Troubled Canadian diamond mine Ekati gets new life as Australian company takes control – by Gabriel Friedman (Financial Post – March 16, 2023)

Burgundy is paying US$136 million to assume control from Arctic Canadian

The Ekati complex, a star-crossed diamond mining operation in Northwest Territories, is getting a new life. Ekati has changed hands several times in the past decade, and has struggled in recent years. But Australia’s Burgundy Diamond Mines Ltd. sees promise, announcing this week that it would pay US$136 million to assume control from Ekati’s current owner, Arctic Canadian Diamond Co. Ltd.

The deal is expected to close in April. Burgundy, based in Perth and listed on the Australian Stock Exchange, said in a press release that the current life-of-mine plan supports operations until 2028, and that investments could further extend mining. In 2022, Ekati delivered US$494 million in revenue and 4.1 million karats of diamonds were recovered, the press release said.

“The proposed acquisition completes Burgundy’s strategy of becoming truly vertically integrated across the diamond value chain,” the company said in the press release. Under the deal, Burgundy would send US$21 million worth of its shares to Arctic Canadian, and take on US$100 million in debt. In addition, Burgundy would pay $15 million cash to Arctic Canadian in December 2023.

Burgundy would also have to make cash payments of US$7.5 million to Arctic Canadian if Ekati’s earnings before interest, taxes and depreciation exceed US$200 million in either 2023 or 2024.

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