The board of directors of United Keno Hill Mines (TSE) has given the green light to a deal that will see BLM Mines, a unit of Sudbury- based Bharti Laamanen Mining, acquire Falconbridge Ltd.’s 44.8% stake in the silver miner for $2.7 million. All of United Keno’s silver mines, which were shut down last year due to low metal prices, are in the Keno Hill-Galena Hill area of the Yukon Territory.
Under terms of the sale agreement, Falconbridge will sell its 3,195,990 shares of United Keno for 85 cents per share for a total sale price of $2,716,591.
Falconbridge, a unit of Noranda (TSE) and Trelleborg, has also agreed to deposit $2.4 million in escrow for United Keno to use in connection with maintenance, exploration and development of the company’s Yukon properties. The funds, together with accrued interest, will be released semi-annually in amounts of $500,000 with the first release set for Sept. 1.
In return for escrowed funds, Falconbridge will receive a capped royalty interest, based on various net smelter returns for all products mined from United Keno’s properties. The royalty will be 1% when the silver price averages US$6-9 per oz., and 3% if the price is greater than US$9 per oz. No royalties are payable when the silver price is below US$6 per oz., and the total royalty will be limited to $7.2 million.
As of Dec. 31, 1989, United Keno reported proven, probable and stockpiled ore reserves totalling 322,000 tons grading 28 oz. silver per ton. An additional 120,800 tons grading 35.4 oz. silver has been classed as possible ore.
As part of the deal, United Keno’s one-third interest in the DEF copper deposit, north of Whitehorse, Y.T., will be transferred to Falconbridge which owns the remaining two-thirds interest.
A fairness opinion for the sale transaction was provided by ScotiaMcLeod, which deemed the deal to be “fair from a financial point of view” to the shareholders of United Keno. The deal is scheduled to close on July 27. .15
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