Australian Burgundy buys Canada’s largest diamond operation, Arctic Canadian 

Burgundy Diamond Mines (ASX: BDM) is buying debt-burdened Arctic Canadian, owner of Canada’s largest gem workings, the Ekati mine, to become one of the world’s biggest diamond operations.  

The purchase price is US$136 million, composed of US$21 million in stock, US$15 million in cash, and Burgundy will cover US$100 million in debt owed by Arctic Canadian, it said in a news release on Tuesday. The Australian company will also assume a further US$69 million of debt owed by the Calgary, Alta. -headquartered miner in an agreement with creditors.  

Arctic Canadian says the deal will recapitalize Ekati allowing it to keep some 1,100 jobs in Canada’s Northwest Territories. Perth, Australia-based Burgundy, which runs that country’s only diamond cutting and polishing facility, says the acquisition will make it a vertically integrated operator from mining to selling finished stones. 

“The acquisition of Ekati is complementary to Burgundy,” the Australian company’s chief executive officer, Kim Truter, said in the release. “We’ve been purchasing rough fancy-coloured diamonds from Ekati in recent years, then cutting and polishing them in our facilities in Perth to go into high-end jewelry designs.” 

Arctic Canadian, a private company owned by DDJ Capital, Brigade Capital and Western Asset Management, has been making a turnaround after former owner Dominion failed two years ago. The Ekati owner earned revenue of US$494 million last year and adjusted earnings before interest, taxes, depreciation and amortization of US$200 million on sales of 4.2 million carats, Burgundy said.