Ross Mining Limited is bankrupt and must pay its main creditor $3.5 million through a receiver, a Whitehorse judge ordered Friday.
The mine’s president, Jon Rudolph, has been given plenty of opportunity to secure a loan that wasn’t going to happen, wrote Yukon Supreme Court Judge Ron Veale.
The application for a receiver, made by the mine’s former owner Norman Ross, was originally scheduled for June 9.
But in an affidavit filed that week, Rudolph said he was optimistic that a proposed loan of $5 million from a company called Strategic Metals Limited would go through, enabling him to pay Ross.
Veale gave Rudolph a chance and appointed a financial monitor, PriceWaterhouseCoopers, to evaluate whether the loan might happen.
But after a damning report from the monitor and few assurances that Rudolph would get the loan, Veale decided the mine must pay.
“Rudolph remains hopeful that this funding will come to fruition if more time is given,” wrote Veale in his decision.
“It is clear that the Strategic Metals re-financing will not proceed,” he wrote.
Rudolph’s mine—415 placer claims 80 kilometres southeast of Dawson City at Dominion Creek—has lost money three years in a row to the tune of $2.5 million in 2007 and the same amount in 2008.
The mine owed MacKenzie Petroleums Limited $650,000 for fuel and that company already had a lien against Rudolph’s mine. MacKenzie opposed Ross’s loan application so that it wouldn’t lose out on getting paid back.
The Dominion Creek mine also owed another of Rudolph’s companies, Golden Hill Ventures Limited Partnership, $11 million, Veale’s decision said.
“(Ross Mining Limited) is insolvent and has no working capital,” wrote Veale.
During the month-long evaluation by PriceWaterhouseCoopers, the international auditing and financial firm found Rudolph was aggressive and unco-operative.
“At the initial attendance and at several situations thereafter, Jon Rudolph and Shaun Rudolph made gestures and statements to the monitor’s staff that were clearly for the purposes of intimidation,” says the monitor’s report.
“At the onset of the file, the monitor was forced to assess the overall safety concerns of its staff,” it said.
Rudolph would delay sending the auditor important financial information and would often not return calls for several days.
The monitor did not receive bona fide co-operation from Rudolph, and did not believe that the mine would get the loan.
Rudolph’s other firm, Golden Hill Ventures, even removed all its equipment being used at the Ross Mining site, says the monitor’s report.
The mine was founded by its current creditor, Norman Ross, in 1979.
Ross and his wife sold their shares in Ross Mining Limited in November 2005 in a deal that would allow Ross to loan $7 million to the mine.
Ross was supposed to be paid in increments, and the contract stipulated that a missed payment could mean the appointment of a receiver.
The mine missed a $1.5 million payment on January 3, thus triggering Rudolph’s current troubles.
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