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Burgundy Diamond Mines’ subsidiary has filed for insolvency protection as a means of working with creditors, despite receiving nearly $130 million in loans over the past few months.
The Supreme Court of British Columbia granted Arctic Canadian Diamond Company (ACDC) the protection order, which also extends to parent company Burgundy, the miner said Friday.
The miner will use the protection to “engage in discussions with its lenders, creditors and other stakeholders, to solicit and evaluate strategic alternatives to restructure ACDC financially and operationally, as it continues to navigate difficult geopolitical, economic and industry conditions,” it explained.
Burgundy observed that the move was necessary due to a number of factors, including US tariffs, sustained weakness in rough demand, and increasing costs, such as rising fuel prices amid the Middle East conflict. The miner is still struggling, despite receiving a large loan facility from the Canadian government to continue operating its Ekati mine in the Northwest Territories. It secured CAD 115 million ($84.9 million) in December and an additional CAD 60 million ($44 million) In March.
“The company believes filing for protection…is the most prudent course of action,” it said. “Burgundy has been working consistently to cut costs and recast its business plan to focus on producing the highest-quality goods within its asset base. Despite these efforts, and after careful consideration of all other available alternatives, Burgundy’s board of directors determined that it is in the best interests of ACDC and all its stakeholders.”
The miner will continue operations at Ekati throughout the insolvency process and expects Arctic’s management to continue handling day-to-day operations at the deposit. Burgundy “continues to believe in the long-term viability of the Ekati diamond mine and intends to emerge stronger, better and able to deliver value to all stakeholders,” it added.
Image: The Ekati mine. (Burgundy Diamond Mines)
