Dominion Diamond Mines announced on Wednesday that a bid worth more than US$146 million to buy almost all of its assets related to the shuttered Ekati Diamond Mine has been successful.
The bid was made by firms affiliated with Washington, Dominion’s parent company, and include Canadian Diamond Holdings, L.P. and CA Canadian Diamond Mines ULC. Their bid was the only one submitted for the purchase of Dominion’s assets.
The transaction would include about US$126 million in cash, US$20 million to be forwarded for pre-filing trade suppliers and Washington Companies taking on “substantially all” of Dominion’s other Ekati-related operating liabilities, including offering employment to almost all of Dominion’s employees and the assumption of pension obligations, the company said in a news release.
Dominion’s 40 per cent interest in the Diavik Diamond Mine joint venture isn’t part of the sale.
The company closed the Ekati mine in March due to concerns over the Covid-19 pandemic. It filed for insolvency about a month later. Ekati is Canada’s first diamond mine and began operations in 1998. It lies about 310 km northeast of Yellowknife, near Lac de Gras.
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The Washington Companies agreed to purchase Dominion’s assets in May.
The sales process was approved by the Court of Queen’s Bench of Alberta on June 19.
The bid’s closure is subject to several conditions, including approval by the Court and the Washington Companies making an agreement with the issuers of the surety bonds presently posted with the GNWT to provide continued security for the reclamation obligations related to Ekati.
If all conditions are met the sale is expected to close by Nov. 7.
“Dominion is excited about its future under Washington’s continued ownership and we expect the Court to approve the transaction in the next couple weeks,” said Dominion CEO Pat Merrin.
“Dominion is working to return to full operations at Ekati, pending the completion of the transaction, a successful recovery of global diamond sales and the Company’s ability to maintain a safe and healthy work environment for its employees and the communities in the NWT.”
In June, Merrin was optimistic that Ekati could resume operations possibly as soon as the fourth quarter of 2020.