Sourcing

Court OKs Sale of Ekati Diamond Mine

SourcingDec 16, 2020

Court OKs Sale of Ekati Diamond Mine

Two wealth management firms are acquiring substantially all the assets of the mine’s owner, Dominion Diamond.

2020_Ekati_Diamond_Mine_aerial_view.jpg
The Alberta Court of Queen’s Bench has approved the sale of substantially all assets of Dominion Diamond to DDJ Capital Management and Brigade Capital Management. The company operates the Ekati Diamond Mine, seen here, and has a controlling interest in a nearby diamond exploration project.

Calgary, Alberta—A Canadian court has approved the sale of Dominion Diamond Mines ULC to a pair of wealth management firms, paving the way for the Ekati mine to reopen in early 2021.

The Alberta Court of Queen’s Bench approved the sale of Dominion to DDJ Capital Management LLC and Brigade Capital Management LP on Monday.

Under the terms of the deal, the firms acquire substantially all Dominion’s assets—which include the Ekati Diamond Mine in Canada’s Northwest Territories—while taking on $70 million in debt and providing a $70 million working capital facility that ranks behind the first-lien lenders.

DDJ and Brigade also agreed to fulfill Dominion’s obligations to: its employees, including their pensions; the Canadian government, including restoring the land at Ekati; and its Impact Benefit Agreement partners and other Indigenous groups and Northern communities.

In addition to Ekati, Dominion has a controlling interest in the Lac de Gras diamond exploration project just south of Ekati and Diavik.

The company also has a 40 percent stake in the nearby Rio Tinto-operated Diavik Diamond Mine, but that mine is not part of the sale. Dominion and Rio Tinto are involved in a separate legal battle regarding their partnership in Diavik.

Dominion Diamond filed for insolvency protection in April.

The company originally planned to sell itself to affiliates of its current owner, The Washington Companies, but that deal fell through over the objections of Dominion’s insurers.

Dominion announced the terms of its new deal with the wealth management firms last week. Both DDJ Capital Management and Brigade Capital Management serve as investment advisors to holders of the company’s second-lien notes.

The sale is subject to regulatory approval and other customary closing conditions and is expected to close by Feb. 1, though the parties have the option to extend the deadline if needed.

Dominion has said it is “making all efforts” to restart operations at Ekati by the end of January. The mine has been on care and maintenance since mid-March.

Michelle Graffis the editor-in-chief at National Jeweler, directing the publication’s coverage both online and in print.
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