Juniors unite in Nunavut diamond project

Gary Park, Petroleum News Calgary correspondent

Northern Empire Minerals and Stornoway Ventures, two Canadian diamond exploration upstarts, have combined their stakes in a Nunavut project, setting the stage for deal-making with BHP Diamonds. The juniors now control 70 percent of the Aviat project on the Melville Peninsula, while Australia’s BHP is seeking a piece of the venture from Hunter Exploration Group, which has a 20 percent working interest and a 10 percent carried interest that allows it to benefit from royalties if the mine is built.

On May 5, Hunter received a C$7.1 million cash offer from BHP for its working interest and the marketing rights to the carried interest. The offer triggered a right of first refusal for Northern Empire and Stornoway, which have until June 4 to make a competing bid.

Stornoway chief executive officer Eira Thomas said May 20 that his company and Northern Exploration “feel more confident having 70 percent and retaining control of the project” if BHP is successful with its bid.

He said the companies are now trying to decide whether to hold their 70 percent stake or try to raise the money to trump BHP’s offer.

BHP already holds 80 percent of the Ekati mine in the Northwest Territories, Canada’s first large-scale diamond mine.