15 Aug 2020
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Dominion Diamonds files for insolvency protection
Dominion Diamond Mines, which owns the Ekati mine as well as a part of the Diavik mine, has filed for insolvency protection
By: Diamond World News Service
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Apr 27 2020 12:25PM
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Reference: 24889  

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A month after suspending operations at its Ekati deposit in Canada due to covid-19, Dominion Diamond Mines has filed for and received insolvency protection.

“Whether or not Dominion agrees to the Washington proposal, it expects as part of the restructuring to obtain new financing, which combined with the company’s available cash, should provide sufficient liquidity to continue to operate during the CCAA process for the benefit of local communities and other stakeholders,” said the company in a statement. 

Dominion intends to use the CCAA process to engage in discussions with its lenders, creditors, equity owner and other stakeholders and to solicit and evaluate strategic alternatives to restructure the Company financially and operationally, and position it for long-term success when global economic and industry conditions improve.


The CCAA filing was necessitated primarily by the impact of the COVID-19 pandemic. Although the Company has strong diamond inventory, sorting houses and diamond markets are closed. These are key channels to facilitate the sale of the Company’s inventory, so currently there is no ability to generate sufficient revenue to support Dominion’s ongoing financial obligations.

Given the rapidly evolving environment and uncertainty of the scope and duration of the restrictions and health and safety concerns associated with the COVID-19 pandemic, along with market dislocation and the continued capital calls from the Diavik joint venture, the Company believes filing for protection under the CCAA is the most prudent course of action. Dominion has worked consistently to cut costs and optimize the Company’s long-term capital structure. Despite these efforts, and after careful consideration of all other available alternatives, Dominion’s board of directors determined that it is in the best interests of the Company and all its stakeholders to seek protection under the CCAA.

Dominion’s commitments to employees and local communities remain a priority for the Company. As the spread of COVID-19 subsides and diamond markets reopen, Dominion plans to resume mining operations at the Ekati Diamond Mine and safely recall its furloughed workers. Dominion continues to believe in the long-term viability of its assets and expects to emerge stronger and better able to deliver value to all stakeholders.

During the CCAA process, it is expected that Dominion’s management will continue to be responsible for handling the care and maintenance of the Ekati Diamond Mine and all other necessary day-to-day operations. The Company expects to arrange for sufficient liquidity to meet its post-CCAA filing obligations to current employees and suppliers of goods and services.

 

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