Dominion Diamond Mines has requested an extension to the insolvency protection it was awarded last week, stating that it needs more time to restructure its finances or find new investment.
The miner asked the Alberta Court of the Queen’s Bench to delay its repayment deadline to June 1, according to a court filing Monday. The original order of protection gave the company — which owns the Ekati mine in Canada, as well as a 40% stake in its neighboring Diavik site — until May 2 to pay its outstanding debts.
“Given a reasonable time to advance the companies’ restructuring efforts, management [of Dominion and its affiliates] is optimistic that the overall value of their business will likely be enhanced to the benefit of their stakeholders as compared to a forced liquidation scenario,” the document noted.
Dominion currently has $180 million of inventory tied up in its supply chain between manufacturing centers in India and Belgium, where the rough is sold. The company has been unable to make money off those stones due to the global shutdown amid the COVID-19 pandemic, it said.
The company argued that this had impacted its ability to make a payment of CAD 16 million ($11.5 million) to Diavik Diamond Mines, and partner Rio Tinto, due April 22. It could also affect the company’s ability to repay CAD 20 million ($14.3 million) in interest charges, which are payable on its $550 million bond on May 1. Extending the deadline is “just, convenient, necessary, and in the best interest of the applicants and their stakeholders,” the filing claimed.
Dominion is considering an offer to provide further liquidity from the Washington Companies, which acquired it for $1.2 billion in 2017, the miner said last week.
In 2019, Dominion recorded $527.6 million in revenue from diamond sales, according to the filing. It also saw a profit of $151.3 million, 47% less than in 2018.
Image: An aerial view of the Ekati mine. (Dominion Diamond Mines)