Inside Ekati’s insolvency: Here’s the full scale of the problem

The Ekati diamond mine has liabilities of more than half a billion dollars, has shed hundreds of jobs and no longer has any cash to pay remaining workers.

That’s the position taken by bosses at Burgundy, the mine’s owner, in court filings this week that declare the mine to be insolvent.

Burgundy is preparing to try to sell the mine in the weeks ahead.

The documents set out:

• glaring environmental concerns, with Burgundy appearing to be at least $100 million short on security deposits to cover the mine’s remediation;
• more than $60 million is still owed to contractors, despite Burgundy negotiating debt forgiveness from firms that is worth $18 million;
• more than $8 million is owed in impact benefit agreement payments to Indigenous governments;
• diamond prices have collapsed by 74 percent since American tariffs began, though that’s attributed to multiple factors; and
• employment at the mine has more than halved, dropping from 1,240 employees and contractors in 2024 to about 575 at the end of March.

The entirety of a $175-million loan offered by a federal Crown corporation has been taken by Burgundy but appears to have made barely a dent in the company’s financial crisis.

“Cash reserves are depleted and absent near-term funding, ACDC cannot meet its payroll and other obligations,” stated head of finance Brent Mierau in an affidavit, using an initialism for Arctic Canadian Diamond Company, the Burgundy subsidiary that directly owns Ekati.

“Knowing its financial situation and given the nature of a diamond mining operation, ACDC has commenced preparatory steps towards scaling down operations at the Ekati Mine in an effort to preserve value,” Mierau continued.

Even so, Mierau believes Burgundy “remains in possession of a viable business” that can be turned around.

The company says it is working on a “restructuring strategy” and intends to ask the court this month for permission to start what is known as a sale and investment solicitation process – a court-supervised sale of the mine.

Here are nine takeaways from the documents filed so far.

1. There’s no more cash

Mierau says ACDC’s cash reserves are “depleted.”

Only through more than $7 million in specialized debtor-in-possession financing – a form of loan available to insolvent firms – is Ekati expected to get through the next 10 weeks.

Ekati would not have been able make payroll in the coming weeks without entering creditor protection, the court-filed documents state.

2. The scale of the debt

At the end of 2025, the mine had liabilities worth about US $482 million – $655 million in Canadian dollars at current exchange rates.

That includes the $175 million taken through a federally backed loan initially worth $115 million and then increased. A condition of the $60-million increase was that Burgundy raise $25 million in equity by May 1, a deadline apparently missed.

Huge sums are also owed to various private financial providers.

Ekati owes about $63 million to trade creditors like businesses that provide services to the mine. That’s despite reaching about 150 separate agreements that collectively saw firms forgive Ekati about $18 million in debt.

Overall, Burgundy says it recorded a net loss of US $86.8 million in 2025.

3. Details of IBA debt

We already knew Ekati was well behind on payments under impact benefit agreements, which are the deals Indigenous governments hold that ensure local benefits from the mine.

The court filings provide some numbers attached to those obligations.

At the end of 2025, those agreements were worth about $45 million. The documents state: “ACDC is in arrears of its annual IBA payments for 2025 and 2026, with approximately CDN $5 million owing for 2025 and approximately CDN $3.2 million owing for 2026.” An exact breakdown isn’t given.

4. Reclamation security gap

Burgundy estimates $428 million is the full cost of reclaiming Ekati.

However, the total security held by the mine toward that cost appears to come out closer to $327 million – not all of which might be available if governments go knocking to collect it.

Two sets of surety bonds provide about $197.5 million. There’s about $84 million in an environmental trust and associated deposits and another $45 million held through other financial arrangements.

Burgundy asserts one reason for creditor protection is “to avoid a potentially sudden abandonment of the Ekati Mine.”

5. The workforce has shrunk

We’ve reported previously on layoffs at Ekati, but Burgundy did not previously provide a detailed picture of what was happening. Now it has.

In 2024, the mine had about 700 employees and 540 contractors according to the documents. By the end of 2025, that had fallen to 480 employees and 405 contractors.

At the end of March 2026, there were 350 or so employees and about 200 contractors.

Burgundy says about 30 percent of Ekati employees at the end of 2025 were northerners, as were 20 percent of its contractors.

6. Diamond prices have cratered

We already knew the natural diamond market was really struggling – witness the financial trouble at the nearby Gahcho Kué mine, for example, which is facing the same problem.

Lab-grown diamonds are now cheaper and just as attractive to many customers, while tariffs and reduced demand from China are also cited as issues.

Burgundy says its price per carat went from US $92 at the end of 2024 to US $24 by December last year.

7. Burgundy’s fortunes shifted significantly

The court documents tell the story of an 18-month collapse.

In mid-2023, Burgundy was celebrating some record figures and boasting about outperforming the market.

By the end of 2025, the company had negative equity, was losing money on every diamond it sold, had burned through more than $100 million in cash, and was borrowing from a director’s company at 15-percent interest by selling diamonds to that same lender.

Warnings in financial statements escalated from “material uncertainty” to “we cannot meet our obligations.”

8. Behind-the-scenes government action

The court documents reveal details of negotiations with governments that we weren’t previously told about.

For example, the NWT’s three diamond mines wrote to the GNWT in March 2025 to “express their shared concerns about the profitability of all three mines” according to Mierau.

In August last year, Mierau says, various Indigenous governments wrote to NWT MP and federal Crown-Indigenous relations minister Rebecca Alty to express similar concerns.

In November last year, when Burgundy was still waiting for a federal Crown corporation to approve a massive $115-million loan, the company took out an interim $9.5-million loan to help keep it afloat. According to Mierau, the GNWT “agreed to provide an interest payment contribution of US $1.5 million” in connection with that loan – in other words, the territorial government paid some of the loan interest.

9. Still viable?

Burgundy insists Ekati is still a potentially profitable enterprise, despite all of this.

“While ACDC remains of the view that it has a viable business, it presently finds itself in a liquidity crisis,” Mierau stated in his affidavit.

“Simply put, ACDC is no longer able to fund the day-to-day costs of operating the Ekati Mine, including payments to employees, trade creditors, and suppliers, in addition to its other ongoing financial obligations.”

On May 11, Burgundy intends to ask the British Columbia court overseeing the creditor protection process for permission to begin a sale process for Ekati.