Harry Winston Diamond Corp. wants to spend less time on Rodeo Drive and more time hauling rock in the Canadian north. But the company's plans to expand its mining operations have hit a snag.
The Toronto-based miner recently announced it was selling its luxury retail business to Swatch Group for US$750-billion, plus the assumption of up to US$250 million in debt. The decision to sell the retail arm of the business to focus on mining follows Harry Winston's move late last year to acquire BHP Billiton's 80% stake in Ekati for $500 million, Canada's first and largest diamond mine.
Those plans are now delayed after C. Fipke Holdings (Fipco) filed legal action in the Ontario Superior Court against BHP, Harry Winston and Stewart Blusson and Archon Minerals. Harry Winston was hoping to complete the purchase by the end of March but is now hoping to obtain a ruling no later than April 15. If the ruling is in favour of the company, the sale of Ekati could be completed by May 15.
Fipco claims under its joint venture agreement with BHP that it has first rights to purchase BHP's share of the mine should the Australian miner exit the partnership. The claim also alleges that Harry Winston's debt financing arrangements for the purchase have interfered with Fipco's ability to raise its own financing. Chuck Fipke and Blusson are the two geologists who discovered the mine and each now owns a 10% stake in the property. According to the release, Blusson has no intention of filing a claim.
Harry Winston's decision to re-focus its attention on mining comes as the large international mining companies start to pull back from diamond mining operations and as the diamond demand slips as many of the worlds richest economies continue to battle economic headwinds.
Harry Winston's main mining asset is its 40% stake in the Diavik diamond mine in the Northwest Territories. Adding BHP's 80% stake in Ekati to would make Harry Winston a significant force in global diamond production.
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