Denesoline Corp says it is owed ‘significant debt’ over Ekati

The Denesoline Corporation says it is still owed a “significant debt” promised by Dominion Diamond Mines, former owner of the NWT’s Ekati diamond mine. 

In a statement to Cabin Radio, Denesoline chief executive Ron Barlas said his company – the financial arm of the Łútsël K’é Dene First Nation – made “inordinate sacrifices” for the mine to continue operating as Dominion struggled.

Barlas said Denesoline has yet to receive a “seven-figure legacy payment” due in return. Barlas said the payment was part of an agreement with Dominion that involved support for the Jay pipe, an expansion once proposed at Ekati but subsequently dropped.

Dominion finalized sale of Ekati to a group of creditors, now known as the Arctic Canadian Diamond Company, in February. That deal included the new company acquiring $70 million of Dominion’s outstanding debt and many of Dominion’s obligations.

“Now that it has been successful in the insolvency process as a result of the major and dramatic concessions made by Denesoline Corporation and its various businesses, it remains to be seen if and how Arctic Diamonds will reciprocate and live up to their promises,” Barlas wrote. 

Ariella Calin, a representative for Arctic, said all debts and obligations the company assumed through its purchase of Ekati are “current and paid up to date, as committed in the transaction.”

Arctic did not respond to questions from Cabin Radio about the existence of a debt specifically owed to the Denesoline Corporation. 

Barlas said if Arctic were to pay the legacy payment owing to Denesoline, that would “provide a solid foundation and indication of their intent to honour their promises and obligations” to the corporation. He said Denesoline being denied the payment would be discriminatory, as other Indigenous communities were paid “many years ago.”

“All of this is not surprising given how the large corporations that own the diamond mines have historically treated Indigenous-owned businesses and communities in northern Canada,” Barlas wrote.

“We have countless examples of the adverse impact that each of the mines have brought upon northern communities, specifically as it relates to awarding contracts to Indigenous-owned companies, providing employment opportunities to community members, and paying royalties to the First Nations whose land has been deeply and irreparably impacted by virtue of diamond mining operations in the North.”

When Dominion Diamond entered court-controlled creditor protection in April 2020, the CBC reported the company owed $13.23 million to 50 NWT businesses, including several associated with the Denesoline Corporation. Under creditor protection, which was recently extended until December 15, creditors cannot pursue debts owed by Dominion outside that process. 

Many of the NWT businesses owed money by Dominion in April 2020 declined to comment this month or did not respond to questions about any money they may still be owed. 

One former employee at Ekati, who asked Cabin Radio that they not be identified, said they are waiting for Dominion’s creditor protection to end so they can pursue a legal claim for severance pay. 

Several non-unionized workers at the mine were terminated with no prospect of severance pay in September 2020, during a suspension of operations at Ekati related to the Covid-19 pandemic. They were among 391 staff who had been on furlough, or temporary unpaid leave, for months. 

“The operators of Ekati have walked away from hundreds of millions of dollars in debt. In the process, a lot of good, hard-working Ekati employees, suppliers, and contractors got kicked to the curb. And no one has had to answer for that,” the former employee wrote. 

Legal counsel for Dominion did not return Cabin Radio’s requests for comment. The court-appointed monitor of Dominion’s creditor protection, FTI Consulting, declined to comment on the ongoing proceedings.