A dispute between two owners of a set of controversial placer mining claims in Dawson City was heard in Yukon Supreme Court this week.
Darrell Carey and Rod Adams want to dissolve their company, 47162 Yukon Inc. But they both want to keep some or all of the 25 claims they purchased together on the east side of the Dome Road in 2013.
Carey and Adams haven’t mined the claims since 2013 because of a disagreement over how the mine should be run.
On Thursday, the court heard that Adams wants the 25 claims to be put up for a sealed-bid auction, meaning both he and Carey would put forward bids without knowing how much the other had bid. The bids would each have to be at least $500,000, which is what the claims were worth in 2013.
“They haven’t increased in value in that time,” Adams’ lawyer, Meagan Hannam, told Justice Ron Veale.
But Carey hasn’t agreed to a sealed-bid auction, because he believes he doesn’t stand a chance of winning the claims.
“He knows that Rod Adams is a much wealthier man than he is,” Carey’s representative, Barry Ernewein, told the court. “And he knows he’ll get outbid.”
Instead, Carey wants to split the 25 claims with Adams. He’s proposing a split that would leave him with 16 claims and Adams with nine. The claims he wants to keep are adjacent to his existing Slinky mine claims. The claims he’s proposing to give to Adams are in two separate blocks along a creek bed further east of the Dome Road.
There is also some ready-to-sluice ground on the claims Carey wants to keep, but he’s proposing to split that with Adams as well.
Though Carey would end up with the majority of the claims if his plan were adopted, he said that many of them are already mined out.
“I’m just trying to make it easy for everybody, that’s all,” he told the court.
But Hannam said Adams isn’t interested in splitting the claims.
“We received a letter proposing this about a month ago, and we declined it,” she explained.
One of the issues is that much of the area hasn’t been properly sampled for gold. That makes it difficult to know which claims are most valuable.
“Splitting them in half doesn’t ensure that each stakeholder gets equal value,” Hannam argued.
She also expressed doubt that Carey actually would split the ready-to-sluice ground with Adams.
Hannam argued that a sealed-bid auction would be fairer because it would ensure that both men “receive value” from the claims. If Adams jacks up his bid to be sure he outbids Carey, she pointed out, then Carey gets a larger windfall.
“At the end, everyone comes out with value from this process,” she said. “It’s just a question of what form it takes.”
During the hearing, Veale said that standard practice would be to put the claims up for sealed bids. But he seemed to acknowledge that Carey and Adams are not on the same financial footing.
“I guess the evidence is that having the sealed bid gives Mr. Adams a distinct advantage,” he said. He referred to Carey as the miner and Adams as the “money man” in the joint operation.
Ernewein stressed that point, suggesting that Adams doesn’t really have an interest in mining, while Carey has done it all his life.
Carey also made an emotional appeal to Veale. “I just always wanted to be a miner,” he said. “I started when I was younger, and I hope I can finish when I’m older.”
Hannam stressed the importance of reaching a resolution quickly, if either party hopes to mine the claims this season. She said it’s already unclear whether that will be possible.
These 25 placer claims made news last December, when it came to light that Carey had applied for a 10-year permit to mine the claims, raising concerns among some Dawson residents.
Shortly after that, Adams informed the Yukon Environmental and Socio-economic Assessment Board that he didn’t support the application, which brought the process to a halt. At the time, Adams said he hadn’t known about Carey’s application until he saw it in the news.
Both men plan to mine the Dawson claims if they retain ownership.
Veale will deliver his decision at 3 p.m. on Friday.
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