Deal to acquire Jericho diamond mine cancelled

Poor world financial conditions are being partially blamed after a private company's plan to acquire the dormant Jericho diamond mine in Nunavut fell apart.

The mine's current owner, Tahera Diamond Corp., said Monday that the plan, which already had the approval of an Ontario court, was scrapped because conditions of the deal were not met. The private company, an affiliate of Hunter Dickinson, a Vancouver-based group of mining companies, had until Oct. 31 to meet all the conditions.

"It is believed that the current difficult market conditions were a factor in the decision," Tahera said in a release.

The plan would have seen the private firm, a numbered British Columbia company, acquire the mine and all the equity of Tahera. Current Tahera shareholders were expected to be shut out.

Tahera opened its Jericho mine to great fanfare in 2006, as it is Nunavut's first and only operating diamond mine to date.

The mine was supposed to produce 2.6 million carats of diamonds over its lifetime, but Tahera began losing money on the project, including $30 million in the mine's first six months alone.

Tahera, a Toronto-based junior mining company, filed for protection under the Companies' Creditors Arrangement Act in January, and has been working on a restructuring plan since then.

Mining was suspended at the Jericho mine in February, in order to conserve cash and fuel during the recovery process.

Tahera said Monday it is still working with Blair Franklin Capital Partners, its financial adviser, on searching for new options for the company.