As the Northwest Territories’ oldest diamond mine nears closure, an Australian company is keen to buy it and hopefully extend its life.
On Monday, Burgundy Diamond Mines announced its intention to acquire all shares of Arctic Canadian Diamond Company Limited, including its principal asset, NWT’s Ekati Diamond Mine, for US$187 million (US$136 million). Subject to funding and Burgandy shareholder approval, Arctic Canadian expects to close the transaction in late April.
“The real benefit is that it’s a tier one asset in a tier one country, which is really important to us,” Burgundy CEO Kim Trutter said of Ekati. Trutter is also listed as a director on Arctic Canadian’s board of directors.
Trutter sees untapped potential in Ekati and says he is “very confident” that Burgundy will be able to “significantly” extend the mine life.
“Canadian diamonds are very popular”
Canadian diamonds are currently an attractive commodity.
Industry watchers say diamond prices have hit new highs in recent years and with the war in Ukraine, buyers are turning their backs on Russia, one of the world’s top diamond producers.
“The provenance of diamonds is becoming very, very important,” said Rory Moore, President and CEO of Arctic Canadian Diamond Company. “Canadian diamonds are highly sought after because they offer a guarantee of ethical mining practices, both in terms of dealing with people and the environment.”
Ekati is attractive for other reasons too – the fancy yellow bricks it produces.
These colored diamonds are at the heart of Burgundy’s cutting and polishing process.
Burgundy wants to own every part of its supply chain, from mining to polishing and retail, and Trutter said Ekati is key to achieving that goal.
Burgundy would look for “innovative options” to extend mine life
The announcement of the proposed sale comes just over two years after Calgary-based Arctic Canadian bought Ekati from Dominion Diamond Mines, which had filed for bankruptcy protection.
On Tuesday, Burgundy, a public company listed on Australia’s ASX Stock Exchange, released further details about the proposed acquisition.
The company, which has experienced three consecutive years of declining earnings, would raise $206 million ($150 million) and pay off much of Arctic Canadian’s approximately $136 million ($100 million ) repay.
Burgundy also says it will be exploring “innovative options” to extend mine life, including remote subsea mining, exploration using AI technology and the possibility of developing the Jay deposit and the Fox underground pit.
“We want the mines to keep going”
That would be good news for Yellowknives Dene First Nation.
Chief Fred Sangris of Ndilǫ said many tribal peoples work in NWT mines in the north, including nearly 200 members of Yellowknives Dene.
“We always worry about work. If the mine closes, it’s not good for many of the workers who work in the mines,” he said.
“We want the mines to continue.”
Tom Hoefer, executive director of the NWT and Nunavut Chamber of Mines, said the proposed sale is good for the North.
“Ekati is a big mine with over 1,000 workers and contributes a lot to our economy,” he said. “It’s good for the whole north that it’s been in operation longer.”
Aside from Ekati’s workers and contractors, Hoefer said the mine life extension benefits the area as a whole through taxes, royalties and impact agreement payments.
The Yellowknives Dene First Nation are among four indigenous groups who have Impact Benefit Agreements with Ekati. Sangris said the sale would not affect their agreement.
In an emailed statement, NWT Minister for Industry, Tourism and Investment Caroline Wawzonek said Ekati plays an important role in NWT’s diamond industry.
The proposed sale, she said, would increase available equity for further exploration and new projects at the mine, “which will hopefully extend the life of the mine.”
