A subsidiary of Dominion Diamond Mines' parent the Washington Companies has agreed to purchase all of the mining firm's assets for US $126 million, possibly allowing the Ekati mine to resume operations.
The subsidiary would assume all of Dominion's operating liabilities and provide up to US $60 million in short-term debtor-in-possession (DIP) financing, Dominion said in a news release on Friday.
The news comes one month after Dominion announced it had filed for insolvency and two months after it suspended operations at the Ekati diamond mine due to Covid-19 concerns. That mine is about 300 kilometres northeast of Yellowknife, has been in production since 1998.
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According to the news release, Dominion believes the proposed deal will allow it to resume mining operations at the Ekati mine and recall its furloughed workers "as the spread of COVID-19 subsides and diamond markets reopen"; provide assurance to its employees, suppliers and NWT communities that Ekati will continue operations; allow the company to pay or meet its obligations to employees, including pension obligations and to remain a "significant employer and corporate citizen in the NWT; and provide assurance to the GNWT that Dominion will continue to comply with the appropriate health, safety and environmental standards at the Ekati site and provide economic support to NWT communities.
Dominion signed a letter of intent (LOI) with the company for the assets sale and the agreement is subject to court approval, as well as agreements with the GNWT, Dominion's sureties, the absence of pandemic-related restrictions on operations, receipt of financing commitments and other conditions.
The $60 million in DIP financing would help Dominion fund business operations and other expenses through the closing of the sale.
The company expects the sale to be closed in 90 to 120 days.