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Chuck Fipke fondly recalls the glory days of Arctic diamond exploration in the 1980s and early 1990s.
His budget was so tight that he flew around in a plane by himself, zigzagging across the Northwest Territories over an 800-mile stretch of prospective land. If he brought an assistant, it would have used up more fuel and left him less weight to carry rock samples.
“It was just fun every day,” the famous geologist said in an interview this week. “Most of the time when I’m working, it’s not really work to me at all.”
In 1991, his efforts paid off as he and partner Stewart Blusson hit the motherlode: They found the Ekati deposit, which became Canada’s first diamond mine and remains one of the richest diamond discoveries ever made.
The Ekati find made Mr. Fipke a prospecting legend and triggered a massive treasure hunt across the Arctic. Eventually, other large diamond deposits would be found as well: Diavik, Snap Lake and Gaucho Kué.
Mr. Fipke became a very wealthy man as shares of his company, Dia Met Minerals Ltd., soared through the roof. Dia Met was sold to mining giant BHP Billiton Ltd in 2001, but Mr. Fipke maintained exposure to Ekati through his 10% direct stake in the mine.
Until now. On Wednesday, Mr. Fipke announced a deal to sell his Ekati interest to Canadian miner Dominion Diamond Corp. for US$67-million, subject to interest and certain adjustments during the past two years. Dominion is already the majority owner of the mine, having bought out BHP’s stake last year.
It is a bittersweet decision to finally sell for Mr. Fipke, a native of Kelowna, B.C., who is now in his late 60s. But ultimately, it came down to harsh economics.
The core zone of the Ekati mine is likely to run dry in about five years, and there will be environmental reclamation costs in the hundreds of millions of dollars to shut the mine down. Mr. Fipke would be on the hook for 10% of that cost, which he said would be a large burden despite his wealth.
For the rest of this article, click here: http://business.financialpost.com/2014/07/12/legendary-geologist-chuck-fipke-reflects-on-ekati-discovery-as-he-sells-remaining-stake/