BHP clears last Ekati hurdle

Vancouver — Australian-based BHP (BHP-N) has moved a step closer to boosting its stake in Canada’s Ekati diamond mine by acquiring 98.2% of Dia Met Minerals’ class A shares and 84.9% of its class B shares.

In April, BHP ended months of speculation by emerging as the only bidder for Dia Met and its 29% stake in Ekati. The move gives the Australian major an 80% stake in Canada’s only diamond mine.

BHP offered $21 in cash for each outstanding Dia Met share, including Class A subordinate shares and Class B multiple voting shares. The offer is worth $687 million and is based on 32.7 million Dia Met shares outstanding on a fully diluted basis.

“The Ekati diamond mine continues to be great success for BHP and the acquisition of Dia Met will ensure assess to the rough diamonds to support its branding programs,” says Ron McNeilly, BHP’s president.

All of the conditions of BHP’s offer have been met, including regulatory approvals. In order for the remaining Dia Met shareholders to tender their shares, the company has extended the deposit period to July 3. After that date, BHP intends to exercise its statutory right to acquire the remaining class A shares.

Dia Met put itself up for sale on Oct. 17, 2000. The junior initiated the auction process after it was advised that two of its major shareholders, Marlene Fipke and David Mackenzie, were willing to entertain offers for their shares. Together, they owned 20% of the Class A shares and 39% of the Class B shares.

Dia Met’s main asset is its 29% stake in the highly profitable Ekati mine, 300 km northeast of Yellowknife, which entered production in October 1998. BHP is the operator and 51%-owner. The remaining 20% is split between geologists Charles Fipke and Stewart Blusson.

BHP has also inked a deal with Majescor Resources (MAJ-M) to earn up to a 56% interest in the Portage property, some 500 km northeast of Chibougamau in Quebec.

The major has approved a $1.1-million exploration and acquisition budget, which comprises extensive airborne geophysical surveys and heavy mineral sampling. Previous sampling on the property identified a kimberlite indicator mineral anomaly.

Under the terms of the agreement, BHP can earn up to a 56% interest in the Portage property by funding a multi-phased program and arranging for full production financing. The junior will be reimbursed up to $260,000 for recent staking costs and BHP will transfer 100% of its land position in the area to the partnership.

BHP must also complete the first-phase 200-tonne bulk sample within four years.