Burgundy boss says Ekati will return smaller, denies it’s a bailout

What will Burgundy Diamond Mines do with the $115-million federal loan it agreed this week? The company’s boss says the plan is a smaller mine focused on high-quality diamonds.

Jeremy King took over as Burgundy’s chief executive officer in May. His predecessor, Kim Truter, retired as a year unfolded that would trigger hundreds of layoffs at the company’s Ekati diamond mine.

The NWT mine appeared on the brink of closure until the federal government agreed to loan it $115 million through a program designed to counter the effects of US tariffs.

Though King described a struggle to find any other financial institution willing to help, he rejected characterization of the loan as a bailout, describing it as a “commercial exchange” that could benefit Ottawa if Burgundy’s fortunes rebound.

Burgundy says the best hope for Ekati is “looking toward our higher-value products” while figuring out how to make underground mining more economical – and running a smaller mine than Ekati once was.

Below, read a transcript of our interview with King in which he sets out the company’s strategy for the months ahead. You can also read our main coverage of the loan and a separate transcript of our interview with Yukon MP Brendan Hanley, who was the federal spokesperson on the deal.

This interview was recorded on December 16, 2025. The transcript has been lightly edited for clarity.

Ollie Williams: I just had a text message that says a $115-million loan to Burgundy has been approved. How are you feeling?

Jeremy King: We’re very grateful, I suppose, for the support from federal government, and we’re looking forward to utilizing it as a platform to continue operating. We face challenges still within the market but this gives us an opportunity to continue operating, continue to pivot our business toward higher-value products within the Ekati complex.

It’s been a long, long process, and at times a challenging one. We’re pleased to get to this point.

From the company’s perspective, I’m sure the money is welcome, but the situation’s dire, isn’t it? Why are you in this hole in the first place?

There have been three main reasons over the last 18 months that the industry has faced challenges. The first, I guess, is the continued ingress into the natural diamond segment by laboratory-grown diamonds or synthetic diamonds. That continues, particularly at a lower end of quality or smaller goods. We see that continuing but at a slower rate.

The second thing is the demand from China for natural diamonds fell away quite sharply. More recently, there’s been the imposition of tariffs from the current administration in the USA. Those are headwinds that all junior diamond miners have faced.

In a market riven with uncertainty, you tend to get a flight toward quality. That’s what’s happened with the natural diamond market. Prices for higher-end products have held up better than, say, lower-quality or smaller products.

It just so happens that the assortment of goods Ekati produces right now is a category of diamonds that has been particularly hit hard by those headwinds, and in particular the US tariffs.

Negotiations to get this money have gone on for months. What have you promised Burgundy will do in return for this help?

There are a number of conditions. It’s a program aimed at large Canadian enterprises who have been hit hard by the tariffs. But at the end of the day, it’s a loan program, right? So the group that administers the loan has the obligation to ensure the money they lend is appropriately looked after, if you like.

I’m not going to go into the specifics of all of the conditions, but they were related effectively to a balance sheet restructuring. We needed to get concessions from our senior debt holders. We needed to get concessions from our surety or environmental bond providers – the company pays millions of dollars in fees and premiums each year to ensure that the environmental liabilities are fully financed, so we had to get concessions from those groups – and we had to get concessions from our trade creditors as well.

That was challenging, those three big conditions, but I’m pleased to say all of those groups have been supportive of Burgundy and getting Ekati back to a position where it has an opportunity to become sustainable.

What will you do now? Is it a case of spinning Ekati back up to full strength? Is it more complicated than that?

In terms of our business plan and what we’re trying to do to meet the market, we’re looking toward our higher-value products at Ekati. That’s at the Sable open pit. We’re intending to reactivate the open pit at Sable and retrieve what has been left there, which is not a huge amount but nevertheless, it’s several months of production. That’s a higher value per-carat product.

At the same time, we’re looking to process a large stockpile of the Fox deposit, which was mined between 2004 and 2014. The upper parts of that deposit have been set aside and been sitting there for some time, but they contain high-quality diamonds as well. We need to build a small beneficiation or wash plant in order to make that stockpile go through our process plant smoothly, so we’re doing that and we expect that to come on stream in the third quarter of this year. That’s aimed at meeting the market and delivering high-value carat product.

At the same time, we’re looking at how we mine our existing underground operation at Misery and ways we can optimize how we use energy, fuel, all of those things.

Your stock has been voluntarily suspended on the ASX for months. You also broke ASX rules by taking a big loan from a closely linked company without getting shareholder approval for that first. How much of an obstacle was that in these negotiations, not being in compliance in Australia?

Those were not an impediment at all, really. The breach of ASX listing rule 10 was inadvertent. The sale of those products to the related party was carried out in an independent process with independent valuation, so we have nothing to worry about there at all. It was simply done as a matter of assisting with our cash flow at the time. Once this was explained to the CEEFC group, there were no concerns on that front.

The mine has built up some ill will in the NWT. There are workers there who don’t like Burgundy as a company – they tell us that much. There are territorial politicians who say this is a mine on life support that shouldn’t be getting a bailout. What is your response to people who are critics of how Burgundy has handled itself and who question whether the company deserves this kind of taxpayer help?

Everyone’s entitled to their opinion.

It’s not a bailout or grant, it’s a loan. We will, as part of it, be granting a significant amount of warrants in the equity of the company such that, if there is upside in the share price, the lender can avail itself of that. I would say it’s a commercial exchange, what we’re going through.

It’s worth bearing in mind the contribution Ekati has made to the local economy in the last 25 years. Right now it’s going through a challenging period, there’s no doubt about that. Is it guaranteed to come out of that off the back of this loan? No. There is risk, right? But I guess the group that distributes the loan is taking a calculated risk.

Ekati still employs a significant number of people in the North and we’re hopeful of getting it back on track so it can support them on a sustainable basis. So I understand the criticism, but I guess I’ll just make those points in response.

Do you feel as though you have some trust to earn back from what has happened at Ekati, or do you not see it that way?

I think we do to a degree. In particular, when I think about our trade credit position, I think that’s a reasonable thing to say.

None of that was taken lightly by us. We’ve been chasing our tail to make our cost base sustainable. We were always hopeful that prices would bounce back during the course of this year. Unfortunately, we haven’t seen that.

We’ve gone through the process of looking for funding not just with the federal government but globally, speaking to mining funds and special situation funds. We’ve been trying to stay afloat while we’ve been looking for funding to get us through what is obviously a very challenging time for us.

We’re grateful for the support. I want to thank everyone on that basis and assure them that we’re doing everything possible to get the business back on a sustainable footing. It will be a smaller business moving forward than we’ve had in the past. Hopefully more nimble and hopefully living within our means.