Yukon’s Supreme Court rejected a lien filed by P.S. Sidhu Trucking Ltd. on Yukon Zinc’s Wolverine mine, arguing the trucking services Sidhu provided were not directly connected to zinc mining.
The court ruled Sidhu’s operations didn’t meet the prerequisite for a lien on a mine: getting the ore out of the ground.
The company, the court found, didn’t qualify because it provided services after the mineral recovery stage.
Sidhu provided trucking services to Yukon Zinc from July, 2014 to January, 2015, hauling ore from the Wolverine mine to a port at Stewart, B.C.
When Yukon Zinc went into creditor protection in March, 2015, Sidhu said it was owed over $860,000.
Sidhu asked the Supreme Court to declare a miners lien against Yukon Zinc.
A lien is a way to secure a debt by being granted ownership of a debtor’s property. Miners liens are regulated by their own set of rules.
A miners lien would have given Sidhu priority over the mine’s other creditors.
But Sidhu’s services don’t fit the definition of a lien under the Yukon’s Miner Lien Act, Yukon Supreme Court Justice Leigh Gower ruled in his Aug. 30 decision.
Sidhu said its services were essential to the mine functioning. Yukon Zinc’s license provided a limit for the amount of concentrated ore it could keep on site. Sidhu was in charge of hauling the concentrate.
But the licence didn’t specify what would happen were the mine to exceed that limit, the judge ruled.
“In any event, Yukon Zinc submits that despite the stated stockpile capacity for the storage of zinc concentrate, it is apparent from the manner in which it departed from the provision in the plan … that the Yukon Government was not strictly enforcing all of the provisions of the plan,” Gower said.
The judge wasn’t convinced the mine would have to shut down without Sidhu’s trucking services.
The Miners Lien Act only refers to the actual extraction of ore from the ground, he ruled.
The act “is concerned with protecting those whose services and materials contribute to the ultimate recovery of minerals from the ground, from which the concentrate is extracted.”
Gower said “Sidhu did not bring materials to the mine.”
The goal of the lien legislation is to protect those who contribute to the actual extraction of minerals, he ruled.
Because liens are essentially creating a right for the creditors that didn’t exist before, the legislation must be interpreted strictly.
In March 2015 Yukon Zinc went into credit protection over a $646-million debt.
Creditors approved a plan that allowed the company to get rid of some of its debt, with those owed less than $5,000 paid in full, and those owed more than $5,000 receiving 11.5 cents on the dollar.
Yukon Zinc has previously disputed the amount owed to Sidhu, claiming it was only $688,000.
Paramjit Sidhu, owner of the trucking company, told the News Tuesday he had sold his debt claim and hadn’t heard of the judgment.
Under the creditor-approved plan, Sidhu would have received between $79,000 and $99,000.
The Wolverine mine has been in care and maintenance since it shut down in January, 2015.
-with files from Maura Forrest
Contact Pierre Chauvin at pierre.chauvin@yukon-news.com