Suspended Ekati diamond mine to be restarted by Jan. 29 under new sales agreement
December 7, 2020
December 7, 2020
(CP) CALGARY – Dominion Diamond Mines ULC says it has struck a new sales agreement for Canada’s first diamond mine that will result in the suspended Northwest Territories project restarting production before Jan. 29.
The Calgary-based company says it will sell its Ekati mine about 300 kilometres northeast of Yellowknife to an entity controlled by DDJ Capital Management, LLC, and Brigade Capital Management, LP, both investment managers for holders of Dominion’s second lien notes.
The sales agreement doesn’t include Dominion’s 40 per cent stake in the nearby Diavik Mine, operated by 60 per cent partner Rio Tinto Group.
Dominion says the buyer has agreed to assume liabilities owing to its creditors, employees, suppliers and surety bond holders, including US$70 million of debt under its revolving credit agreement, and provide a US$70 million working capital facility for the mine’s ongoing operations.
In October, Dominion reported a deal to sell the assets for about $166 million had fallen through after it was rejected by issuers of about $279 million in surety bonds posted with the N.W.T. government to cover reclamation obligations related to the mine.
The new sales deal is subject to court approval, transfers of government and regulatory authorizations and other closing conditions.
Operations at Ekati were suspended in March to prevent spread of the COVID-19 pandemic. The virus’s negative impact on diamond transport and marketing was cited by the insolvent company in its court filing for Companies’ Creditors Arrangement Act protection in April.
Dominion announced last month it had invited about 60 furloughed workers to return to work to prepare for an anticipated restart of the suspended mine as it worked on an agreement with creditors.