North of 60 Mining News - The mining newspaper for Alaska and Canada's North

Having been rebuffed last June, an Israeli diamond consortium has made a second unsolicited bid for the lucrative Ekati mine in Canada's Northwest Territories.

But the offer by the DGI Group of Cos. drew a light-hearted response from Ekati owner BHP Billiton, with a spokesman in Yellowknife suggesting that "this comes around every year ... take it with a pinch of salt."

Graeme Currie, a mining analyst with Canaccord Capital, told the Financial Post that BHP, having spent millions of dollars to secure diamond exploration prospects in the Northwest Territories and Nunavut, would be unlikely to sell without opening up a data room to seek the highest offers.

The Israeli company said it has put Ekati at the top of its list of target companies as it embarks on a US$2 billion global shopping mission to acquire diamond mines.

No firm price tag, says Israili consortium

A DGI Group spokesman said there is no firm price tag attached to the Ekati bid, "but it is an offer to negotiate and to reach an agreement to buy," he said, claiming the company is aware of competing offers of up to US$700 million.

DGI Group said it sent a letter expressing its interest to BHP Billiton Chairman Don Argus.

BHP owns 80 percent of Ekati, having paid C$750 million in 2001 to buy out a 29 percent minority stake. The remaining 20 percent is in the hands of geologists Charles Fipke and Steart Blusson, who discovered the deposit.

Ekati currently produces about 4 million carats of diamonds a year, with profit margins that run at 35 percent or better. The mine accounts for about 4 percent of the world's diamond production by weight and 6 percent by value.

DGI Group describes itself as one of the world's leading wholesale distributors of rough and polished diamonds and says it has accumulated US$2 billion in cash to purchase operating assets.