Update on proposal to acquired the Wolverine Zinc Mine, Yukon Territory • Yukon Zinc Corporation is currently under Court protection from its creditors, with PricewaterhouseCoopers having been appointed as Monitor of Yukon Zinc. Yukon Zinc has put forward a restructuring proposal, which is to be considered by creditors at a meeting on September 2, 2015 (Pacific Standard Time). • MinQuest Limited has agreed with the Monitor on the terms of an Asset Purchase Agreement (APA) to acquire the Wolverine Zinc Mine and related assets in the Yukon Territory, currently owned by Yukon Zinc. • Under the terms of the APA MinQuest would acquire the Wolverine Zinc Mine for CAD$15 million, with an additional payment of CAD$2.85 million to the government of the Yukon Territory to supplement existing CAD$7.7 million of environmental bonds. • MinQuest has executed the APA and is awaiting advice from the Monitor as to whether the Monitor intends to make an application to the Supreme Court of British Columbia for an order that PwC be authorised to execute the APA on behalf of Yukon Zinc. If the Monitor does not intend to make an application to the Court, MinQuest will proceed with making such an application to the Court. • If a Court order providing the Monitor the power to execute the APA is obtained, the APA would become effective if Yukon Zinc's restructuring proposal is not approved by its creditors or is not implemented. • In addition to proceeding with the purchase of Wolverine pursuant to the APA, MinQuest is proposing to make the following payments (approx. CAD$4M) after the completion of the purchase under the APA: - all employee claims in full, - creditors with total claims of up to CAD$10,000 also to be paid in full. - Creditors with a claim value in excess of CAD$10,000 will be paid the greater of CAD$10,000, or 10% of their claim. • In the event that the APA becomes effective and MinQuest purchases the Wolverine Zinc Mine and related assets, MinQuest intends to bring the Wolverine Mine back into operation as soon as is economically feasible. Following completion of mining at Wolverine, MinQuest will use the plant to process ore from the nearby Fyre Lake project, creating significant jobs and business opportunities for the region, over potentially a 10 year period. Highlights 2 September 2015 DIRECTORS David Deloub Chairman Jeremy Read Managing Director Paul Niardone Non-Executive Director Adam Davey Non-Executive Director Stephen Kelly Company Secretary SHARE INFORMATION ASX Code: MNQ Issued Capital: 220,230,116 Fully Paid Shares 72,936,522 Unlisted Options CONTACT INFORMATION Registered Office: Unit 1, 47 Park Road Milton, QLD 4064 T: +61 7 3511 6570 F: +61 7 3369 3305 www.minquest.com.au MinQuest Limited ACN: 146 035 127 For personal use only
Transcript
Update on proposal to acquired the Wolverine Zinc Mine, Yukon Territory
• Yukon Zinc Corporation is currently under Court protection from its creditors, with PricewaterhouseCoopers having been appointed as Monitor of Yukon Zinc. Yukon Zinc has put forward a restructuring proposal, which is to be considered by creditors at a meeting on September 2, 2015 (Pacific Standard Time).
• MinQuest Limited has agreed with the Monitor on the terms of an Asset Purchase Agreement (APA) to acquire the Wolverine Zinc Mine and related assets in the Yukon Territory, currently owned by Yukon Zinc.
• Under the terms of the APA MinQuest would acquire the Wolverine Zinc
Mine for CAD$15 million, with an additional payment of CAD$2.85 million to the government of the Yukon Territory to supplement existing CAD$7.7 million of environmental bonds.
• MinQuest has executed the APA and is awaiting advice from the Monitor as to whether the Monitor intends to make an application to the Supreme Court of British Columbia for an order that PwC be authorised to execute the APA on behalf of Yukon Zinc. If the Monitor does not intend to make an application to the Court, MinQuest will proceed with making such an application to the Court.
• If a Court order providing the Monitor the power to execute the APA is
obtained, the APA would become effective if Yukon Zinc's restructuring proposal is not approved by its creditors or is not implemented.
• In addition to proceeding with the purchase of Wolverine pursuant to the APA, MinQuest is proposing to make the following payments (approx. CAD$4M) after the completion of the purchase under the APA: - all employee claims in full, - creditors with total claims of up to CAD$10,000 also to be paid in full. - Creditors with a claim value in excess of CAD$10,000 will be paid the greater of CAD$10,000, or 10% of their claim.
• In the event that the APA becomes effective and MinQuest purchases the Wolverine Zinc Mine and related assets, MinQuest intends to bring the Wolverine Mine back into operation as soon as is economically feasible. Following completion of mining at Wolverine, MinQuest will use the plant to process ore from the nearby Fyre Lake project, creating significant jobs and business opportunities for the region, over potentially a 10 year period.
Highlights
2 September 2015
DIRECTORS David Deloub Chairman Jeremy Read Managing Director Paul Niardone Non-Executive Director Adam Davey Non-Executive Director Stephen Kelly Company Secretary
CONTACT INFORMATION Registered Office: Unit 1, 47 Park Road Milton, QLD 4064 T: +61 7 3511 6570 F: +61 7 3369 3305 www.minquest.com.au
MinQuest Limited ACN: 146 035 127
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INTRODUCTION
MinQuest Limited (ASX:MNQ) has agreed with the Monitor the terms of an Asset Purchase Agreement (APA) for the acquisition of the Wolverine zinc mine in the Yukon Territory, Canada.
The mine is currently owned by Yukon Zinc Corporation, which is under Court protection from its creditors, with PriceWaterhouseCoopers (PwC) having been appointed by the Court as Monitor of Yukon Zinc.
