Judge orders Wolverine mine owners Yukon Zinc into receivership

It's the end of the line for Yukon Zinc.

On Friday, a Yukon judge ordered the company be put into receivership. That gives the Yukon government first dibs on the company's assets as it tries to contain deteriorating conditions at the Wolverine lead-zinc mine, located approximately 190 km north of Watson Lake.

"We felt it was imperative we take action to get control of the situation," said Yukon government lawyer John Porter during proceedings Friday.

Friday's ruling means the receiver, PricewaterhouseCoopers, can take control of the mine site and Yukon Zinc's assets.

The government has been seeking the ruling since it filed a petition in late July. It says Yukon Zinc is on the hook for a total of $35 million in securities, meant to cover the cost of environmental protection at the mine. The government has collected approximately $10.7 million of that, and has spent $1.4 million on work at the site.

John Fox, an assistant deputy minister with Yukon's Department of Energy, Mines and Resources, welcomed Friday's decision.

Fox said staff from PricewaterhouseCoopers went to the mine to meet with remaining staff there, and to Yukon Zinc's Vancouver office to secure company files.

It's too early to predict how much the government will be able to collect, Fox said.

"Ultimately over time we will work with the receiver on a process for the sale of the company's assets, which of course include the Wolverine mine and following that process we would have a better idea about security," he said.

Other creditors will be next in line if there's anything left after the government gets the outstanding $25 million.

Yukon Zinc status unclear

Yukon Zinc had tried to stave off receivership by applying for creditor protection in British Columbia, which created an automatic stay in Yukon court proceedings.

In court, Porter said the government agreed to stand down on the receivership application as long as Yukon Zinc made two separate security payments totalling more than $600,000.

The company failed to make either payment, and even Kibben Jackson, the lawyer who represented Yukon Zinc earlier in the process, did not know why.

Jackson, who took part in Friday's hearing by phone on behalf of a creditor, said he had not been in contact with Yukon Zinc and had no instructions from the company. He also said he was "all but certain" a proposed $3-million credit facility that would have kept Yukon Zinc afloat had fallen through.

In court documents, mine inspectors detailed deteriorating conditions at Wolverine over the last two years. An inspection report from late May noted concerns with waste management, chemical storage, dams and other site structures and tailings storage.

In that report, inspectors said Yukon Zinc "has failed to feet all previously identified non compliance" orders.

In June, the Yukon government warned Yukon Zinc it was violating the terms of its water and quartz mining licenses. Emails between the Department of Energy, Mines and Resources and Yukon Zinc CEO Jing You Lu, show the company promised to "do all the work" for care and maintenance.

Reached in Vancouver, a Yukon Zinc spokesman declined to be interviewed, but said employees at the Vancouver office had been let go.