October 13, 2020 by The Canadian Press
CALGARY – A deal to sell the suspended Ekati Diamond Mine in the Northwest Territories for about $166 million has fallen through after bond issuers refused to go along with it.
Owner Dominion Diamond Mines ULC says the offer by two affiliated companies, referred to as a “stalking horse bid,” was rejected by Aviva Insurance Company of Canada, Argonaut Insurance Company and Zurich Insurance Company Ltd. and there is “no reasonable prospect” of negotiating an agreement.
The three are issuers of about $280 million in surety bonds currently posted with the N.W.T. government to cover reclamation obligations related to the Ekati mine. The bid was subject to a condition that the bond issuers and purchaser reach an agreement.
The Ekati mine was to be returned to full operating status if the bid submitted by Canadian Diamond Holdings, LP, and CA Canadian Diamond Mines ULC, affiliates of the Washington Companies, was accepted through the sales process approved by the Court of Queen’s Bench of Alberta.
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 company in its court filing for Companies’ Creditors Arrangement Act protection in April.
Dominion says it will remain in creditor protection until Nov. 7, unless extended, and is working with its advisers and will consult stakeholders to determine next steps.
Dominion’s 40 per cent stake in the Diavik mine operated by rival Rio Tinto, located near Ekati about 300 kilometres northeast of Yellowknife, was not included in the sales deal.
Feature image via iStock.com/poco_bw