Burgundy Halts Some Rough Sales over "Finance Breach"
October 13, 25
(IDEX Online) - Loss-making Burgundy Diamond Mines has suspended sales of rough diamonds to one of its biggest shareholders, over concerns that it breached Australian Securities Exchange (ASX) rules.
The company, based in Perth, Australia, received AUD 24.9m (USD 16.2m) in short-term financing in 2023 for its Ekati mine, in Canada, from Antwerp-based Choron Group, which is an 8.4 per cent shareholder.
The financing was secured by, and settled through, the sale of rough diamond inventories from Burgundy to Choron, but was not approved by other shareholders.
Burgundy acknowledges in an ASX announcement (dated 7 October) that the arrangement was in breach of listing rule 10.1. , which requires shareholders (or related parties) to approve agreements for the sales of assets to related parties in certain circumstances.
"The company has suspended sale of inventory to Choron, pending ASX's determination and anticipates seeking shareholder approval in relation to the matter as well as an expert report to opine on whether the transaction was fair and reasonable, with further details to be announced in due course," Burgundy said.
Sales to Choron were priced at the average of two independent valuations conducted by experienced diamond valuators appointed by an independent third party, Burgundy said.
"This approach accelerated the inventory turnover cycle and ensured there was no unsold inventory, as is often the case in the company's traditional sales channels."
Choron CEO Anshul Gandhi sits on Burgundy's board as a non-executive director. Burgundy sales to parties other than Choron are not affected.
Burgundy reported a net loss of $29.5m for the first half of 2025 and announced hundreds of job losses at Ekati in July, as falling prices made some of its operations "sub-economic".
Pic shows Ekati diamond mine.