Ekati Deposit to Close as Buyers Fail to Step Up

The Ekati mine in Canada will shut after owner Burgundy Diamond Mines goes into receivership upon failing to secure a buyer for the deposit.

“The sales process conducted…did not result in any compliant bids, and the interim funding available to the Burgundy respondents is fully exhausted,” documents filed in the Supreme Court of British Columbia on Monday stated. “Canada Enterprise Emergency Funding Cooperation (CEEFC) (the lender) has determined it will not fund the companies [including mine operator Arctic Canadian Diamond Company] any further. GNWT (the government of the Northwest Territories) requires the urgent appointment of a receiver over the Burgundy respondents to conduct an orderly wind down of Ekati mine operations, and to oversee environmental remediation and reclamation activities.”

Burgundy first filed for creditor protection in May after the weak diamond market caused it to go into arrears, and it was unable to pay back its lenders, despite receiving CAD 175 million ($128.9 million) from the government to help keep it afloat. Later that month, the company requested an extension of its creditor protection to allow it to restructure or find an alternative, at which point, it opened a sales and investment solicitation process.

However, that process failed to yield any bids by the court-required due date, despite 140 “potentially interested parties” being contacted, according to the filing.

“The sales and investment solicitation process (SISP) has marketed the business and assets of the Burgundy respondents for the past eight weeks,” the filing stated. “‘Phase 1’ of the SISP requires that any interested ‘potential bidder’ must deliver a nonbinding letter of intent to the monitor by no later than…July 10, 2026. GNWT understands that: (a) the monitor did not receive any compliant bids in the SISP before the bid deadline; (b) funds available to the Burgundy respondents under the DIP (debtor in possession) loan in Phase 1 of the SISP are fully drawn; and (c) no further DIP loan funding is available to the Burgundy respondents given the outcome of Phase 1 of the SISP.”

According to the filing, Burgundy’s debts included approximately CAD 175 million owed to the CEEFC as well as $79 million payable to various other lenders.

“Burgundy…is expected to run out of all cash during the week ending July 17, if no further funding is obtained,” the filing added.

Ekati is one of three diamond mines that were operating in the Northwest Territories. The Diavik mine, owned by Rio Tinto, closed in March. The third, and only remaining deposit, Gahcho Kué, held by a joint-venture between Mountain Province and De Beers, is also struggling with financial uncertainty and has been working on deals to preserve liquidity, including selling rough at discounted prices to one of its majority shareholders as well as delisting from the Toronto Stock Exchange (TSX) in preparation for a potential sale.

The weakness in the natural-diamond market has affected several other miners as well, with the Kao mine in Lesotho shutting in July, De Beers announcing earlier this week it would suspend production at its Venetia mine in South Africa for two years, and Alrosa halting operations at its Severalmaz deposit.

Image: The Ekati mine. (Burgundy Diamond Mines)