Nevada Pacific picks up Keno Hill

The dormant Keno Hill lead-zinc-silver mine in the Yukon has been sold out of receivership to Vancouver junior Nevada Pacific Gold (NPG-V) for $3.6 million.

The property, 350 km northeast of Whitehorse, had been held by the creditors of delisted United Keno Hill Mines and was the subject of a court-ordered divestment in favor of secured creditors. A sale deal with the creditors had been struck in September 2001 by AMT Canada, a subsidiary of Maverick Minerals (MAVM-O), but AMT missed a scheduled payment of just over $1 million at the end of 2002.

The creditors applied to the Yukon Supreme Court to have the sale deal overturned; the court gave AMT until Feb. 10 to make the payment before the property was returned to the creditors. A Feb. 4 appeal by AMT was turned down and the creditors reached terms with Nevada Pacific.

Nevada Pacific gets the 105-sq.-km property, surface buildings, and a 450-tonne-per-day mill. A 1996 estimate put the measured and indicated resource on the property at 680,000 tonnes grading 1,033 grams silver per tonne, with 5.08% lead and 4.05% zinc. In addition, there was an inferred resource of 190,000 tonnes at average grades of 992 grams silver, 5.92% lead and 7.28% zinc.

The company is hoping to follow recommendations in an earlier engineering study of the Keno Hill deposit that consulting firm Watts Griffis and McOuat di between 1993 and 1996. The consultants concluded that production using new ground support techniques and lower-cost mining methods could be economic.

The company has paid a $50,000 deposit and must pay a further $150,000 at the end of a 60-day period, during which it can perform a due-diligence investigation. It would then owe $800,000 in August of this year and the remaining $2.6 million in August 2004. Amounts up to $700,000 spent on “environmental capital works” can be credited toward the payments, and there are delay clauses in the deal allowing Nevada Pacific to defer payment of $800,000 for up to 3 years.