Ekati Owners File for Insolvency Protection

(IDEX Online) - Owners of the Ekati diamond mine in Canada's Northwest Territories have filed for insolvency protection, just months after agreeing federal loans worth up to CAD 175 million (USD 128 million).

Arctic Canadian Diamond Company (ACDC), a subsidiary of the Australia-based Burgundy Diamond Mines, has obtained an order from the Supreme Court of British Colombia granting it protection under the CCAA (Companies' Creditors Arrangement Act).

In a statement issued on 1 May, Burgundy blamed the move on the ongoing adverse impact of US tariffs on the natural diamond industry, a global slump in demand for natural diamonds, and increasing costs, notably of fuel, due to the Middle East conflict.

Last December, Burgundy announced it had secured a loan of CAD 115m (USD 83.5m) through Canada's Large Enterprise Tariff Loan (LETL) facility, repayable over seven years.

At the time, CEO Jeremy King said: "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."

In March of this year the company announced an expansion of that loan by additional CAD 60 million (USD 44 million).

Burgundy acquired the mine, together with 100% of ACDC shares, in March 2023 for a package worth USD 136 million, after ACDC bought the mine from Dominion Diamond Mines in 2021.

Burgundy says mining operations will continue during the CCAA process.

"Burgundy continues to believe in the long-term viability of the Ekati Diamond Mine and intends to emerge stronger, better and able to deliver value to all stakeholders," the company said.

Pic, courtesy Burgundy, shows the Ekati mine.