Dominion to Sell Ekati Mine for $126M

RAPAPORT… Dominion Diamond Mines has sold its Ekati mine in Canada to affiliates of its owner, the Washington Companies, for $126 million amid struggles with mounting debt.

The offer came from Canadian Diamond Holdings and CA Canadian Diamond Mines, which initiated the original stalking-horse bid, a bottom-floor amount that sets a certain financial expectation that must be met. No other qualified bids were submitted for all or part of Dominion’s assets, the miner said Wednesday.

The purchase does not include Dominion’s 40% stake in the Diavik mine, as its inclusion in the deal was not approved by its partner, Rio Tinto, which holds the remaining 60%.

In addition to the $126 million, Washington will also pay $20 million to cover costs associated with Dominion’s suppliers, and will assume all of Dominion’s other Ekati-related operating liabilities, the miner noted. That includes offering employment to Dominion’s employees and assuming pension obligations for them.

The purchase must be approved by the Court of Queen’s Bench of Alberta. The Washington Companies must also enter into agreements with Dominion’s bond holders. The deal is expected to close by November 7 if all conditions are met.

Dominion filed for insolvency protection in April, citing difficulty paying bills and maintaining operations amid the coronavirus pandemic. In May, it announced it would sell its assets to avoid bankruptcy.

“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 Northwest Territories,” the company added.

Image: The Ekati mine. (Dominion Diamond Mines)