Yukon Zinc granted more time, money to restructure

Yukon Zinc has been given more time and money to restructure, and maintain the Wolverine mine site.

The B.C. Supreme Court granted thecompany's request on Fridayto further extend the relief granted under creditor protection. It's the second extension granted to Yukon Zinc, but a longer one. The previous one-week extension covered the company until Friday. It now has a stay of proceedingsuntil June 12.

The court also approved thecompany'srequest to borrow more money. Its previous court-ordered borrowing limit was $1.5 million; it's now $5 million.

The beleaguered company requested the extra relief to allow it to work on a restructuring plan, and attempt to re-open the Wolverine Mine northeast of Watson Lake.

Yukon Zinc 'temporarily'shut down the Wolverine Mine in December,citinglow metal prices and lack of funding. Since then, the mine site has been in care and maintenance mode. Last month, the company was granted creditor protection.

'Delicate environmental condition'

A report fromPricewaterhouseCoopers, the court-appointed monitorofYukon Zinc's creditor protection process, recommmended the B.C. Supreme Court grant Yukon Zinc's latest requests.

It says the higher borrowing limit will allow the company to continuemaintainingthe mine site.

"The Mine is in a delicate environmental condition at this time and any curtailment of the current care and maintenance could have a significant impact to the area and require government intervention," the report says.

The mine is now flooded and the company needs money to try to de-water it.

The PricewaterhouseCooper report also says extending the stay of proceedings will allow for a more 'orderly' liquidation, if the Yukon Zincshould fail to restructure.

Looking for buyers

Yukon Zinc owes money to hundreds of creditors, but most of its$646 million debt is owedto parent companyJinDui Cheng Canada Resource Corporation Limited (JDC Canada), which has a head office in Vancouver.

Court documents show JDC Canada supports Yukon Zinc's attempts to restructure, but the parent company also wants Yukon Zinc to look for investors and buyers for its assets. The B.C. Supreme Court approved a sale and investment solicitation process, overseen by PricewaterhouseCoopers.

Yukon Zinc spent close to $600 million to purchase and develop the Wolverinesite. It went into production in early 2012, and lost nearly $200 million over its three years of operation. At its peak, there were about 300 people working on-site at any time. Most have now been laid off, leaving a workforce of just 12 to maintain the site.