Failing to come to an agreement at the 10-sq.-km Knife project in the north Slave Craton region of Nunavut, De Beers Canada Exploration has commenced legal proceedings against Rhonda (RDM-V) in the Ontario Superior Court of Justice.
The two had been trying to hammer out an agreement including the creation of a mutually favourable diamond sales and marketing arrangement.
The Canadian exploration division of De Beers is seeking, among other things, a declaration as to the existence of an agreement between the two companies providing for De Beers to earn a 70% interest in the property by spending $10 million over six years and carrying Rhonda to production.
In an Aug. 7 press release, Rhonda claimed that the two companies had simply been in negotiations for an option and joint venture agreement since April 2000.
De Beers points to, “many previous public statements by Rhonda that De Beers was its joint venture partner, and that there existed an agreement between them whereby De Beers had the option to earn a 70% interest in the property.”
De Beers also wants Rhonda to confirm that the major has earned a 51% undivided ownership interest in the property.
The sticking point in the talks for Rhonda was that De Beers was trying to link the joint-venture agreement to a sales-and-marketing agreement.
Rhonda’s President Glen Alston said, “We have told them that there is no linkage and there is no reason we need to complete a DTC [Depository Trust Company] agreement before we complete the joint-venture agreement.”
De Beers, on the other hand, has suggested to Alston that it was not prepared to proceed with the joint-venture agreement until the DTC agreement was completed.
On Monday, the South African-based diamond giant posted first-half net earnings of US$251 million, less than half the year-ago US$633 million. The drop is owing to the loss of earnings from its former stake in Anglo American (AAUK-Q).
Rough diamond sales for the first six months of the year tallied to US$2.84 billion, up 8.5% from a year earlier.
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