12 Y UKON The Whitehorse STAR, Friday, October 22, 2004 UKHM is prepared to be auctioned ment as no management. It was impos- principal with Norvista. By JANE GAFFIN sible for decision-makers, holding the United Keno had originally Keno, the venerable old gentle- purse strings, to revive old mines with acquired its two-thirds interest in the man mine, refuses to die a natural occasional site visits and long-distance Marg as a result of “taking over” NDU death as long as a probable hundred calls from Toronto. Resources, which was heralded to be million ounces of silver keep its heart Whatever remained of United a merger — not presumable one where beating. Yet, the federal government Keno’s tattered bank account had to be United Keno was to assume majority is bent on subjecting the mine to spent to try keeping a large package of position. euthanasia. mineral leases in good standing with That is not clear and neither is it I believe the mine deserves a dig- the Mayo mining recorder so there clear if Atna Resources bought the nified burial. were properties to explore, mine or sell. Marg property through the court or pos- In a series of articles being pub- Nevertheless, many were allowed to sibly directly from Norvista. lished in the Star each Friday, I’m lapse. A February 2000, StockHouse Bull- saying last rites and farewell to a Other payments had to be made to board Internet posting stated that great mine that served as the the Whitehorse expediter on time and United Keno’s financial documents Yukon’s lifeblood off and on for in-full. And, as inadequate as they indicated issuance of convertible more than 80 years. were, payments were sent to the Yukon debenture shares to a number of com- Here’s part 12. Energy Corp. in an attempt to keep the panies. Those debentures were United Keno Hill Mines (UKHM) lights on. defaulted, evidently. had to suspend development work on It was a constant battle to keep the Through a promissory note, United its property in 1997 while company company afloat. Without secure tenure, Keno had eventually drawn $200,000 officials desperately sought a financial a bank couldn’t help with the financial from the $500,000-debenture issued to angel. dilemma. Norvista Development in July 1998 — On-site people guesstimated the While Stephen Powell, the United one month before Archer and Stephen company had been unnecessarily out- Keno chair and CEO, wasn’t a mining Star file photo resigned from United Keno’s board of laying $1 million a year to satisfy man, he was a stock broker who knew INTERVENTION SOUGHT – Some United Keno Hill Mines work- directors. overblown environmental demands of the financial end of the business. As he ers and a local politician described the mine-site realities in As with any contract, the terms are federal agents who held the power to magically pulled dollars from hats, negotiated between the parties letters to Robert Nault (above), then the minister of Indian revoke licences and take the company names of directors changed in direct involved. A debenture acknowledges and directors to court. proportion to deals sealed. Affairs and Northern Development. They went unanswered. a debt. This specific contract may have A few irked employees — even a On March 20, 1998, NDU merger went sour very quickly. Archer he was skunked before he started. included some kind of charging pro- local politician — spelled out on-site Resources, an Archer Cathro associ- and Stephen resigned from the United Gauthier’s first task was to send out visions relating to the grantor’s prop- realities in a flow of unanswered let- ate, merged with UKHM. Several new Keno board in August 1998. a news release. The Ontario Superior erty. ters to Robert Nault, the minister of the United Keno directors appeared on the About the same time, it became Court had granted United Keno cred- Regardless, the Marg forfeiture federal Department of Indian Affairs board: Alan Archer, Douglas Goss and harder to trace corporate particulars. itor protection pursuant to an order filed came about because of the 1999 court and Northern (I say “No” ) Develop- James Stephen. United Keno had stopped filing pur- in Toronto under the Companies’ Cred- proceedings in Whitehorse where the ment (DIAND) in Ottawa. By now, Donald Rogers of Romith suant to the Yukon Societies Act, as itors Arrangement Act on Feb. 18, group of creditors holding miners’ liens The once-rational thought about Investments, whose money was being had been done religiously each year 2000. had been sanctioned to sell the Elsa sil- being able to live cleaner, healthier used or misused, had relinquished his since 1952. The order stayed all proceedings ver properties to pay outstanding debts. lives while continuing to fuel an econ- directorship. Who was right and who was wrong against United Keno till March 16, The total amount owed to all those omy with human activity and resource- The NDU-UKHM union sounded in the merger is a Gordian knot that 2000. On that date, the court extended who came forth to make claims at the based jobs went out the window when too good to be true. It was arranged to would take a roomful of corporate the protection deadline to June 23, time was about $8.2 million. Fourteen a set of contradictory environmental facilitate a rapid evaluation of NDU lawyers eons to untangle. 2000, and later granted the last exten- local creditors, including the Yukon regulations were dumped into the Resources’ neighbouring Marg and Without space to go into sordid sion up to Jan. 10, 2001. Energy Corp., which said it was receiv- Yukon Quartz Mining Act. Blende properties and their incorpora- details, it appeared that United Keno The initial ruling prolonged the ing some arrears payments, were owed It had zippo to do with protecting tion into a production schedule. may have made a sneaky end run out- inevitable. But it was not clear if the $1.7 million; unsecured private credi- and preserving the environment but A feasibility study was needed to side the known zone of what was sup- court protection was meant to overturn tors claimed roughly $4.9 million; and had everything to do with giving establish the economics of shipping posed to be a deal. a previous judgment from Whitehorse. a numbered Ontario company claimed DIAND ministerial control over min- ore from the Marg property to the Elsa By May 26, 1998, the position of A 1999 ruling, handed down by $1.6 million. ing claims. townsite where a new mill was pro- Dominion Mineral Resources and Ster- Yukon deputy justice Mary Moreau, The Ontario