'Obviously, we need to get some money to resupply.'
KIA fears big job losses as Tahera enters bankruptcy
The Kitikmeot Inuit Association is bracing for the worst as analysts predict the demise of the region's money-losing Jericho diamond mine.
Donald Havioyok, president of the Kitikmeot Inuit Association, says his organization has begun talks with the operators of other mines in the Northwest Territories who may be able to employ Inuit who now work at Jericho.
Havioyak said it will be a shame if Jericho, located 360 kilometres southwest of Cambridge Bay, closes.
He considers the troubled Tahera Diamond Corp., which operates the mine, to be a "good company" for hiring a substantial number of Inuit at the site. About 35 of the mine's 100 employees are Inuit.
On top of this, another 125 Inuit have jobs created through contracts between the mine and companies affiliated with KIA, Havikoyak estimates, to provide services such as catering and ice-road maintenance.
The Kitikmeot has high hopes that mines will provide jobs to most residents one day.
But right now Jericho is the only mine operating in Nunavut, and if the mine closes, Havioyak says those 160 jobs won't be easy to replace.
"It's too bad, the way things are going," Havioyok said. "If they do close down, it's going to be a loss for us."
Last Wednesday Tahera went into court-ordered bankruptcy protection, because the company doesn't have enough money to resupply the mine through the winter road, and it owes more than $5 million.
That same day, the Toronto Stock Exchange began a review to delist the company.
The protection order gives the company one last stab to raise money to supply the mine. The order will be reviewed in 30 days.
The company made a failed bid in December to raise $40 million on the stock market. That would have permitted the company to exchange with creditors the needed money for more equity in the company.
Tahera's CEO, Peter Gillen, admits it was a stretch, given the shaky state of the market, with fears that the United States may plunge into a recession following the sub-prime mortgage melt-down.
"It was a tall order to start with. It's a lot of money."
The company has also been hit by the effects of a high Canadian dollar and soaring oil prices. On-site processing problems and disappointing diamond yields haven't helped.
In fact, the mine has bled money since it opened, to much fanfare, in mid-2006. In the first nine months of 2007, the company lost $143 million.
From a high of $4.15 in February 2006, Tahera shares are now worth only seven cents.
Still, Gillen said the company will do everything it can to keep the mine open.
"What can I say? We think doing these filings right now is the best way to protect our various shareholders."
"Obviously, we need to get some money to resupply."