Ekati Diamond Mine gets $115M federal loan, avoids bankruptcy

Ekati Diamond Mine is getting a a $115 million loan from the Canadian government to continue operations at the mine and protect jobs, its owner announced Thursday.

Jeremy King, CEO of Australia-based Burgundy Diamond Mines, which owns Ekati, said his company was working in the background with the government of the Northwest Territories and came close to shutting the mine down "weeks ago."

"We were in a very bleak, or stark, scenario," he said. "It was either this line or we were looking at bankruptcy and shutting the mine down," he said.

King said the loan allows Ekati to keep operating and employ people.

The federal Finance department is providing the loan to Arctic Canadian Diamond Company Ltd., Ekati’s operator. Australia-based Burgundy Diamond Mines is its parent company and Ekati’s owner.

The department would not confirm the exact conditions attached to the loan, but a spokesperson confirmed in an email to CBC that "there are strong conditions attached to this loan, including job guarantees, strong loan repayment provisions, among others."

Claude Guay, parliamentary secretary to the minister of energy and natural resources, said the federal government decided to intervene because mining is a “vital sector” for the country and the Northwest Territories, particularly for Indigenous communities in the region. 

“In the short, medium term, this should definitely alleviate the economic challenges of the mine and provide certainty for the communities around the mine,” he said. 

King said the $115 million will be received in installments, with the first one expected "in days."

The loan comes through the Large Enterprise Tariff Loan (LETL) facility from the Canada Enterprise Emergency Funding Corporation. 

To be eligible for LETL loans, a large Canadian company must fulfill three criteria: have an impact on Canada’s economy due to significant operations or a significant workforce in the country; have at least approximately $150 million in annual Canadian revenue; and require a minimum loan size of $30 million.

Finance confirmed in an email that each LETL loan is unique to the company, their circumstances and broader market conditions, and that exact terms are private to the government and company.

It is standard for LETL loans to be split between two facilities, according to a government factsheet. An unsecured one, not backed by collateral for seven years, is equal to 75 per cent of the loan amount. A secured facility for the remaining 25 per cent is issued for a term that depends on the company's existing secured debt.

While the loan is a tariff relief mechanism, the diamond market has been struggling long before U.S. tariffs kicked in.