MinQuest has signed the APA to acquire Wolverine for CAD$15 million, with an additional payment of CAD$2.85 million to the government of the Yukon Territory to supplement an existing CAD$7.7 million of environmental bonds.
Yukon Zinc has advised the Monitor that it does not intend to execute the APA. In this circumstance MinQuest understands that an application will need to be made to the Supreme Court of British Columbia to grant the Monitor the power to execute the APA on behalf of Yukon Zinc. MinQuest is awaiting advice from the Monitor as to whether the Monitor intends to make an application to the Supreme Court of British Columbia for an order that PwC be authorised to execute the APA on behalf of Yukon Zinc. If the Monitor does not intend to make an application to the Court, MinQuest will proceed with making such an application to the Court. Yukon Zinc meanwhile has proposed a Plan of Compromise and Arrangement which is to be voted on by creditors in Vancouver on September 2, 2015 (Pacific Standard Time). A townhall meeting of creditors was held in Whitehorse in the Yukon on August 31, 2015 (Pacific Standard Time). Materials that were presented to that meeting by the Monitor can be viewed via the Monitor’s website under the Creditor Meeting and Voting Process tab.
The APA includes the acquisition of the Wolverine Mine including the 750,000 tpa processing facility, tailings management facility, mine office, workshops, power station, underground mine, surrounding exploration tenements and operating licences.
The Wolverine project is 28km north east of MinQuest’s Fyre Lake Project in the Finlayson Lake District of the south east Yukon Territory. F
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MinQuest is assessing the potential to use the existing facilities at Wolverine to process ore from Fyre Lake. MinQuest also is considering resuming mining and processing of remaining reserves at Wolverine while infrastructure is developed and permits obtained to transport ore from Fyre Lake to Wolverine.
MinQuest Managing Director Jeremy Read said the MinQuest acquisition of Wolverine would allow the Fyre Lake project to be developed more quickly and at significantly lower cost.
“Using the existing infrastructure at Wolverine could significantly reduce the pre-production capital expenditure for Fyre Lake, substantially improving the project economics, securing the long term viability and security of the project and the Wolverine operations. The combination of the two projects will create substantial employment and business opportunities for the region.
"Yukon Zinc has stated that, if its restructuring proposal is approved by creditors, it does not intend to resume operations at Wolverine in the foreseeable future, and instead will leave the facility on care and maintenance.
"We believe that would be a disappointing outcome for the region," said Mr Read. "In the event that creditors approve the Yukon Zinc restructuring proposal, MinQuest intends to engage with Yukon Zinc to negotiate an agreement with the company to enable Fyre Lake ore to be treated at Wolverine. This would again create the opportunity for an integrated development of the two projects, which will generate significant economic benefits for the region, potentially creating jobs and business
0 5 10 km
UTM Projection. Zone 9. NAD83 Datum.
Wolverine MineZn-Ag-Cu-Pb-Au
GP4F DepositZn-Pb-Au-Ag-Cu
Kudz Ze Kayah DepositZn-Pb-Cu-Au-Ag
FYRE LAKE
Fyre Lake
Wolverine Lake
ROBERT
North Lakes
North
River
Frances
P E L L Y MO
U N T AI N
S
CA
MP
BE
LL
RA
NG
E
to Ross River
to Watson Lake
Kona DepositCu-Co-Au
CAMPBELL
HIGHWAY
Lake
MoneyCreek
MoneyCreek
420000
420000
440000
440000
460000
460000
6800000 6800000
6820000 6820000
Drawn: RRM
Checked: C. Doornbos
Date: 05.05.2015 Revision:
Drawing No.: FL-010a.mxdFigure 1
FYRE LAKE PROJECT - YUKON, CANADAWOLVERINE ZINC MINE
VMS MineVMS Deposit
HighwayMine access roadProposed Fyre Lake accessLakeRiver
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opportunities for many years into the future. We look forward to working with all stakeholders and potential business partners to bring the projects to fruition," he said.
MinQuest’s opinion is that for viable, long term mining operations to be sustained using the existing infrastructure at Wolverine, an integrated project combining the remaining mineral resources at Wolverine and the Kona mineral resource on the adjacent Fyre Lake project, is required.
Competent Person Statement The information in this report that relates to exploration results is based upon information reviewed by Mr Jeremy Read BSc (Hons) who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Read is a full time employee of MinQuest Limited and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Read consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Mr Read is the Managing Director of MinQuest and currently owns 2,525,253 Fully Paid Ordinary Shares and has the entitlement to a further 2,525,253 deferred consideration shares subject to relevant milestone events being achieved.
Forward Looking Statements
This announcement contains “forward-looking statements”. Such forward-looking statements include, without limitation: estimates of future earnings, the sensitivity of earnings to commodity prices and foreign exchange rate movements; estimates of future production and sales; estimates of future cash flows, the sensitivity of cash flows to commodity prices and foreign exchange rate movements; statements regarding future debt repayments; estimates of future capital expenditures; estimates of resources and statements regarding future exploration results; and where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, forward looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to commodity price volatility, currency fluctuations, increased production costs and variances in resource or reserve rates from those assumed in the company’s plans, as well as political and operational risks in the countries and states in which we operate or sell product to, and governmental regulation and judicial outcomes. For a more detailed discussion of such risks and other factors, see the Company’s Annual Reports, as well as the Company’s other filings. The Company does not undertake any obligation to release publicly any revisions to any “forward looking statement” to reflect events or circumstances after the date of this release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities law.
