Burgundy set to buy Ekati diamond mine
North of 60 Mining News - March 14, 2023
Last updated 3/14/2023 at 10:47am
Agrees to $136M deal to acquire full ownership of Northern Canada diamond mine.
Toward its goal of building a balanced portfolio of the world's best diamond projects in favorable jurisdictions, Australia-based Burgundy Diamond Mines has agreed to pay US$136 million (A$209 million) to acquire full ownership of Arctic Canadian Diamond Company Ltd.'s world-class Ekati Diamond Mine and other interests in Canada's Northwest Territories.
"This is an exciting and transformational acquisition for Burgundy with potential to generate significant and growing returns for our shareholders," said Burgundy Diamond Mines CEO Kim Truter.
Burgundy is no stranger to Canada's North or the Ekati Mine.
Since 2021, Burgundy has been purchasing fancy-colored rough diamonds from Ekati for cutting and polishing at its facility in Perth, Australia, and then selling them as luxury gems in high-end jewelry boutiques.
Over that same period, the Australian company has earned a 40% interest in North Arrow Minerals Inc.'s Naujaat project in Nunavut by funding the collection of a bulk sample from Q1-4, a kimberlite on the property known for its distinct population of high-value, fancy, yellow to orange-yellow diamonds.
More information on Burgundy's partnership with North Arrow can be read at North Arrow shows off largest cut diamonds in the February 23, 2023 edition of North of 60 Mining News.
The purchase of Ekati will significantly elevate Burgundy's efforts to deliver high-end cut and polished diamonds mined in Canada's Arctic to global markets.
"Having been involved with Burgundy since 2017, this exciting acquisition completes Burgundy's vertically integrated business model: bringing the world's most beautiful diamonds to market from discovery through to design," said Burgundy Diamond Mines Executive Chair Michael O'Keefe.
Since its opening in 1998, Ekati has become renowned for the premium gem-quality diamonds it ships to global markets and has served as a pillar of Northwest Territories' economy.
While the exact quantity of diamonds recovered at Ekati has been opaque since the privately held Washington Companies acquired the mine through a US$1.2 billion acqusition of Dominion Diamond Mines in 2017, approximately 67.8 million carats of Ekati diamonds had been recovered through the end of 2016, and North of 60 Mining News estimates the total to now be north of 80 million carats.
The COVID-19 pandemic forced Dominion to place Ekati on care and maintenance in March 2020, and the company filed for bankruptcy shortly after.
Arctic Canadian Diamond Company gained ownership of Ekati by assuming US$70 million of Dominion's debt and the obligations to reclaim the mine site upon closure of the diamond mine.
The northern Canadian mine, however, will likely not be looking at closure for several more years.
Going into 2023, Ekati hosted 48.5 million metric tons of reserves averaging 0.5 carats per metric ton (26.1 million carats) of diamonds.
The reserves do not include large quantities of diamonds that could be recovered with an innovative underwater mining system developed by Arctic Canadian.
Arctic Canadian Diamond President and CEO Rory Moore says the underwater remote mining system "has the potential to significantly increase the mine life at Ekati and thereby provide the opportunity for Arctic to continue to make a positive socio-economic contribution to the North for many years to come."
Further details on the underwater diamond mining system can be read at Underwater mining for Ekati diamonds in the October 7, 2022 edition of North of 60 Mining News.
Arctic Canadian says its definitive sale agreement with Burgundy will result in a significant recapitalization that will ensure the brilliant future it envisions for Ekati and the roughly 1,100 workers at the Northwest Territories mine.
"I believe that this transaction is a significant positive development for Ekati and for the North," said Moore. "The hard work of our people has led to a return to steady state profitable operations and successfully demonstrated the longer-term value of the Ekati asset that attracted Burgundy to this transaction."
Burgundy shareholders will vote on the Australian company's plans to raise US$150 million (A$231 million) for the acquisition of Ekati at a meeting slated to take place in late April.