Vancouver firm may revive Jericho diamond mine in Nunavut
A private company has made an offer to buy Tahera Diamond Corp.'s mothballed Jericho mine in Nunavut, CBC News has learned.
An official with Hunter Dickinson, a Vancouver-based group of mining companies, confirmed to CBC News this week that a private company within its group has made the conditional offer to buy the Jericho mine, which shut down earlier this year after Tahera filed for bankruptcy protection.
The offer is conditional and is subject to a due diligence process that includes a close examination of the company's assets.
The Hunter Dickinson official said the company is aiming to reopen Jericho, located 360 kilometres south of Cambridge Bay in the Kitikmeot region of western Nunavut.
The due dilligence process was supposed to be completed by Friday. Officials with both companies have yet to comment late Friday.
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.
Group has record of reviving projects: analyst
Mining was suspended at the Jericho mine in February, in order to conserve cash and fuel during the recovery process.
Patrick Donnelly, a mining analyst with Salman Partners in Toronto, described Hunter Dickinson as a development firm with a history of turning failed or stalled assets into profitable ventures.
But given the economic crisis affecting markets worldwide, Donnelly said the demand for diamonds would likely suffer.
"On one hand I'm surprised, but on the other [hand] the Hunter Dickinson group [does] have a track record of getting previously producing projects going again," Donnelly said.
Donnelly cited efforts by Taseko Mines Ltd. — which is part of the Hunter Dickinson group — to revive the Gibraltar copper mine in British Columbia, which closed down in 1998.
"It's a low-grade but fairly good-sized copper project in B.C., and it shut down because of weak copper prices. And they got it going again," he said.
"They know how to operate, they're good developers, and I would suspect they've done their homework."
News of a potential new buyer for the Jericho mine pleased Cambridge Bay MLA Keith Peterson, who was on hand when Tahera officially opened the mine in 2006.
"It would be great news if they could re-open it," Peterson said. "It could mean as many as, you know, 30 or 40 jobs for the Kitikmeot."