Canadian Sirius in Receivership

August 24, 2004

Canadian Sirius in Receivership

Sirius Diamonds, one of four diamond cutting plants in Yellowknife, Northwest Territories, Canada, is officially in receivership, says the NWT government, after it defaulted on guarantee and indemnity agreements on a Canadian bank's $8 million loan. News reports from Yellowknife say the 27 employees at the Sirius plant will continue working under the receiver's management in the short term, but their futures are uncertain. NWT officials say they have heard from potential buyers for the Sirius cutting factory and say it signals continued confidence in the viability of NWT cutting. If a buyer can't be found, the plant will close and its assets will be liquidated, says NWT Finance Minister Floyd Roland.

The potential failure of the diamond cutter has brought into question the commercial viability of cutting diamonds in the NWT versus cutting in more established or lower cost cutting centers. In June, Arslanian Cutting Works went into interim receivership along with Sirius, but Polar Ice Diamonds, a subsidiary of Basal Diamonds of Montreal, rescued that Canadian cutting operation by paying off its bank loan and taking control.

The two other cutting factories in the NWT are Canada Dene Diamonds Ltd., which is owned by the Deton'cho Corp. and operated by Israel-based Schachter Namdar; and Laurelton Diamonds, which is wholly owned by Tiffany & Co.

When both Sirius and Arslanian were placed in interim receivership in June, Brendan Bell, NWT minister of resources, wildlife and economic development, told legislators: "We recognize there will be ups and downs, as well as challenges we cannot yet foresee. However, I believe that if we stay the course we will realize our vision for the diamond industry in the Northwest Territories."

by Robert Weldon, G.G.

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