After more than six months under creditor protection, Yukon Zinc has paid out part of its debt to businesses, suppliers and employees, and has given the Yukon government the full $3 million it owed in late security payments.
Employees and creditors owed less than $5,000 were paid the full amount they were due. Creditors owed more received $5,000 or up to 11.5 per cent of what they were owed. The Ross River Dena Council has also been paid the full $170,000 it was owed.
Yukon Zinc sent out cheques to creditors earlier this month, after the creditors narrowly voted to approve the mining company’s restructuring plan in early September.
Technically, the company will remain under creditor protection until disputes with a few remaining creditors have been resolved. The Wolverine mine, which shuttered in January, will stay in care and maintenance for the foreseeable future.
Still, not all is exactly as it should be. Yukon Zinc’s court-appointed monitor, Mike Vermette, released a report on Oct. 8 expressing “serious concerns” that Yukon Zinc’s parent company, JDC Canada, had not yet received all the money it had been promised by JDC Group, the Chinese state-owned mining company funding the restructuring.
JDC Group was supposed to transfer $15 million to JDC Canada by Sept. 25 to pay off the creditors and keep the mine in care and maintenance through 2016. To date, JDC Canada has only received $13 million, which the monitor estimates is only enough to fund Yukon Zinc’s operations until early 2016.
Vermette said JDC representatives have said they will advance the rest of the money at some point. But the move is of concern because JDC has a “history there… of changing its mind” and not giving funds to Yukon Zinc when it said it would, he explained.
“Had there not been that history, we would never have made the comment,” he said. “If the $15 million loan had been from the Royal Bank, we would have never made the comment.”
But he maintained that the restructuring plan is still the best option available to creditors. “It’s still a fair and reasonable plan. What I’m trying to do is caution people. Don’t assume that all of your ongoing credit you give them will be taken care of.”
Energy, Mines and Resources Minister Scott Kent said he’s “disappointed” with the outcome for local businesses that have lost money in their dealings with Yukon Zinc.
But he said he wouldn’t do anything differently to prevent this type of situation from repeating itself. He dismissed a recent suggestion from NDP MLA Jim Tredger that the government could require a security bond for creditors that would reduce some of the risk to local businesses.
“Our government believes in the independence of the private sector and the freedom for them to make their own decisions,” he explained.
Kent said his first priority was to make sure Yukon Zinc followed through on its security payments, which it has now done. The mining company began to miss payments in October 2014, but that information didn’t become public until January 2015. To help protect the company from bankruptcy, the government didn’t charge Yukon Zinc for failing to pay until March.
“We wanted to try to ensure that that mine remained viable, and was able to weather some of the storms… in the commodities market,” Kent said. “Unfortunately (it) couldn’t.”
Australian junior mining company MinQuest, which put in an offer to buy the Wolverine mine this summer, says it’s still interested in using the mine’s facilities to process ore from its nearby Fyre Lake copper project. It hopes to negotiate an agreement with Yukon Zinc.
Contact Maura Forrest at
maura.forrest@yukon-news.com