Mining giant BHP Billiton has sold its controlling interest in Nunavut’s Chidliak project, giving the other stakeholder, Peregrine Diamonds, 100 per cent ownership.
“We view Chidliak as a shining example of how a major and junior company can work together to add real value to a mineral project,” said Eric Friedland, Peregrine’s chief executive officer (CEO). “We now look forward to advancing Chidliak to become Baffin Island’s first diamond mine.” Peregrine previously owned 49 per cent of the mine.
The deal—which will be completed by Jan. 31—calls for the company to pay BHP $9 million over three years and a two per cent royalty on future production from Chidliak. If BHP decides to sell the royalty to a third party, Peregrine has the right to match the offer.
“A 100 per cent stake in Chidliak at a time when diamond supply shortfalls are on the horizon and worldwide demand for diamonds continues to grow offers us complete flexibility on how this project will be developed to maximize shareholder value,” Friedland said. “I believe BHP Billiton’s acceptance of a royalty speaks volumes about Chidliak’s potential to become a significant royalty-generating diamond mine. In addition, the acquisition of [BHP’s] Canadian regional diamond exploration database could significantly increase our chances of discovering the next new Canadian diamond district.”
News of the sale comes less than a month after BHP announced it was reviewing its continued presence in the diamond industry and selling its Ekati mine.
BHP says it will only pursue those offers that “will preserve Ekati’s outstanding safety and environmental standards and protect the benefits that the mine has created for local communities.”
