Mining royalty and streaming company Osisko Gold Royalties has entered into a letter of intent (LoI) to form an entity to acquire embattled diamond miner Stornoway Diamonds, which was granted creditor protection by a Quebec court on Monday.

Osisko and secured creditors would acquire “all, or substantially all, of the assets and properties of Stornoway and assume the debts and liabilities owing to the secured creditors, as well as the ongoing obligations relating to the operation of the Renard mine”.

The mine would continue to operate uninterrupted, Osisko said in a news statement, noting that a working capital facility of C$20-million had been secured.

Like many other junior diamond miners, Stornoway has endured turbulent times amid an unfavourable market for its diamonds and needed to restructure to continue to operate. The company in June launched a formal sale and investment solicitation process to seek out proposals for a restructuring transaction, but by the initial deadline of July 15, it failed to receive an acceptable offer. The deadline was then extended to September 16.

On Monday, Stornoway obtained an initial order from the Superior Court of Quebec for protection under the Companies’ Creditors Arrangement Act (CCAA) to restructure its business and financial affairs.

The order extends to Stornoway Diamonds, Ashton Mining of Canada and FCDC Sales and Marketing.

Under the terms of the initial order, Deloitte Restructuring has been appointed as monitor to oversee the CCAA proceedings and report to the court. While under CCAA protection, management of the corporation will remain responsible for the day-to-day operations.

Trading in Stornoway’s common shares on the TSX has been halted and the remedial delisting process, announced last month, would be accelerated. The company said its shares would soon be delisted from trading on the TSX.

“In addition, given the granting of the initial order, the corporation believes that, irrespective of the outcome of the CCAA proceedings, there is and will be no recoverable or residual value in either Stornoway’s common shares or convertible debentures,” the diamond miner noted.

Stornoway last traded at C$0.02 a share on September 6. Around the time the Renard mine opened in 2014, the stock fetched about C$0.60 a share.