The owner of the Ekati diamond mine is proposing a transaction that would allow it to exit court protection from creditors, provide short-term operating funds and allow it to eventually restart the suspended mine.
Dominion Diamond Mines ULC says it has signed a letter of intent with an affiliate of The Washington Companies under which an entity to be managed by Washington would buy its assets for about $177 million while assuming its operating liabilities.
Under the deal, which requires court approval, Washington would also provide Dominion with up to $84 million in short-term debtor-in-possession financing.
The Washington Companies, a Montana-based group of privately held companies, bought Dominion for US$1.2 billion in 2017.
Operations at Ekati have been suspended since March to prevent spread of the COVID-19 pandemic. The company cited the virus’s negative impact on diamond transport and marketing in filing for Companies’ Creditors Arrangement Act protection in April.
According to court documents, Dominion had revenue from diamond sales of about US$528 million in 2019 and employed 634 people at Ekati before the pandemic.
Dominion also owns 40 per cent of the Diavik mine operated by Rio Tinto, located near Ekati about 300 kilometres northeast of Yellowknife.
It says the proposed sale would be conditional on reaching an agreement with Rio Tinto on the Diavik joint venture – failing that, the assets being sold could exclude the Diavik interest, Dominion said.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.