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Economy

Dominion announces sale of Ekati to group of creditors

Last modified: December 7, 2020 at 11:01am


For the second time this year, Dominion Diamond Mines says it has reached a deal to sell its NWT Ekati mine.

In a news release on Monday, Dominion said it had reached a deal with two investment managers representing creditors of the company.

The agreement is subject to court approval because Dominion has been in a court-controlled creditor protection process since April, which has provided the company with protection from its debts while it worked on a sale.

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In May, Dominion said it would sell its Ekati assets to another subsidiary of its parent company, the Washington group.

However, that sale fell through in October when insurance companies involved in the deal exercised their veto. The group of creditors now set to buy the mine had earlier complained at being shut out of that initial sale process, then scrambled to put together a bid when the Washington sale collapsed.

Last week, the court-appointed monitor overseeing Dominion’s creditor protection suggested discussions with the insurance companies related to this latest deal were making better progress.

The creditors planning to buy Ekati were “in ongoing negotiations with the surety providers and expect to have an agreement in the near term,” an update provided to the court by the monitor read.

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“The surety providers have independently advised the monitor that they have had very positive discussions with the GNWT and that the parties are in the process of documenting an arrangement.”

The GNWT is involved as a condition of any sale is that the buyer must inherit responsibility for cleaning up Ekati and the security payments lodged with the NWT government to ensure that happens.

Alongside Ekati, Dominion also owns 40 percent of the neighbouring Diavik mine. That interest in Diavik is excluded from the terms of the sale announced on Monday, and it remains unclear what will eventually happen to Dominion’s share of that mine.

According to its news release, Dominion’s Ekati debts will be assumed by the buyers, who will also provide a $90-million working capital fund for Ekati to resume operations.

The mine has been shut down since March as a result of the Covid-19 pandemic.

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