Ekati Owner Asks Canada Govt. for Help in Challenging Market

Burgundy Diamond Mines has urged the government of Canada’s Northwest Territories to provide the industry with aid during the market slowdown, or it may need to reconsider ownership of the deposit. 

The request, made by letter to Northwest Territories Premier R.J. Simpson, asks the government to make allowances on some of the policies it currently has in place for the diamond-mining sector, which Burgundy believes puts excess and unnecessary financial burden on the company. 

“Since acquiring Ekati, the team at Burgundy has worked tirelessly to improve the economic viability of the asset by strengthening the balance sheet, improving efficiencies, reducing costs, optimizing sales channels, and identifying ways to extend the mine life,” Burgundy CEO Kim Truter wrote in the letter, sent last week. “The key message was that Burgundy would make every effort to extend the life of the asset but needed support from all stakeholders to assist in this significant challenge. Since the acquisition, diamond prices have declined by at least 20%, and the industry remains in a state of turmoil. Despite this backdrop, there has been very little support forthcoming.” 

Environmental requirements are getting unnecessarily more difficult, government agencies are inflexible to change, and the burden placed on Ekati is increasing, Burgundy explained. 

The company asked the government to help by changing certain processes. Among these are reducing the large sum it requires Burgundy to put away for mine reclamation, allowing a more fluid sale process for the company’s rough and simplifying the environmental permit process. 

With these changes, Burgundy believes it will be able to continue running the mine until at least 2040. Without it, the company may be forced to abandon the site. 

“Should this trend continue, then Burgundy will need to revisit the viability of the Ekati asset and focus on growth elsewhere,” Truter noted. 

Burgundy bought the Ekati mine from Arctic Canadian Diamond Company in 2023 for $136 million. Following the purchase, it returned ownership of the Ellendale mine in Australia to Gibb River Diamonds. 

Image: An aerial view of the Ekati mine. (Burgundy Diamond Mines)