SOMBA K'E/YELLOWKNIFE - One of Yellowknife's last-standing diamond cutting and polishing plants has closed its doors and issued 35 temporary layoff notices.

Arslanian Cutting Works shut down its factory three weeks ago - originally for a mandatory holiday period. The company has since decided to backdate 35 layoff notices to May 11.

Arslanian employee Gennadiy Tereshko works in the factory's fancy cuts department. He is one of 35 workers who was issued a temporary lay off notice as Arslanian closed its factory. - NNSL file photo

"At the end of six weeks (from May 11 forward) it then would become a permanent layoff," said Bob Bies, director of operations at the factory.

Bies and the factory's accountant are currently the only two employees left at the factory.

"My job of course it to try and get this factory running again and get it going," he said.

Arslanian first announced layoffs in mid-February when it sliced its workforce to 45 from 50. By mid-March the company had laid of 13 workers and had begun negotiating with the territorial government to relax the territory's policy on selling rough diamonds - Arslanian had excess and wanted to look outside the territory for buyers.

With closure of Arslanian and its sister factory, Polar Bear Diamond, HRA Crossworks Manufacturing is the only cutting and polishing plant left operating in town.

Bies said Arslanian is currently negotiating with the government to secure temporary financing - and is no longer focusing on rough diamonds policies.

"Everything's negotiable, so we don't know how long the financing would be for. But we're looking for some temporary financing, just until things turn around a little bit," said Bies.

One of Arslanian's key funders, New York City-based Gary Barnett, a former diamond trader and owner one of NYC's most active real estate firms, ceased funding Arslanian at the end of April.

"It's tough. There have been retailers that have closed down," said Bies. Retailers, he added, "haven't been buying as much so we have more inventory on hand - more than we like."

He said it's also been hard to collect from people who owe money to Arslanian, and crashing diamond prices don't help either.

"It just creates a domino effect," he said.

Bies is hoping negotiations with the government will pull through.

"We're continuing to work with the GNWT. We're hoping we can reach some type of agreement that can keep us in operation and right now it's not looking good, but we're hoping for the best," he said.

"There's nothing really negative to say (about the GNWT). It's just that we want to continue operating, and times are tough right now and we need the assistance of the government," he added.

"They want to work with us ... they still see the secondary diamond industry as a priority," Bies said.

Industry, Tourism and Investment Minister Bob McLeod would not comment on whether the GNWT would grant the financing, but did say his department has been in discussion by phone with Arslanian over the past week.

McLeod said both sides have issued proposals. Even though talks are taking longer than expected, he is "always optimistic" negotiations will reach a successful end.

But time is ticking for Bies, with Arslanian already closing in on the fourth week of its six-week temporary layoff period.

"We're hopeful that we can continue operating, but for now we've had to close," said Bies. "We'll see what unfolds."

- with files from Herb Mathisen