{"id":1186015,"date":"2020-05-22T12:14:02","date_gmt":"2020-05-22T17:14:02","guid":{"rendered":"https:\/\/www.mining.com\/?p=1024779"},"modified":"2020-05-22T12:14:02","modified_gmt":"2020-05-22T17:14:02","slug":"dominion-diamond-unveils-plan-to-avoid-bankruptcy","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1186015","title":{"rendered":"Dominion Diamond unveils plan to avoid bankruptcy"},"content":{"rendered":"<p>Canada\u2019s Dominion Diamond Mines has <a href=\"https:\/\/www.businesswire.com\/news\/home\/20200522005189\/en\/Dominion-Diamond-Mines-Reaches-Agreement-Key-Terms\"  rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">unveiled a transaction<\/a> that would allow it to exit court protection from creditors and access short-term operating funds, which would pave the way to eventually restart its idled Ekati mine. <\/p>\n<div class='ad-slot' id='div-gpt-ad-1561499308230-0'><script>googletag.cmd.push(function() {    googletag.display('div-gpt-ad-1561499308230-0');    googletag.pubads().addEventListener('slotRenderEnded', function (event) {        if (event.isEmpty) {            var id = event.slot.getSlotElementId();            var x = document.getElementById(id);            if(x == null) return;            if (x.parentElement.classList.contains('ad-slot')) {                x.parentElement.style.display = 'none';            }\t\t\t\t        }    });});<\/script><\/div>\n<p>The company, which owns and operates the iconic Ekati diamond mine and also has a 40% interest in the nearby Diavik, said it had signed a letter of intent <a href=\"https:\/\/www.businesswire.com\/news\/home\/20200522005189\/en\/Dominion-Diamond-Mines-Reaches-Agreement-Key-Terms\"  rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">with an affiliate of The Washington Companies<\/a>.<\/p>\n<p>The privately held Montana-based conglomerate <a href=\"https:\/\/www.mining.com\/washington-companies-buys-canadas-dominion-diamond-1-2-billion\/\"  rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">bought Dominion for $1.2 billion in 2017<\/a>, when the miner was the world\u2019s third largest producer of rough diamonds by value.<\/p>\n<p>Under the agreement, which requires court approval, Washington would buy the company\u2019s assets for about $177 million, while assuming its operating liabilities.<\/p>\n<figure class=\"wp-block-pullquote alignright\">\n<blockquote>\n<p>It would allow it to exit court protection from creditors,  access short-term operating funds and eventually restarting its idled Ekati diamond mine. <\/p>\n<\/blockquote>\n<\/figure>\n<p>It would also provide Dominion with up to $84 million in<br \/>\nshort-term debtor-in-possession financing.<\/p>\n<p>Ekati has been halted since March to help slow down the<br \/>\nspread of the coronavirus pandemic. The operation was left with about $180 million<br \/>\nworth of inventory, which it has been unable to sell since its Belgian<br \/>\nretailers remain closed.&nbsp;<\/p>\n<p>The diamond miner said at the time that covi-19 had had a<br \/>\n&#8220;devastating impact&#8221; on the global diamond mining industry, affecting<br \/>\nthe company.<\/p>\n<p>According to court documents seeking bankruptcy protection<br \/>\nfrom creditors, Dominion revenue from diamond sales last year reached about<br \/>\n$528 million.<\/p>\n<p>The company said the proposed sale would be conditional on<br \/>\nreaching an agreement with Rio Tinto on the Diavik joint venture. Failing that,<br \/>\nDominion would exclude its interest in the Yellowknife diamond mine from the<br \/>\ntransaction.<\/p>\n<p>The miner is a major employer in the Northwest Territories<br \/>\nwith 634 workers, 60% of whom are locals. Only 212 people are currently at the<br \/>\nmines, which are fly-in and fly-out operations. This allows for a pre-screening<br \/>\nof the staff before they are allowed to board flights to the Ekati and Diavik.<\/p>\n<h2><strong>Shattered dreams<\/strong><\/h2>\n<p>The global coronavirus outbreak squashed diamond miners\u2019<br \/>\ndawning hopes of a recovery in a sector already reeling from weak prices and<br \/>\ndemand since late 2018.<\/p>\n<p>De Beers, the world\u2019s largest producer by value,&nbsp;<a href=\"https:\/\/www.mining.com\/de-beers-axes-diamond-production-forecast-amid-market-collapse\/\"  rel=\"noreferrer noopener\">cut&nbsp;2020 production guidance by a fifth<\/a>&nbsp;last<br \/>\nmonth. It had earlier&nbsp;<a href=\"https:\/\/www.mining.com\/de-beers-scraps-diamond-sales-event-due-to-coronavirus-lockdowns\/\"  rel=\"noreferrer noopener\">cancelled its April sales event<\/a>.<\/p>\n<p>Russia\u2019s&nbsp;Alrosa&nbsp;(MCX: ALRS), the world\u2019s top<br \/>\ndiamond producer by output, saw sales for rough and polished diamonds drop to<br \/>\n$15.6 million. The figure stood in stark contrast to the $152.8 million the<br \/>\ndiamond miner fetched in March and the $405 million in January.<\/p>\n<p>Lucara Diamond&nbsp;(TSX:LUC), another Canadian company,&nbsp;<a rel=\"noreferrer noopener\" href=\"https:\/\/www.mining.com\/lucara-diamond-in-the-red-as-market-conditions-worsen\/\" >posted earlier this month a net loss of $3.2 million<\/a>, or $0.01 a share, for the first three months of the year.<\/p>\n<p>The figure was in sharp contrast with the $7.4 million in<br \/>\nnet income, or $0.02 in earning per share the miner reported in the same period<br \/>\nlast year.<\/p>\n<p>South Africa\u2019s Petra Diamonds (LON:PDL)&nbsp;recently<br \/>\ndelayed interest payments&nbsp;<a href=\"https:\/\/www.mining.com\/petra-diamonds-delays-interest-payment-to-borrow-21m\/\"  rel=\"noreferrer noopener\">to borrow $21 million in new debt<\/a>, a crucial move to keep<br \/>\nthe company afloat.<\/p>\n<p>Investment banks are increasingly reluctant to extend credit<br \/>\nto diamond producers, as inventory is not being sold and defaults are possible,<br \/>\nanalysts have warned.<\/p>\n<p>\u201cWe are concerned about oversupply of rough diamonds<br \/>\nfollowing the reopening of economies, as a lot of inventory could potentially<br \/>\nbe flooded into the system and the market might not be able to absorb all of<br \/>\nit, resulting in increased pricing pressure,\u201d Citi said in an early May note.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>It involves selling its assets for about $177 million, which could pave the way to restart its idled Ekati 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