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Court Allows Rio Tinto to Sell Dominion’s Diamonds
Nov 17, 2020 9:43 AM
By Rapaport News
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RAPAPORT... A Canadian court has granted Rio Tinto permission to sell diamonds belonging to Dominion Diamond Mines to recoup more than CAD 120 million ($91.4 million) in unpaid debt from their Diavik joint venture.
Rio Tinto subsidiary Diavik Diamond Mines, Inc. (DDMI) had been holding Dominion’s 40% share of rough from Diavik as collateral. That was used as security for the $91.4 million Dominion owed from two missed cash calls required for the running of the mine, plus an additional CAD 2.4 million ($1.8 million) in interest. Dominion missed the payments after filing for creditor protection in April.
However, while the judge is allowing DDMI to sell the goods, it is basing that sale on a previously performed estimate of the total value of the diamonds, according to the November 4 filing. Rio Tinto must also return to Dominion anything that exceeds the amount of the debt, the documents stated.
Though the final decision favors DDMI, the company is appealing the court decision. It notes that the value stated in appraisals, which has been used to determine what Rio Tinto will make on the sale, has historically been higher than the realized value, meaning they could end up with less than the stipulated amount. That figure also doesn’t take into account Rio Tinto’s costs for marketing and selling the goods, DDMI added.
Therefore, DDMI is requesting the judge allow it to sell the diamonds and pay itself the full amount owed prior to returning any excess, which would ensure it received the amount owed in full.
DDMI has asked the court to expedite the appeal hearing, but no date has been established yet.
Image: Rough diamonds. (Dominion Diamond Mines)
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Tags:
DDMI, Diavik, diavik diamond mines, Diavik mine, Dominion, Dominion Diamond Mines, Rapaport News, Rio Tinto
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