A little more info--
Friday, August 7, 1998
United Keno hits another bump in mine
plan
By Paul Bagnell
Mining Reporter The Financial Post
United Keno Hill Mines Ltd., which is trying to restart four Yukon silver mines, has made an
abrupt change in the contractor it needs to operate the sites.
United Keno said an agreement with Dynatec Corp. to operate its mines near Elsa, Yukon,
has fallen through. It now has a deal with Procon Mining & Tunnelling Ltd. of Burnaby, B.C., to
run the mines.
The switch is the latest bump in the road in United Keno's bid to restart the mines and take
advantage of strong silver prices.
It wants to restart the Bellekeno, Silverking, Husky and Husky Southwest silver-lead-zinc
mines, which have been idle since 1989. The company says it can produce five million ounces
of silver a year from the mines but lacks full financing for the project.
Dynatec and United Keno said June 1 they had reached a deal that would have seen Dynatec
operate the mines in exchange for a share of profits. The agreement called for Dynatec to buy
$1.5 million of United Keno stock and provide half the $22 million needed for pre-production
work at the sites.
Dynatec has since changed its view of the economics of the deal, spokesman Alex Daschko
said yesterday. "It was decided that, from our perspective, it just wasn't worth pursuing."
On July 28, Dynatec reached a deal with Franco-Nevada Mining Corp. and its sister company
to operate the companies' Ken Snyder mine in Nevada. The mine is expected to be one of the
lowest-cost gold producers in the world.
Daschko said the decision not to proceed with the United Keno agreement was unrelated to
winning the Ken Snyder job.
United Keno chief executive Stephen Powell said Procon developed the Eskay Creek
gold-silver mine in British Columbia, and now operates the mine for Homestake Canada Inc. It
also worked at the Elsa mines for United Keno in 1995.
Shares of United Keno (UKH/TSE) closed yesterday at 34›, down 2.5›.
Procon is working for fees, while the deal with Dynatec called for it to share in profits, Powell
said.
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