Operator of Ekati Diamond Mine Granted Insolvency Protection

London—Dominion Diamond Mines announced Thursday it has filed for and was granted insolvency protection under the Companies’ Creditors Arrangement Act (CCAA) in Canada.

The CCAA is a federal act that allows financially troubled companies owing more than $5 million to creditors 30 days of protection to financially restructure while avoiding bankruptcy and allowing the creditors to receive some money.

Based in Calgary, Dominion owns the Ekati Diamond Mine and is the 40 percent JV partner in the Diavik Diamond Mine operated by Rio Tinto. Both mines are located in Canada’s Northwest Territories, less than 200 miles south of the Arctic Circle.

In a statement released Thursday, the company said the COVID-19 pandemic was the primary driver behind its filing.

It closed the Ekati mine fairly early on in response to the pandemic, shuttering operations there March 19, citing the disease’s rapid spread, the mine’s remote location and the high frequency of air travel required by staff.

Diavik, which is less than 20 miles from Ekati, is still fully operational, Rio Tinto confirmed.

“Although the company has strong diamond inventory, sorting houses and diamond markets are closed,” Dominion said. “These are key channels to facilitate the sale of the company’s inventory, so currently there is no ability to generate sufficient revenue to support Dominion’s ongoing financial obligations.”

The Washington Companies, which bought Dominion in 2017, offered to provide debtor-in-possession financing to provide it liquidity through the CCAA process in exchange for Dominion agreeing to a memorandum of understanding (MOU) regarding its possible sale to a Washington Companies affiliate as a stalking-horse bidder. Dominion would also be required to solicit other bids to either buy or invest in the company.

Dominion said whether or not it accepts The Washington Companies’ offer, it expects to obtain new financing, emerge from CCAA and reopen.

“As the spread of COVID-19 subsides and diamond markets reopen, Dominion plans to resume mining operations at the Ekati Diamond Mine and safely recall its furloughed workers,” it said. “Dominion continues to believe in the long-term viability of its assets and expects to emerge stronger and better able to deliver value to all stakeholders.”

Rio Tinto declined to comment directly on Dominion’s filing or its options when it comes to the Diavik mine, stating only: “Rio Tinto notes that Dominion Diamond Mines has filed for insolvency protection. Our focus remains on safely continuing our operations amidst the global COVID-19 pandemic.”