The owner of the NWT’s Ekati diamond mine says it broke Australian Stock Exchange listing rules by agreeing a $23-million loan from a closely connected company without shareholder approval.
Burgundy Diamond Mines, which is based in Australia and has owned Ekati since 2023, made the admission in a statement posted to the exchange’s website.
ASX listing rule 10.1 requires that companies acquire shareholder approval for any deal that involves transferring assets to a party with existing close connections to the firm. Those are known as “related parties.”
In this case, Burgundy said, it agreed short-term financing worth $23 million (Aus $24.9 million) with Choron, an Indian diamond manufacturer that says it acquired a stake of just over eight percent in Burgundy two years ago.
Choron boss Anshul Gandhi sits on Burgundy’s board.
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By agreeing the loan with Choron – demonstrably a “related party” – and repaying it through the sale of rough diamonds without first asking shareholders, Burgundy broke ASX rules.
Earlier this week, Burgundy said it had “become aware” of the issue following correspondence with ASX officials and was in discussion with the exchange regarding the matter.
The error has the possibility to further disrupt Burgundy’s operations at a time when the mine has already laid off hundreds of people and pared back the value of monthly severance payments because of cashflow trouble.
In its statement, Burgundy said it had used independent and “experienced diamond valuators” to price the rough diamonds it sent to Choron in return for the loan.
“The company has suspended sale of inventory to Choron, pending ASX’s determination and anticipates seeking shareholder approval in relation to the matter as well as an expert report to opine on whether the transaction was fair and reasonable,” Burgundy’s statement continued.
