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Burgundy Diamond Mines (ASX:BDM,OTC Pink:BDMMF) has paused plans for further development at the Ekati diamond mine, saying diamond prices have fallen at least 20 percent since it acquired the project.
In a letter to RJ Simpson, premier of Canada’s Northwest Territories (NWT), Burgundy said that along with the decreasing prices, the diamond industry has been receiving “very little support.”
“Environmental requirements are getting unnecessarily more onerous, government agencies are inflexible to change and the burden placed on the asset is increasing,” the company said, adding that it may need to revisit the viability of the Ekati asset and focus on growth elsewhere should these problems continue.
Burgundy said this outcome would be “tragic,” noting that Ekati’s undeveloped diamond resources are large enough that the property could operate until 2040 and beyond if it were to receive sufficient support.
Notably, the Jay pipe represents “one of the largest undeveloped kimberlite pipes on the planet.”
Burgundy has five key areas where it wants help: mine reclamation provisioning, the diamond royalty valuation process, mineral resource act regulations development, environmental permitting and water management requirements.
According to the company, operational burdens in the NWT could be alleviated should the government make the requested changes and reduce regulations in these key areas.
Burgundy also believes that the mindset in the north needs to change from that of “closure” to “opportunity,” saying that “there is no reason that diamond mining cannot continue at scale for the next 25 years.”
No public statement had been released by the NWT at the time of this writing, but Cabin Radio reported that a spokesperson for Simpson said the government is “taking the time needed to work with colleagues and relevant departments to determine how, and if” the concerns and supports proposed by Burgundy can be addressed.
The Ekati diamond operation is located in the Lac de Gras region of the NWT, approximately 300 kilometers northeast of Yellowknife. It began production in October 1998, with exploration programs dating back to 1981.
Burgundy purchased Ekati in July 2023, and mining currently takes place at the Sable open-pit mine and Misery underground mine. The company has withdrawn its application for underground development at Sable.
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Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.
