Diamond mine future unclear after sale fails

A deal to sell the suspended Ekati Diamond Mine in the Northwest Territories for about $166 million has fallen through after bond issuers refused to go along with it.

Owner Dominion Diamond Mines ULC says the offer by two affiliated companies, referred to as a “stalking horse bid,” was rejected by Aviva Insurance Company of Canada, Argonaut Insurance Company and Zurich Insurance Company Ltd. and there is “no reasonable prospect” of negotiating an agreement.

The three are issuers of about $280 million in surety bonds currently posted with the N.W.T. government to cover reclamation obligations related to the Ekati mine. The bid was subject to a condition that the bond issuers and purchaser reach an agreement.

The Ekati mine was to be returned to full operating status if the bid submitted by Canadian Diamond Holdings, LP, and CA Canadian Diamond Mines ULC, affiliates of the Washington Companies, was accepted through the sales process approved by the Court of Queen’s Bench of Alberta.