Ekati owners outline tentative reopening plan for mine

Dominion Diamond Mines expects its NWT Ekati mine to resume full operations in the fourth quarter of 2020, the company told employees on Friday.

Ekati was shut down in mid-March on health and safety grounds as the Covid-19 pandemic reached the territory. The NWT’s two other active diamond mines, Diavik and Gahcho Kué, have continued to operate.

Pat Merrin, Dominion’s interim chief executive, said the financially troubled company expects its assets to be sold to its parent, Washington – or a higher bidder – some time between August and October this year.


A sales process was approved by an Alberta court last week as part of Dominion’s entry into creditor protection, which allows it to pause repayment of many debts while the company is restructured or sold.

So far, Washington has made the only firm bid. It is considered a stalking-horse bid, in other words and offer designed to act as a reserve price in case nobody else comes forward.

“The sales process does not need to be completed in order for us to reopen the Ekati mine,” Merrin told staff in a conference call on Friday morning.

Merrin said a phased approach to reopening would be taken, and restarting Ekati depended on three main factors: the ongoing process of selling Dominion, resumption of the global diamond market, and pandemic-related health and safety.

“We anticipate returning to full operations in the fourth quarter of this year,” he said.


“We are working with the NWT government, our employee union, and other stakeholders to understand the implications of the current timeline.

“Nothing is more important than protecting the health of our employees but we also recognize the important of getting people back to work and supporting the economy of the Northwest Territories.”

More than 400 furloughed employees were initially told to expect a return to work in August. Megan Bufton, Dominion’s head of human resources, said this timeline had been pushed back.

Merrin said Dominion did not think Ekati would remain permanently shut down, but acknowledged reopening Ekati in the northern winter would be challenging and expressed a hope to reopen before the cold fully sets in.


He did not, however, rule out some employees being permanently laid off.

“We are hopeful that the majority of employees can return to Dominion once the Ekati mine reopens. However, this is clearly a fluid and dynamic situation and it is hard to predict the future,” Merrin said.

‘Positive signs’ for global diamond market

Diamond mining companies active in the North differ in how they have handled Covid-19 and how they evaluate their ability to sell diamonds during the pandemic.

DDMI, the Rio Tinto subsidiary that controls the NWT’s Diavik mine, has in recent months described being able to find buyers for its diamonds.

Mountain Province Diamonds, De Beers’ junior partner at the Gahcho Kué mine, earlier this month announced it would sell USD$50 million in diamonds to Dunebridge, a company controlled by Mountain Province shareholder Dermot Desmond.

“We need global diamond sales to resume in a meaningful way,” Merrin said on Friday, setting out Dominion’s view of the market.

“We are starting to see positive signs and plan to participate in a diamond sale in mid-July.”

Relations have deteriorated significantly this year between DDMI and Dominion, the two companies who jointly own Diavik. Each has accused the other of operating irresponsibly in recent court filings.

Dominion, for example, has launched a separate legal action in British Columbia suing DDMI for mismanagement of Diavik.

That breakdown in relations has implications for Dominion’s sale. The company’s 40-percent stake in Diavik is one of the assets expected to be sold, but Washington may choose not to acquire that stake.

What happens if Washington decides not to buy that 40-percent share in Diavik is unclear.

“We are hopeful we can reach a mutually beneficial resolution with Rio Tinto … that helps protect the future of diamond mining in the Northwest Territories,” Merrin said on Friday.

A first round of bids for Dominion, from Washington and any other interested party, is expected to be complete by July 20. Merrin said the company would have a clearer picture of its future by that point.