Here is the news Harry
Attention Business Editors:
UNITED KENO HILL MINES LIMITED
TORONTO, June 1 /CNW/ - United Keno Hill Mines Limited (''United Keno'')
is pleased to announce that it has agreed to form an operating joint venture
with Dynatec Corporation (''Dynatec'') for the rehabilitation, development and
operation of the mines and mill at United Keno's Elsa Properties in central
Yukon.
The agreement provides for the parties entering into definitive
agreements including a Joint Venture Agreement which will detail the operation
of the joint venture and provide for Dynatec to serve as Operator. Dynatec has
agreed to provide or arrange 50% of the $22,000,000 in pre-production and
working capital and equipment estimated in its proposal to be necessary to
re-commence commercial production from the Elsa Properties and will assist the
Corporation in securing the balance. In recognition of that assistance,
Dynatec is to be granted options to purchase shares of United Keno pursuant to
an option agreement. As part of its commitment, Dynatec will subscribe for
common shares of United Keno for an aggregate subscription price of
$1,500,000. As part of its commitment, United Keno has agreed to arrange for
subscriptions for common shares of United Keno of a like amount. The proposed
transactions are subject to satisfaction of certain conditions including
obtaining regulatory approval.
The Joint Venture Agreement will contain provisions for the recovery by
each company of capital contributions and for Dynatec's participation in the
profits of the joint venture. That participation will be affected by
production efficiencies and costs and by the overall profitability of the
joint venture.
United Keno owns numerous underground and open pit mines in the vicinity
of Elsa, Yukon, where its milling, mining and industrial facilities are
located. These Elsa Properties have produced in excess of 200,000,000 ounces
of silver since 1914 when commercial production commenced. After production
was halted in 1989 as a result of declining production and rising costs,
United Keno implemented a reserve development program to rebuild reserves and
develop a new mine plan.
The program has been successful and the silver, lead, zinc resource which
has been established is the highest in United Keno's 50 year history and
contains nearly 30,000,000 ounces of silver. A feasibility study and detailed
mine plans have established new mining and development techniques which will
permit substantial reductions in mining costs and increases in production
efficiencies. A Production Licence permitting commercial production from the
Elsa Properties was issued to United Keno in January of this year.
Stephen Powell, Chairman and Chief Executive Officer of United Keno
observed: ''Dynatec's confidence in the project and its commitment of capital
to it represent a very positive development. Dynatec is a highly qualified and
professional operating partner. To have them as a capital partner as well is
very encouraging. We are confident that their presence will allow us to
complete the financing of the Company and the joint venture. Dynatec has
indicated that they want to commence pre-production activities immediately
and, following four to six months of that preparation, we expect commercial
production to resume late this year.''
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