Ekati mine Image credit: Dominion Diamond Mine
Canadian company Dominion Diamond Mines has announced a deal that will allow it to exit court protection from creditors and gain access to short-term operating funds, which will ultimately pave the way for resumption of production at its inactive Ekati mine in Canada’s Northwest Territories, says mining.com.
Dominion Diamond, which also owns a 40% stake in the neighboring Diavik mine, announced that it has signed a letter of intent with a subsidiary of Washington Companies, a North American group for mining and transportation.
A private conglomerate from Montana bought Dominion for $ 1.2 billion in 2017, when the mining company was the world's third largest producer of rough diamonds by value.
Under an agreement that requires court approval, Washington will buy back the company's assets for about $ 177 million, while taking on its operational obligations.
According to the agency, it would allow it to exit court protection from creditors, access short-term operating funds and eventually restarting its idled Ekati diamond mine and would also provide Dominion with up to $84 million in short-term debtor-in-possession financing.
The diamond production at the Ekati mine that is still in operation began in 1998.
The mine was mothballed since march to stop the spread of Covid-19. The operation was reportedly left with about $180 million worth of inventory, which it has been unable to sell since its Belgian retailers remain closed.
According to court documents, Dominion revenue from diamond sales last year amounted to about$528 million.
The company said the proposed sale would be conditional on reaching an agreement with Rio Tinto on the Diavik joint venture.
Alex Shishlo, Editor of the Rough&Polished European Bureau
