Yukon Zinc asks for more time to sell beleaguered mine

Yukon Zinc says it has received several purchase offers for the Wolverine mine, but it has requested more time before giving an update on those offers to the B.C. Supreme Court. 

Yukon Zinc says it has received several purchase offers for the Wolverine mine, but it has requested more time before giving an update on those offers to the B.C. Supreme Court.

Purchase offers were due on June 8, and Yukon Zinc was supposed to provide an update on the offers during a court hearing on June 12. Instead, the company requested an extension to June 26.

“Due to the limited time between the deadline for the submissions of offers and the June 12, 2015 hearing, additional time is required to further refine, analyze and discuss with the company and other stakeholders,” according to a monitor’s report released last week.

The report didn’t say how many offers have been made, though it did say 24 interested parties responded to its call for buyers.

The mine, located near Watson Lake, stopped production and laid off most of its employees on Jan. 21, 2015. On March 13, Yukon Zinc received creditor protection for $646 million of debt. The company began looking for buyers on April 17.

The monitor’s report also gave an update on flooding in the mine, which has been slowly filling with water since pumps were shut down in February.

An inspection of the flooding in late April found that water would reach the mine entrance in 30 months if no action were taken to stop water levels from rising.

Currently, the upper two-thirds of the mine are mostly clear of water, but damage to the mine’s access ramp prevented workers from assessing the lower part of the mine.

Yukon Zinc has no plans to address the flooding in the near term, as a consultant “estimated that it would cost several million dollars to rehabilitate and dewater the underground areas of the mine,” according to the monitor’s report.

The company is currently in breach of its temporary closure plan, which requires ongoing dewatering and ventilation of the mine. The company said it expects to submit a revised closure plan on July 17 that would remove that requirement.

The decision not to begin clean-up or pump water from the mine means that Yukon Zinc has borrowed significantly less money than it anticipated. The company has an $8-million line of credit to cover expenses until it can find a purchaser for the mine. As of June 12, the company had borrowed $2.2 million, which is $2.5 million less than expected.

The company also cut spending when it decided not to invest in equipment maintenance and refurbishment that was supposed to happen before potential buyers visited the site. It simply ran out of time and decided not to pay for the improvements, according to the monitor’s report.

Most of Yukon Zinc’s $646-million debt is owed to its parent company, Jinduicheng Canada Resource Corporation Ltd.

It also owes about $3 million in security payments to the Yukon government. The government maintains that fund to pay for the eventual clean-up of the mine site.

Contact Maura Forrest at

maura.forrest@yukon-news.com

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