Silver mines goes up for sale
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by John McHutchion
News reporter
The possible sale of one of the territory's oldest mines will take another step forward this weekend.
Ads for the sale of the assets and claims of United Keno Hill Mines Ltd.'s silver mine in Elsa were to start appearing in a national newspaper on Saturday.
Owed millions of dollars by United Keno Hill, the company's creditors were granted permission by the Yukon Supreme Court on September 21 to begin looking for a possible buyer for the mine.
The newspaper ads will appear in The National Post for the next three weeks and at least once in The Northern Miner, said Paul Lakowicz, a lawyer for some of the mine's creditors.
Creditors have said they hope to sell off the mine's assets and mineral claims intact as one complete unit, but they aren't determined to sell the mine intact.
"We're flexible," said Lakowicz. "It would make sense that a package would be the easiest way to handle it."
Outside of the mineral claims at the mine, there aren't many other assets that could be sold off from the mine because it hasn't operated in so long, he said.
"The value is in the claims," said Lakowicz.
Once the creditors find an interested buyer for the mine, the whole issue will have to go back before the Yukon courts, he added.
Creditors of the company are owed millions of dollars.
There are roughly $1.1 million in lien claimants, said Lakowicz, who knows of an additional $150,000 in liens that are yet to be reported.
Two Ontario companies also claim to be owed roughly $2.5 million, but Lakowicz said the businesses haven't provided any details of their claims to United Keno Hill's Yukon creditors.
Those creditors have a court order stating the Ontario companies must provide details of their security documents but, so far, no information has been forthcoming, said Lakowicz.
Convertible debenture holders are owed roughly $4.9 million.
Executives at Toronto-based United Keno Hill have been trying to hold off any potential sale of assets by trying to secure financing to reopen the mine.
The company said it needs about $18 million to resume operations.
Following the late-September court decision that cleared the way for the creditors to begin the process of selling the assets, Gerald Gauthier, United Keno Hill's president and CEO, contacted Yukon creditors, trying to dissuade them from going ahead.
To one creditor, either United Keno Hill must come up with some money or somebody else will.
"(The sale) is going ahead," said Earl MacKenzie, who operates MacKenzie Petroleums Ltd. of Dawson City.
United Keno Hill has the same option to satisfy creditors as any potential buyer, said MacKenzie.
The fuel supplier is owed about $170,000 on a claim that dates back at least three years.
As for United Keno Hill executives' requests for more time to line up potential investors, MacKenzie said creditors have been hearing that same thing for the past four years.
If United Keno Hill is going to request "indulgence" from the secured creditors, then the company must "do something that is going to make everybody happy," said Lakowicz.
In a release issued last Friday, United Keno Hill reiterated it is confident it can arrange its financing and deal with its "creditor problem" in the Yukon.
In a further development related to the company's money troubles, assets at the Elsa mine have been ordered to be seized and sold to pay off employees.
According to documents filed with the Yukon Supreme Court this week by the Yukon government's director of employment standards, seven workers claim to be owed almost $116,000 by United Keno.
The document orders the sheriff to sell off mine assets by public auction or tender to pay off these employees.
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