Tahera Diamond Corp., the owner of Nunavut's first and only diamond mine, could go bankrupt by April.
On Saturday, Tahera shut down operations at its Jericho mine site, handing over responsibility for the site to the federal Indian and Northern Affairs Department for maintenance and reclamation.
The closure of the mine, which opened in 2006, comes almost one year after Tahera went into court-ordered creditor protection in January, citing insufficient cash to fund its operations.
The company has since been seeking a new buyer of the mine, Tahera's main asset. However, no one has closed a deal on the property to date.
The current economic crisis is not helping Tahera find a buyer, chief restructuring officer Andrew Gottwald told CBC News.
"There are mines closing all the time, and it will certainly make it more difficult to sell the assets," Gottwald said Tuesday.
"The company's funds are limited. Really, we're looking at the next few months in getting a deal done. And if one can't be achieved, then likely the company would stop its activities."
Gottwald said the company will work to find a buyer until its cash runs out in April. After that, he said, the creditor protection would likely be lifted.
When that happens, a company is usually placed in bankruptcy, and creditors can move in and seize the assets.
The Jericho diamond mine is about 360 kilometres southwest of Cambridge Bay in the Kitikmeot region of western Nunavut.
It once had up to 180 employees, but now there are three or four federal employees overseeing care and maintenance of the site.
Remote communities 'hooked into global processes': prof
Arn Keeling, a Memorial University geography professor who studies abandoned mines in northern Canada, said remote communities that depend on mines can often become victims of global business.
"Because they participate in the industrial economy, they are hooked into a set of global processes," Keeling said in an interview.
Keeling said key decisions are usually made thousands of kilometres away from the communities where mines are based. Looking at past failures could teach communites some valuable lessons, he added.
"It might be well worth them taking that time and saying, 'Hold on a minute,' and get themselves into the planning process as early as possible," he said.