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NUNAVUT - Tahera Diamond Corp may have a buyer lined up for its Jericho diamond mine – but the company's identity is being kept secret, at least for now.

When contacted by News/North, Paul Champagne, CEO of Caz Petroleum, Tahera's senior secured creditor, said an announcement from Tahera is expected soon. While he was mum on details of the announcement, he said it will be more than a simple update on how the company is doing.

Tahera's Jericho diamond mine at the height of all its promise at the 2006 opening, where Prime Minister Stephen Harper was onduring the ribbon cutting ceremony. From left: Donald Havioyak, Paul Okalik, Peter Gilin, then chairman and chief executive officer with Tahera, Harper and Jim Prentice. - NNSL file photo

“Hopefully, (the announcement) will be another step forward,” he said.

Caz recently gave Tahera $1 million in secured financing to determine the viability of reopening the Jericho Mine. If things look positive, Caz has agreed to make an additional amount of up to $4 million more.

“Our ultimate goal is to get this mine started,” said Champagne.

Jericho closed early 2008 after mounting operating costs began to significantly outpace diminishing revenues. Jericho, which opened in 2006, was Nunavut's first diamond mine,and is located 350 km southwest of Cambridge Bay.

“I know it seems like we're taking baby steps every time we do it (make another announcement), but they're all steps in the right direction,” Champagne added.

Champagne said Tahera, Caz, and the potential bidder are still working on a possible transaction, which, if all goes smoothly, is expected to close in May.

Court documents from March show the new group was one of three publicly traded Canadian income trusts that had expressed interest in purchasing Tahera's assets, chief among them Jericho.

The unnamed potential buyer – the court has also sealed the company's identity under Tahera's request – signed a letter of intent, expressing interest in Tahera's assets late February. It entered into a loan agreement with Tahera early last month and agreed to advance the company up to $500,000 to finance both costs of the potential transaction and costs accrued from the Companies' Creditors Arrangement Act (CCAA) proceedings.

Tahera was granted a stay of proceedings by the Ontario Superior Court of Justice on Jan. 18, 2008. The stay has since been extended several times, most recently to May 29, 2009. It essentially places Tahera under bankruptcy protection; once it's lifted creditors can move in and seize the company's assets.

Court documents show the deal calls for Tahera's subsidiary, Benachee Resources Inc, to merge with the bidder, creating a new corporate entity to manage Tahera's assets – Jericho, of course, among them.

Tahera has fallen hard since the early, sparkling days as Nunavut's first diamond mine. After another potential deal to sell Jericho, this time to Hunter Dickinson, fell through late last year, Indian and Northern Affairs Canada became the agent responsible for ongoing care and maintenance of the mine site.

INAC “intervened with the goal of protecting the environment,” said Michael Nadler, Nunavut's regional director for INAC. The department continues to keep a skeleton staff for ongoing care and maintenance at the site – and could continue to do so even if Tahera finalizes a transaction, said Nadler.

They will stay “as long as Tahera, and the future purchaser, are unwilling to put staff at the site,” he said, adding the length of INAC's presence all depends on what the new buyer decides to do with the site.

Potentially, the new buyer could leave the site on ongoing care and maintenance, put the mine back into operation or even reclaim the site, explained Nadler.

“It's very difficult at this time to speculate,” he added.

Meanwhile, Tahera will continue to try and stave off bankruptcy. At the end of last December, Tahera closed its Toronto office and sold its remaining office furniture this month for $34,125 this month to augment the company's cash flow.

Also in December, the company excused former Chief Restructuring Officer (CRO) Peter Gillan and transferred the spot to Andrew Gottwald, who fields Tahera's remaining business on his own.