Burgundy enters Canadian diamond scene

Precious stone mines saw some shuffling in Canada's North with Burgundy Diamond Mines Ltd.'s acquisition of the Ekati diamond mine.

Already a 40% partner with North Arrow Minerals Inc. at the Naujaat diamond project in Nunavut, Burgundy closed its buyout of Arctic Canadian Diamond Company Ltd. on July 4, which gave the Australian diamond company full ownership of the world-class Ekati Mine and significantly elevating its efforts to deliver high-end cut and polished diamonds mined in Canada's Arctic to global markets.

"Burgundy is well-positioned for growth, with significant value to be delivered to all stakeholders through our fully integrated end-to-end value chain now including the global scale Ekati asset," said Burgundy Diamond Mines CEO Kim Truter. "Burgundy investors have overwhelmingly supported and endorsed this acquisition, and they are showing great interest in producing sustainable and valuable natural diamonds via mines in Canada and bringing them to market through our innovative business model."

Since 2021, Burgundy has been purchasing fancy-colored rough diamonds from Ekati for cutting and polishing at its facility in Perth, Australia, and then selling them as luxury gems in high-end jewelry boutiques.

Considering previous operator Dominion paid a massive US$1.2 billion to operate the mine for only a few short years before filing bankruptcy, Burgundy agreed to pay roughly US$136 million, nearly a tenth of the cost.

Before Burgundy's ownership, Arctic Canadian Diamond Company gained possession of Ekati by assuming approximately US$70 million of Dominion's debt and the obligations to reclaim the mine site upon closure of the diamond mine.

Due to its own challenges, Arctic Canadian Diamond opted to sell the property to Burgundy, which it saw as a win for the North regardless of ownership.

"I believe that this transaction is a significant positive development for Ekati and for the North," said Arctic Canadian Diamond President and CEO Rory Moore. "The hard work of our people has led to a return to steady state profitable operations and successfully demonstrated the longer-term value of the Ekati asset that attracted Burgundy to this transaction."

Going into 2023, Ekati hosted 48.5 million metric tons of reserves averaging 0.5 carats per metric ton (26.1 million carats) of diamonds.

These reserves, however, do not include the large quantities of diamonds that could be recovered with an innovative underwater mining system developed by Arctic Canadian.

Moore says the underwater remote mining system "has the potential to significantly increase the mine life at Ekati and thereby provide the opportunity for Arctic to continue to make a positive socio-economic contribution to the North for many years to come."

With an estimated 80 million carats mined historically since its opening in 1998, nearly 30 million in reserves and an inestimable quantity submerged underwater, the life of Ekati is still going strong, and if Burgundy plays it right, another 20 years could be viable for this Far North diamond mine.

Aside from its 40% ownership of Naujaat, and its acquisition of Ekati, Burgundy was also in talks to buy 100% of the Ellendale diamond project from Gibb River Diamonds Ltd., located in the West Kimberley region of Australia, however, the company decided not to go forward with this purchase after a two-year option deed signed in 2021 expired.