Dominion Diamond Mines says the proposed sale of its Ekati mine to a subsidiary owned by its parent, the Washington group, will not go ahead.
Three insurance companies connected to Ekati have refused to agree to the deal, Dominion said in a news release on Friday. Their agreement was a condition of the sale going through.
The Aviva, Argonaut, and Zurich insurance companies have collectively issued around $280 million in surety bonds posted with the territorial government, designed to guarantee Ekati can be safely closed and reclaimed once mining ceases for good.
Dominion said the insurance companies and the Washington subsidiary set to purchase the mine had “reached an impasse in negotiations and there is no reasonable prospect of reaching a satisfactory agreement.”
The sale would have been worth just over $160 million, though some of the deal’s detractors said the true cash figure was set to come in significantly lower.
What will now happen to Ekati and hundreds of furloughed staff is unclear.
The mine has been in care and maintenance since the onset of the Covid-19 pandemic in the spring. It was the only one of three active NWT diamond mines to close.
A separate group of Dominion’s creditors had spent months trying to come up with its own bid to take over Ekati, but said its efforts were frustrated by a range of delays during the sales process.
That group of creditors was due to appear in court on October 14 in an attempt to block the sale. That court appearance will no longer go ahead.
However, the Washington deal’s breakdown means the clock provided by that sales process is no longer running in quite the same way.
That could allow the creditors to go ahead with a bid of their own in due course.
Time is running out to reopen Ekati in late 2020 or even in 2021.
Money, fuel, goods, and drivers need to be in place for the spring 2021 ice road season, which means the mine needs clarity on its future before that season comes to pass.
Ordinarily, according to court documents filed in the past week, Ekati’s owners would have already put most if not all of those arrangements in place.
Instead, the mine has tentatively committed to purchasing 10 million litres of fuel but has otherwise made no fresh arrangements.
Ekati staff at the mine were briefed at 2pm on Friday in a meeting at the mine’s gymnasium. Cabin Radio understands staff were told the mine is now expected to remain in care and maintenance for an indefinite period.
“Dominion remains in creditor protection until November 7, 2020, unless extended,” the company said in its Friday statement. The company has used that protection to spend the past six months finding a buyer and delaying repayment of some debts. Its renewal past November 7 can only happen if a court agrees.
“Dominion is working with its advisors and will be consulting with stakeholders to determine next steps,” the company added.