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Jericho security payments missed
Shear Diamonds Ltd. owes money to Ottawa, says Aboriginal Affairs

Thandiwe Vela
Northern News Services
Published Saturday, March 16, 2013

Shear Diamonds Ltd., the company that abruptly left the Jericho Diamond Mine site last fall, is past due on its required security payments for the project, according to the federal government.

NNSL photo/graphic

An aerial view of the Jericho diamond mine, which closed in 2008 under its past owner, Tahera Diamond Corporation, which filed for bankruptcy protection the same year. Shear Diamonds agreed to purchase the mine in 2010. - photo courtesy of Tahera Diamond Corporation

The security payments can be used in the event the company goes into receivership and is not able to carry out reclamation of Jericho, located 350 km southwest of Cambridge Bay.

The Toronto-based junior purchased Jericho, Nunavut's first diamond mine, in 2010, which had been dormant since being closed by past owner Tahera Diamond Corporation in 2008. Tahera filed for bankruptcy protection in 2008.

Shear began work at Jericho last April after securing Type A water licences on the recommendation of the Nunavut Water Board, covering the re-commissioning, operation and ultimate reclamation of the Jericho Diamond project.

The company throughout the summer processed stockpiles left behind by Tahera at Jericho, announcing a number of shipments of diamond parcels recovered from the stockpiles, to its financing partner, Tache Company N.V.

By September, the company had decided to suspend production of Jericho stockpiles due to weak world diamond prices.

Shear closed the site on short notice on Sept. 2, 2012, removing all personnel from the site, who were only provided the weekend to shut down the site and ready everything for the winter.

The company said in a Sept. 4 news release that it was temporarily shutting down the site, and planned to look at exploration assets around Jericho until prices improve. It has since disconnected its telephone lines and its website is down.

The Nunavut Impact Review Board has been unsuccessful in reaching the proponent, according to executive director Ryan Barry, who said the board recently requested a formal update from the Department of Aboriginal Affairs and Northern Development and the Kitikmeot Inuit Association, the agencies that have the ability to require performance bonds or security bonds for major developments, which can be accessed if a company goes into receivership or if there is some other reason KIA or Aboriginal Affairs might be required to step in and maintain or carry out reclamation at the site.

In response to a request for information regarding the current status of compliance and oversight at the Jericho diamond mine, Aboriginal Affairs told News/North that the remote, seasonally operated mine site is temporarily closed for the winter, and the owner, Shear Diamonds, remains accountable for safety at the site during the temporary closure.

The owner is also continuing to be responsible for maintaining compliance with the terms and conditions of all authorizations and permits issued for the site, stated Aboriginal Affairs spokesperson Geneviève Guibert, who also confirmed that the company is past due on its required security payment.

"AANDC is working with the company to address the shortfall," Guibert said.

News/North was not able to determine the amount owed by Shear for security bonds as of press time.

The Kitikmeot Inuit Association, which is responsible for security on Inuit-owned land, has been monitoring the situation, said president Charlie Evalik, who declined to comment on the situation.

"We're monitoring the situation, that's it," Evalik said.

The Jericho site is currently stable, according to Aboriginal Affairs, which plans to conduct a full inspection of the site prior to spring freshet.

If the company is not able to follow the inspection order within 30 days of its issuance, the department will step in and take control of the site to prevent environmental harm, Guibert said.

"The Government of Canada is monitoring the situation at Shear Diamond's Jericho diamond mine site, assessing environmental risks and determining next steps," she stated.

Shear Diamonds has not declared bankruptcy and is still the mine operator, according to the federal government.

The department's regional office last communicated with the company on Jan. 10.

Jericho employees recently filed a claim with the Nunavut Labour Board for unpaid severance payments after the Nunavut Labour Standards Compliance Office found the company owed two weeks termination pay to four groups of employees.

The labour board did not respond to requests for information about the status and value of the claim last week.

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