Harry Winston Diamond Corp., actor Ben Affleck's go-to brand for engagement rings, will shell out $500 million to buy a controlling interest in a Canadian diamond mine.
The Toronto purveyor of precious stones struck a deal with Australian-based BHP Billiton to take over the company's 80% stake in the Ekati mine 120 miles south of the Arctic Circle. Harry Winston will also gain BHP's sales, sorting and marketing operations.
Ekati is Canada's first diamond mine. Each year for the past five, it has produced more than $750 million worth of rough diamonds, or 6% of the world's supply by value.
Harry Winston has agreed to maintain Ekati's environmental standards and relationships with local communities, according to the companies. They expect Ekati to have seven more years of production in the pipeline but are also holding out for "additional resources which could become economic with increased diamond prices."
Depressed demand and an 11% drop-off in rough diamond prices since the start of the year were "perplexing" to Harry Winston, causing the company to hold onto some $65 million in stock in hopes that prices will improve later this year, said Chief Executive Robert Gannicott in a conference call with analysts this fall.
The stringent credit situation has also caused supply chain destocking, though Gannicott said he expects demand to perk back up amid the year-end holiday season.
The Ekati transaction is set to wrap up in the first quarter of next year, pending regulatory approval.