‘All bets are off’ as Dominion Diamond Mines faces serious money crunch

Dominion Diamond Mines has been postulated a postpone after filing for penury protection, a association announced Wednesday in a press release.

According to a release, a association and some of a affiliates “have filed for penury insurance underneath a Companies’ Creditors Arrangement Act (CCAA)” and has perceived an sequence from a Alberta Court of Queen’s Bench extenuation insurance to a association underneath a act.

“Dominion intends to use a CCAA routine to rivet in discussions with a lenders, creditors, equity owners and other stakeholders and to appeal and weigh vital alternatives to restructure a association financially and operationally, and position it for long-term success when tellurian mercantile and attention conditions improve,” a press recover states.

Dominion Diamond is a determining owners of a Ekati Diamond mine, and is a 40 per cent partner with Rio Tinto PLC in a Diavik Diamond mine — both in a Northwest Territories, approximately 300 kilometres northeast of Yellowknife.

Operations during a Ekati cave have been suspended given Mar 19 in light of a COVID-19 pandemic, while prolongation during Diavik continues.

Dominion Diamond owes a creditors $550 million. That check is due in 2022. Credit agencies were already skeptical that it would actually pay this off.

Seattle-based Washington Companies is a equity owners of Dominion Diamonds and, according to a press release, has offering to yield sufficient money to see a association by a CCAA process. In exchange, Dominion Diamond would determine to a chit of bargain per a sale of a resources to a Washington Companies affiliate.

The association shouldered a evident means of a financial problems on a COVID-19 outbreak.

“The CCAA filing was necessitated essentially by a impact of a COVID-19 pandemic,” states a press release.

“Although a association has clever solid inventory, classification houses and solid markets are closed. These are pivotal channels to promote a sale of a company’s inventory, so now there is no ability to beget sufficient income to support Dominion’s ongoing financial obligations.”

A ‘big understanding for a North’

“I was shocked. we wasn’t awaiting this during all,” Tom Hoefer, executive executive of a N.W.T. and Nunavut Chamber of Mines, told CBC News late Wednesday.

“I theory we’ll have to see how prolonged it takes for them to get by this CCAA insurance and what comes out a other end. It seems like their devise is to restructure, which doesn’t sound like a cave closure though … all bets are off right now since we only don’t know what a destiny is going to demeanour like in a solid markets, and so we’ll have to wait and see,” Hoefer said.

“But we consider their devise is to emerge out of this healthy and, in a sense, means to do something, though what that will be we only don’t know.”

In a talk with Cabin Radio on Wednesday evening, N.W.T. Finance Minister Caroline Wawzonek pronounced a territorial supervision perceived small allege notice of a announcement, observant they only schooled of it that same day.

According to a N.W.T. Bureau of Statistics, solid mining was obliged for approximately $1.7 billion of a territory’s GDP, or 35 per cent of GDP by attention type.

“It’s a large understanding for a North since it’s a biggest mine, a biggest solid mine, and it’s contributed a heck of a lot to a economy only from that one mine,” Hoefer said.

“At a same time, we got Diavik that is still articulate [about] a closure in 2025, and that’s not left divided … it’s got large implications.”

Dominion Diamond stated that it expects to lapse a Ekati cave to operation once a COVID-19 pestilence eases and solid markets reopen.

“Dominion continues to trust in a long-term viability of a resources and expects to emerge stronger and improved means to broach value to all stakeholders,” a press recover states.

The association also settled it expects to “arrange for sufficient liquidity to accommodate a post-CCAA filing obligations to stream employees and suppliers of products and services.”

FTI Consulting Inc. is a court-appointed CCAA record monitor.

Article source: https://www.cbc.ca/news/canada/north/dominion-diamond-files-for-insolvency-protection-1.5541929?cmp=rss