint venture contributions and distributions since June 30, 2012, as well as interest from that date. The purchase price would be payable in cash on closing.
The joint venture agreements governing each of the Core Zone and the Buffer Zone contain a right of first refusal in favour of each joint venture party, which rights are exercisable for 60 days. If Dr. Blusson exercises his right in respect of FipkeCo's Core Zone interest, the Company would acquire an 8.89% participating interest from FipkeCo, rather than a 10% interest. If Archon exercises its right in respect of FipkeCo's Buffer Zone interest, the Company would acquire a 6.53% participating interest from FipkeCo, rather than a 10% interest.
It is anticipated that completion of the transactions would occur in September, 2014.
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