The Australian mining giant, BHP Billiton Ltd. (BHP - Free Report) recently completed the divestiture of its interests in EKATI Diamond Mine and Diamonds Marketing operations to Dominion Diamond Corporation . The sale, announced on Nov 13, 2012, is valued at US$553.0 million.
Dominion, previously known as Harry Winston Diamond Corporation, will assume all the obligations related to the mine with the Government of Canada and Government of the Northwest Territories. Also, Dominion will continue to work with the businesses in Canadian North.
All the employees of EKATI mine will continue working as employees of Dominion. EKATI, being Canada’s first diamond mine, has a successful track record.
BHP Billiton’s interests in EKATI mine comprise two joint ventures, which are now sold to Dominion. BHP Billiton holds 80.0% interest in Core Zone Joint Venture, which consists of the existing operations and 58.8% interest in Buffer Zone Joint Venture, which focuses on the exploration targets.
Recently, BHP Billiton has been focusing on streamlining its operations by cutting down investments in assets apart from its core businesses. This divestiture fits in well with the strategy ahead of the divestiture of interests in Richards Bay Minerals and Yeelirrie in 2012.
BHP Billiton has recorded $211.0 million as post-tax impairment charge of the assets related to the diamond business, in the half year ended December 2012. In these fiscal 2013 first half results announced on Feb 20, reported earnings before taxes experienced a major blow from lower volumes of diamond production.
With the divestiture of the diamond business, we expect BHP Billiton to focus on its core competencies and grow in the coming quarters. BHP Billion currently has a Zacks Rank #3 (Hold). Other mining stocks worth a look are UR-Energy Inc. (URG - Free Report) and US Energy Corp. ; both carrying a Zacks Rank #2 (Buy).