Yukon Zinc’s creditors have approved the mining company’s restructuring plan, which will see many of them paid a fraction of the amount they’re owed.
The results of the vote were announced at a meeting in Vancouver today.
Under the plan, creditors owed less than $5,000 will be paid back in full, while anyone owed more will either be paid $5,000 or up to 11.5 cents on the dollar.
The Yukon government will receive the full $2.8 million that Yukon Zinc owes in security payments, and the Ross River Dena Council will also be paid back the full $170,000 it’s owed. Yukon Zinc will also pay out the full amount owed to 131 employees who were either working or on temporary layoff when the company filed for creditor protection in March.
The plan is being funded by Jinduicheng Canada Resources Corp., Yukon Zinc’s parent company.
Yukon Zinc plans to keep its Wolverine mine in care and maintenance for the foreseeable future. The mine shut down in January, citing low mineral prices, and is now slowly flooding with water.
At a meeting in Whitehorse on Monday, Yukon Zinc CEO Jing You Lu said he would like to see the mine open again.
“Why not?” he said. “If the markets resume and we can make money, why not?”
But not all of the roughly 20 people in attendance at Monday’s meeting were satisfied with the plan.
Paramijit Sidhu, with P.S. Sidhu Trucking Ltd., said he believes the mine will never operate again, since it has only two or three years of production left.
Sidhu eventually stormed out of the meeting.
“They took 10 years out of my life to help them,” he said. “And they want me to take 10 cents on the dollar.”
His company claims it’s owed close to $866,000 for trucking services.
Robert Wills, with Above Ground Engineering, said the way Yukon Zinc treated its creditors is “shameful.”
“They’re certainly not prepared to buy any goodwill in the Yukon,” he said. “As creditors, we are at a loss.”
His company is owed less than $5,000, meaning he was automatically assumed to have voted for the plan. Any creditor who will be repaid in full did not get the chance to vote against the plan.
But Wills said he would have voted no, if he’d been allowed.
“If I was owed a million dollars and only offered a hundred thousand, I would wait to see whether… I could make a better deal with a future purchaser,” he said.
During the meeting, Yukon Zinc’s court-appointed monitor, Mike Vermette, gave out details of a bid by Australian junior mining company MinQuest to buy the mine.
Had the creditors voted against Yukon Zinc’s plan, it’s possible the company would have sold its assets to MinQuest. MinQuest apparently wanted to offer creditors a similar pay-out plan to Yukon Zinc’s.
But Vermette stressed that Yukon Zinc wouldn’t necessarily have sold the mine to MinQuest, even if its plan had been voted down. Instead, it might have developed a new restructuring plan, or JDC Canada might have acquired the mine from Yukon Zinc, which likely would have landed the unsecured creditors with nothing.
Vermette insisted that Yukon Zinc’s plan is the best creditors could have hoped for. He said it’s rare for anyone to come away from a creditor protection process feeling satisfied, because creditors are always taking a hit.
“If there’s anybody who leaves the process happy, you’ve screwed up,” he said. “Because when the pie is not big enough to pay everybody, it’s just not right for somebody to leave happy.”
Once the proceedings are approved by the B.C. Supreme Court, cheques could be issued to creditors as early as Oct. 2.
Contact Maura Forrest at