Financially troubled Dominion Diamond Mines, owner of the NWT’s Ekati mine, has accepted the only bid received for its assets – from its parent company, Washington.
Washington originally bought Dominion in 2017 for US$1.2 billion. In an unusual move, Washington will now buy out its subsidiary’s assets for a basic fee of US$126 million plus US$20 million to pay suppliers.
Washington will assume Dominion’s Ekati-related operating liabilities and will keep “substantially all” of Dominion’s employees, a statement on Wednesday read.
No other bids were received.
Washington’s bid specifically excludes Dominion’s 40-percent share in Ekati’s neighbouring mine, Diavik. It’s not clear what will now happen to that share in Diavik, which is majority owned and operated by Rio Tinto.
Rio Tinto executives are closely monitoring the sale process. “Rio Tinto remains focused on continuing to operate the Diavik diamond mine safely,” said a spokesperson.
Washington’s bid was a stalking-horse bid, considered the lowest-value terms that could reasonably accepted, with the intention of stimulating higher bids from other interested parties.
However, in practice, Washington was the only serious contender. Even three years ago, at the time of Dominion’s initial sale, Washington had been the only buyer in the market.
The sale is set to be completed by November 7, Dominion said. It requires court approval under Dominion’s creditor protection proceedings and Washington must also reach an agreement to provide continued security to the GNWT regarding Ekati’s eventual clean-up, as any mine operator must.
There is still no date for Ekati to resume operations. The mine has been closed since March when operations ceased on health and safety grounds owing to the onset of the Covid-19 pandemic. Dominion entered creditor protection shortly thereafter.
Hundreds of staff have been furloughed for months.
“Dominion is working to return to full operations at Ekati, pending the completion of the transaction, a successful recovery of global diamond sales, and the company’s ability to maintain a safe and healthy work environment for its employees and the communities in the Northwest Territories,” the statement read.