The Yukon government has attached sweeping conditions to a $29-million loan guarantee for lead-zinc-silver producer Curragh (TSE), Canadian Press reports.
Conditions range from a first mortgage on assets of the Faro open pit to relocating the head office in the Yukon, away from Toronto.
Since Curragh has at least $44 million outstanding in unpaid bills, the government insists that it raise further equity before the guarantee can be issued, says Government Leader John Ostashek.
Curragh needs money to develop a new orebody, but low metal prices have hurt its cash flow.
The deal would see Curragh repay the $5-million loan extended by the former territorial NDP government last April. That loan enabled the company to start stripping at its Grum orebody.
The government would then extend a $34-million loan guarantee (to include the original $5 million) to ensure completion of the Grum development. The second of three satellite orebodies at the Faro mine, Grum must come on stream for the mine to avoid running out of reserves.
Curragh is carrying more than $300 million in debt, with senior noteholders owed $164 million.
The Faro mine has been shut down and the remaining workers will be laid off in the coming days, said Ostashek.
Ostashek said he will likely require the Sa Dena Hes mine, near Watson Lake, to be restarted, in conjunction with the Faro restart.
Curragh employs about 1,000 people directly and another 2,000 in spinoff jobs — one in four of all Yukon workers. It’s the major employer in Faro, a town of 1,000, about 200 km northeast of Whitehorse.
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