court granted Gau- Under section 151.1, an inspector posed for construction. ling Frontier Properties Co. as United had forced United Keno to reluctantly thier’s request for extra time to restruc- could interpret United Keno’s tempo- The grandiose plan was formulated Keno’s majority shareholder had sell the Marg property, which seem- ture and refinance. His faint hope was rary work stoppage as an abandonment to augment Elsa mill feed with Marg slipped to 12.16 per cent, and the com- ingly went to a mystery company, to enter into a financial agreement with of its development program and as a material in hopes of grinding nearly pany had taken on a new crop of direc- believed to be Norvista Development Pacific Cart Services Ltd. of Nevada violation of its “approved” operating 3,000 tons per day of rock, although tors. Ltd. to provide the required working capi- plan. nobody knew much about the ore’s On Dec. 31, 1999, Energold Min- The Yukon court action had tal until commercial production Sinners would be shown no mercy. metallurgy or recovery methods at this erals took over a majority position with resulted when MacKenzie Petroleum resumed at Elsa. The authorities could take whatever point. 12.2 per cent shares. Powell only lasted of Dawson City, one of United Keno’s Pacific Cart would loan an initial measures they deemed necessary to The Marg deposit, located 40 kilo- as CEO another year; he stayed on as many secured creditors, came forth first $150,000 on the basis of a loan con- “remedy” any real or fabricated metres northeast of Keno City, is a vol- chairman. to obtain a judgment from the Yukon vertible into common shares at nine offences thrust on the so-called frag- canogenic massive sulphide (VMS) In 2000, Gerald Gauthier assumed Supreme Court in September 1999. cents each, with the option to advance ile environment and send the sinner the deposit. It contains copper, lead, zinc, the role as president and CEO, turning Other creditors followed MacKen- up to a further $4 million on a similar bill or have the judge send him to jail. silver and gold, which see-saw back over his former vice-chairmanship to zie’s lead. United Keno was ordered basis. As proved later, no company can and forth in the marketplace. Robert Granger, a director of several to put its assets on the auction block as United Keno was supposedly in dis- run a specialized mining operation on When one commodity sinks in years. per a marketing plan proposed by all cussions with an undisclosed third over-regulation and too much hands- value, another metal should be rising. Gauthier inherited bills and a the secured creditors. party concerning the balance needed on interference from government. Theoretically, it should be profitable bankrupt company. But the mining In February, 2000, when Gauthier to meet its $6.5-million obligation. It was the unpaid employees, con- to continuously mine either for base engineer thought he could save the pro- was putting out a news release, Atna The refinancing agenda must have tractors and service providers who took metals or for precious metals. ject. He had faith in himself and his 30 Resources purchased two-thirds major- cratered. the full brunt of the so-called environ- United Keno had historical con- years of technical expertise in under- ity interest in the Marg property from It was the bitter end. An Ontario mental liability. The federal govern- nections with the Marg. It was first ground and open pit operations in an “undisclosed company” for court decision extended creditor pro- ment had an imbecilic notion to date staked in 1965 by Canadian Superior Canada, the United States and Mexico. $250,000. (This property had been tection to Jan. 10, 2001. United Keno historic clean-up obligations back mil- Exploration, one of the financial back- Some of his credentials included a appraised at more than $1 million). couldn’t come up with the $6.5 million lions of years to the extensive glacial ers of United Keno’s exploration divi- 15-year employment record with Lac A1 Archer, an astute businessman that would cover only the debts of activity of the Ice Age when Mother sion. Minerals Ltd. From 1979 to 1994, he and head of the Vancouver-based secured and unsecured creditors. Nature was the biggest bulldozer grind- Together, CanSup and United Keno was mine manager of the Bousquet Archer Cathro & Associates, was a Secured creditors, who were owed ing through the Keno Hill area. had prospected the Marg claims for sil- Gold Mine in Quebec; general man- principal in a private company, the most money individually and first That is not to say United Keno did ver in 1965-66. ager of the Hemlo (Ont.) Page Norvista Development. He also was a on the list to collect, were awarded not fritter away investors’ money in Over the years, the ground came Williams Gold Mine; and elevated to principal in NDU Resources, plus court flexibility to garage-sale the other ways. There were strangers on- open and was staked by various com- senior vice-president of Lac’s North another affiliate, Expatriate Resources, assets piecemeal or as a whole unit. site who nobody knew or understood panies. American operations. which was engaged with Atna *** what they were supposed to be doing, By 1986, All-North Resources Ltd. Under an ordinary business venture, Resources in a joint venture elsewhere Jane Gaffin is author of Cashing much less why they might be getting held more than 66-per-cent interest in he possibly could have saved the day, in the Yukon. In, a definitive history of the Yukon’s paid. the property. Its interest was bought attracting financiers and taking United Following the NDU-UKHM agree- hardrock mining industry, 1898 to From abject neglect, the roof caved out in 1987 by NDU Resources, which Keno to commercial production. ment, Archer sat only about five 1977. You can e-mail her at janegaf- in one of the valued underground work- added more claims to the package. But loaded down with corporate months as a United Keno director, as email@example.com or visit her at ings being developed and the mill fell A 1996 diamond-drill program baggage, and without careful thought did his colleague, James Stephen, who www.diArmani.com. into a sorrier state of disrepair. expanded the mineralization to almost to the lurking environmental regula- had NDU Resources connections Next week: unbelievably, the United This was not so much mismanage- four million tons.The NDU-UKHM tions negating legal security of tenure, through All North. Stephen also was a Keno epic tale gets more convoluted.