Mining giant BHP Billiton is to sell its diamonds business to Toronto-headquartered diamonds group Harry Winston for half a billion dollars, the company announced on Tuesday afternoon.
Under the terms of the $500m cash sale, Harry Winston will take over BHP's interests in the EKATI Diamond Mine and Diamonds Marketing operations, and will assume all of its obligations under EKATI's agreements with the Canadian government. All BHP employees associated with the diamonds subsidiary will move over to Harry Winston.
The divestment will see BHP take an impairment of $200m after tax to the value of the asset which will be reflected as an exceptional item in the group's results.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The EKATI mine is located nearly 200 miles north-east of Yellowknife in the Northwest Territories of Canada.
Tim Cutt, the President of BHP's Diamonds & Specialty Products division, 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."
The sale is subject to the approval from regulators but BHP expects it to complete in the first quarter of 2013.
BHP's shares were trading down 1.08% at 1,930p in the afternoon session.
