Yukon Zinc fined $10,000 for overdue security payments

Yukon Zinc has been fined $10,000 over two late security payments to the Yukon government.

Yukon Zinc has been fined $10,000 over two late security payments to the Yukon government.

The owners of Wolverine mine have since paid off the close to $3 million dollars they owed but missed two deadlines along the way while they struggled to keep the mine afloat.

Wolverine was shuttered in January and will stay in care and maintenance for the foreseeable future.

That security cash is earmarked for mine reclamation and eventual closure plans.

The penalty – which was suggested by lawyers for both sides – is a lot less than it could have been. The law allows for fines up to $200,000 total.

Crown prosecutor Peter Sandiford acknowledged that the recommended fine was “lenient” but said there was no evidence that Yukon Zinc had a willful disregard for the deadlines.

Sandiford said Yukon Zinc was having “legitimate financial difficulties” but kept the Yukon government apprised of what was going on.

It’s also worth noting that the money was eventually paid in full, Sandiford said.

Construction of Wolverine mine, about 200 kilometres northwest of Watson Lake, started in 2009 and was completed the next year. The mine was in commercial production by 2012.

In 2013 the amount of security Yukon Zinc was required to pay the government was set at nearly $10.6 million, the court heard. A schedule was set for when that money would be paid.

Things started going badly for the company early.

In the period from 2012 through 2014, Yukon Zinc suffered net losses of approximately $196 million, according to an agreed statement of facts filed with the court.

Still, they made payments early on.

In November 2013, Yukon Zinc requested that the minister of energy mines and resources allow for some flexibility with their payment schedule.

By that point Yukon Zinc had paid nearly $7.5 million of the money it owed.

Even with the adjusted schedule the company missed a $350,000 payment due at the end of October 2014 and a $450,000 security due in January.

On Jan. 21, 2015, underground mining operations at Wolverine ceased. Sixty employees were laid off. By Feb. 19, only 12 mine employees remained.

Yukon Zinc went into creditor protection in March. It was $646 million in debt. Nearly $600 million of that was owed to its parent company, Chinese-owned JDC Canada.

The Yukon government got paid in full – a total outstanding bill of $2,847,731.

The Ross River Dena Council has also been paid the full $170,000 it was owed.

Yukon businesses were not nearly as lucky.

Creditors eventually agreed to a deal that saw them get cents on the dollar if they were owed more than $5,000.

This July, Yukon Zinc submitted a new reclamation and closure plan for the mine. That’s on schedule – these plans are required to be redone every two years.

According to the company’s updated plan, the cost to close the mine, even though it is now flooded, is still less than the $10.5 million that the Yukon government has in the coffers.

Staff at Energy, Mines and Resources is still reviewing the plan to see if they agree with Yukon Zinc’s calculations.

The department says they should have a decision by the end of the year.

Contact Ashley Joannou at

ashleyj@yukon-news.com

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