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NUNAVUT - Just when they thought they were out, they got pulled back in.

A deal to sell Tahera Diamond Corporation's mine to a Vancouver mining development group fell through last week, bringing Tahera back to square one and essentially rendering the mine unwanted during this gloomy economic climate.

Peter Gillin, right, president of Tahera Diamond Corporation, speaks with Donald Havioyak, left, former president of the Kitikmeot Inuit Association about Tahera's Jericho diamond mine, which was slated to be sold to Hunter Dickinson in Vancouver, but the deal fell through last week.

"Hunter Dickinson (was) doing due diligence review and there were conditions that needed to be met by the end of October, which, from their perspective, were not met, and I think that the market condition in the course of October had a bearing on their judgements as well," said Peter Gillin, president and CEO of Tahera, which opened the Jericho mine in the summer of 2006 and closed it early this year after entering creditor protection in January.

While work on the proposed deal - which would have seen Hunter Dickinson take over 100 per cent of Tahera's equity, including the mine - was originally made public in September, negotiations began long before that, according to Gillin.

"I was disappointed," he said of the end result. "We put a lot of effort into getting it that far."

Gillin would comment neither on whether a new deal with Hunter Dickinson might be considered nor whether a new buyer has been lined up.

"We either find another partner or restructure some other way. We're looking at those very things right now," he said.

Hunter Dickinson stuck close to Tahera's story when asked why the deal fell through, citing unsatisfactory due diligence and market conditions.

"We have a range of criteria, be it legal, be it property, be it environmental - all the normal things a company goes through when looking at an investment. When we do due diligence, it has to meet all of the criteria," said Marchand Snyman, Hunter Dickinson's vice president of corporate development.

"It didn't meet our criteria for a transaction at the end of the day."

Shaw Wallace, the company's director of investor relations, said the economy definitely played a hand, too.

"The current market environment and the realities of it and our approach to things are absolutely being governed, in part, by that for every single thing Hunter-Dickinson is doing right now," said Wallace.

"That plays a role in every single thing every single mining company is out there doing right now. If the management of companies aren't factoring that into what they're doing, then they're idiots."

Wallace added he does not envy Tahera's position in the current economic climate.

"They're going to have a difficulty getting any momentum unless someone comes in," he said.

Things went off the tracks for Tahera in late 2006, when bad weather and a short season for the winter road meant the company couldn't get all of the supplies it needed up to Jericho.

"We were under-supplied in terms of fuel and supplies and we therefore had to modify our mine plan, which was expensive. And then we had to catch up in 2007, which was even more expensive," said Gillin.

But a shorter winter road season wasn't the only obstacle facing Jericho.

"Probably the principal culprits would have been disappointing diamond values and very unfavourable foreign exchange ratios," said Gillin.

"There's probably always things we could have done differently or better. But we did have more than our fair share of bad luck."