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Dominion Diamond agrees to sell Ekati

About eight months after filing for bankruptcy protection Dominion Diamond Mines says it has agreed to sell its Ekati mine in Canada’s Northwest Territories to its second-lien noteholders.
Dominion Diamond agrees to sell Ekati Dominion Diamond agrees to sell Ekati Dominion Diamond agrees to sell Ekati Dominion Diamond agrees to sell Ekati Dominion Diamond agrees to sell Ekati

Dominion Diamond Corp has agreed to sell its Ekati mine in Canada's Northwest Territories to creditors

The Washington Companies-owned miner filed for insolvency protection under Canada's Companies' Creditors Arrangement Act in April, citing disruption to the global diamond market caused by the COVID-19 pandemic which caused it to put Ekati on care and maintenance.

Subject to court approval, a new vehicle controlled by Dominion's creditors DDJ Capital Management and Brigade Capital Management will acquire most Dominion assets, excluding a 40% stake in the Rio Tinto-operated Diavik mine, in return for assuming the company's debt liabilities and for providing a US$70 million working capital facility.

Dominion said the capital injection would be used to fund the post-closing liabilities, operations at Ekati, and for general working capital purposes. Dominion is locked in a separate legal battle with Rio Tinto over the Diavik operation, where it stopped paying its share of bills after being granted creditor protection.

The bidders have agreed to restart Ekati by January 29, 2021, at the latest. Dominion last month recalled 60 furloughed employees.

However, a sale of the mine to an affiliate of Dominion's parent company, The Washington Companies, for $126 million failed to win the support of insurance providers. Washington Companies acquired a controlling interest in the Ekati mine in 2017 as part of its $1.2 billion acquisition of Dominion.

The deal is expected to close by February 1.

The Ekati mine is well known for its premium gem-quality diamonds. The largest gem-quality stone from the mine is a 186-carat diamond from the Pigeon pit, recovered and sold in 2016. Cumulative production to January 2017 totalled about 67.8 million carats.

The Ekati mine plan, including the Misery underground and the Jay project, runs through to 2034. Several exploration and project evaluation activities are ongoing, including the Fox Deep project which could extend Ekati's life to 2042.