Ottawa steps in to manage Jericho mine site
Doomed Tahera Diamond Corp. closes for good
After using up the last of its cash, the Tahera Diamond Corp. shed all remaining staff this past Friday, Dec. 12 and ceased all operations at its moribund Jericho diamond mine in the Kitikmeot region, the company said this week in a statement.
At the same time, the Department of Indian Affairs and Northern Development took responsibility for the Jericho site and will pay former Tahera employees to do care and maintenance work.
The company has been under bankruptcy protection since last January. This month, Tahera ran out of money and couldn't find a buyer for the Jericho mine's assets.
Tahera's Toronto office will shut down for good Dec. 31.
Opened in the summer of 2006 by a crew of dignitaries that included Prime Minister Stephen Harper, the $116-million Jericho mine was Nunavut's first and Canada's third diamond mine.
Many observers saw it as the first of a new generation of Nunavut mines that would generate jobs, business opportunities and help move Nunavut towards economic self-sufficiency.
But the Jericho mine never lived up to the hype that attended its opening.
Rising fuel costs, lower than expected diamond grades and technical problems at its processing plant battered the small mine right from the start.
In the first nine months of 2007 alone, the company had posted $143.1 million in losses.
In January of 2008, Tahera sought and received bankruptcy protection. By February, the company had stopped mining and by this past April they stopped processing diamonds.
And after nearly a year of searching, Tahera and its creditors still can't find anyone willing to buy the Jericho mine's assets.
This week, all staff, including former CEO Peter Gillin, were terminated as of Dec. 12.
A corporation managed by Andrew Gottwald, the company's former chief financial officer, was appointed by an Ontario court to act as the company's "chief restructuring officer."
At the same time, the court extended the period of bankruptcy protection to Jan. 23, 2009. This gives the company more time to look for someone willing to buy the mine's remaining assets.
The biggest secured creditor is Caz Petroleum Inc., a supplier of fuel products.
Meanwhile, the Department of Indian and Northern Affairs will look after the abandoned mine site for the time being, using former Tahera employees.
It's not clear when, or if, an environmental cleanup will take place.