Tahera granted protection
Unable to pay suppliers after failed bid to fund Nunavut diamond mine
Jan 17, 2008 04:30 AM
Tahera Diamond Corp. appears to have lost its battle to survive, announcing yesterday it had been granted bankruptcy-court protection after a failure to raise funds for its Jericho mine in Nunavut.
The Toronto-based miner, which has faced operating problems and mounting costs at Jericho, as well as financing troubles, had been trying to raise cash so it could take supplies to the mine via its winter road.
Tahera shares tumbled seven cents yesterday to close at seven cents on 18 million shares traded on the Toronto Stock Exchange, while the TSX began a delisting review of the stock.
Tahera had peaked at $4.15 in February 2006 and had its 52-week high last February at $1.38. Yesterday's price represents a market value of $14.7 million.
The firm has been trying to further develop the Jericho mine, which has had mill processing difficulties since it opened more than a year ago.
But the firm said its current cash flows and cash on hand wouldn't allow it to meet its current obligations and those related to the winter road resupply in Nunavut.
"It was determined by the board of directors that, as a result of insufficient indications of interest in Tahera's best-efforts equity offering and the absence of any viable strategic alternatives at this time, seeking CCAA (Companies' Creditors Arrangement Act) protection would be in the best interest of all stakeholders," the miner said.
The Ontario Superior Court of Justice granted CCAA protection for an initial period of 30 days, expiring on Feb. 14.
Brian Christie, an analyst with National Bank Financial, said the announcement likely marks the end of Tahera Diamond – expected news since his firm had "been negative on this story for a long time."
"The winter road (to Jericho) is now open for resupply, and if they don't have the money to bring in those supplies, then they won't have fuel, and the operation will stop producing," he said.
He said Tahera has had problems with the winter road to the mine, forcing it to fly in supplies, as well as the loonie's rapid rise and flat diamond prices.
"If there was somebody (willing to save Tahera) it may have happened before now, so I think unfortunately it's probably the end of the company," he said.
Tahera said it intends to continue day-to-day operations with the supervision of a court appointed monitor, PricewaterhouseCoopers Inc.
Depending on how much fuel is currently on site, Christie said he guessed the company could shut down operations by March.
The Canadian Press
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