Dominion Diamond Mines, which entered creditor protection this week, says it still plans to reopen its NWT Ekati mine following the Covid-19 pandemic.
Dominion said restrictions related to the pandemic mean the company cannot move or sell diamonds worth nearly $200 million, leaving it without the cash to make critical payments of $16 million this week and $28 million at the start of May.
Filing for creditor protection buys the company time to restructure, find new investments, or sell to a new owner in order to meet its obligations.
Of those options, Dominion told Cabin Radio it is pursuing a “restructuring of our balance sheet” that will let it reopen Ekati as soon as the pandemic allows.
In a statement, a Dominion spokesperson said: “As the spread of Covid-19 subsides and diamond markets reopen, Dominion plans to resume mining operations at Ekati and safely recall its furloughed workers.”
The company made the same pledge in emails sent to suppliers. In one, Charlene Lees – Dominion’s head of supply chain and site services – told a vendor Dominion would “participate in diamond sales as we always have” once the pandemic passed.
“We continue to believe in the long-term viability of our assets and our ability to extend the mine life of Ekati for years into the future,” Lees wrote.
The Ekati mine is a large driver of the NWT economy and Dominion says its business was worth more than $500 million to northern companies over the past two years. More than a thousand jobs are directly or indirectly related to the company’s work.
A Dominion spokesperson said employees who remain in their posts will keep the same responsibilities, compensation, and benefits without interruption during the creditor protection process.
More than 400 employees furloughed last month, as the pandemic hit, will continue to receive their existing benefits while not working.
A call-in meeting for all employees is being held at 2pm MT on Friday.
“Our commitments to employees and local communities remain a top priority for Dominion,” the email reads.
Environmental regulator ‘will discuss implications’
Dominion owns and operates Ekati and owns 40 percent of the Diavik mine. Both are located in the Lac de Gras region about 300 km northeast of Yellowknife.
The company said the creditor protection process “should have no impact on the current state of operations at either mine.” Rio Tinto, which operates and owns the majority of Diavik, declined to comment.
Operations at Ekati have been suspended since March. The site is being looked after by a small number of care-and-maintenance staff.
According to court documents Dominion filed related to solvency protection, the company employed 634 people at Ekati before the pandemic and paid 425 contractors last year.
Diavik remains in operation but has made some adjustments to account for the pandemic, such as sending home employees from smaller NWT communities that might be more vulnerable to an outbreak of Covid-19.
Dominion said filing for solvency protection will not affect environmental management and remediation at either mine. The company’s finances suggest it has posted approximately $400 million in securities to the GNWT to date for both mine sites. Those securities would be used to fund a clean-up if Dominion were no longer around to do so.
Ryan Fequet, executive director of the Wek’eezhii Land and Water Board – which has regulatory oversight of Ekati – said on Thursday the board “will be discussing the implications of [Dominion’s insolvency proceedings] with senior management over several phone calls in the coming days.”
With creditor protection now granted until at least May 2, Dominion said it will continue discussions with creditors and aims to agree to a restructuring plan to submit for the court’s approval.
“We expect in the coming months to reach an agreement on a comprehensive plan that will reduce our long-term debt and best position the company financially and operationally for long-term success when global economic and industry conditions improve,” an emailed statement reads.