Government's Lifesaving $83m Loan for Ekati Mine

(IDEX Online) - Burgundy has secured a lifesaving loan from the Canadian government for its Ekati mine.

The company was facing imminent bankruptcy and closure of the deposit, amid cash shortages, unpaid debts, a collapsing rough diamond market and punitive US tariffs on Indian imports.

But the Australia-based company announced last Friday (19 December) that it had secured a loan of CAD 115m (USD 83.5m) through Canada's Large Enterprise Tariff Loan (LETL) facility, repayable over seven years.

"This loan is critical to assisting Burgundy and Ekati as it attempts to navigate rough diamond markets impacted by the current 50 per cent US tariff on imports from India, where 90 per cent of rough diamonds globally are cut and polished," said CEO Jeremy King in a statement to the ASX (Australian Securities Exchange).

"Rough diamond markets continue to be highly challenging for Ekati, and the Loan Facility provides the opportunity to continue operations whilst working toward a significantly lower cost profile, with a focus on higher-value diamond deposits within the Ekati complex."

He also told Canada's public broadcaster CBC: "We were in a very bleak, or stark, scenario. It was either this line or we were looking at bankruptcy and shutting the mine down."

Canada's federal finance department is providing the loan to Burgundy's subsidiary Arctic Canadian Diamond Company Ltd, which operates the mine.

It attaches strict conditions including job guarantees, after several hundred workers were laid off at the mine.

Pic of Ekati mine, courtesy Burgundy.