Mining News: Northern Neighbors: MinQuest makes offer for Wolverine Mine

Australia-based MinQuest Ltd. July 23 said it has submitted a conditional, non-binding offer for the Wolverine zinc mine in eastern Yukon Territory. MinQuest is examining the potential of utilizing the existing processing and tailings management facilities at Wolverine to fast-track the development of the Kona deposit at its own Fyre Lake copper project, which is located about 28 kilometers (17 miles) to the south. Jeremy Read, managing director of MinQuest, explained: “Using the existing infrastructure at Wolverine could decrease the pre-production capital expenditure for putting Fyre Lake into production by as much as C$150 million to C$200 million, which would substantially improve the economics of the Fyre Lake copper project.” Yukon Zinc Corp. has invested more than C$500 million on development of Wolverine since it acquired the project in 2008. The mine was commissioned in 2010, but ran into a number of difficulties during the operational phase. Citing low metals prices, Yukon Zinc put the operation on care and maintenance in January. In March, the Supreme Court of British Columbia granted Yukon Zinc protection from its creditors. PricewaterhouseCoopers Inc., which was appointed as monitor of Yukon Zinc, has been authorized to seek of offers to invest in Yukon Zinc or to purchase the company’s assets. MinQuest has made a conditional offer to purchase Wolverine, including the mine’s remaining mineral resources, mill, tailings facility, buildings, power plant, leases and surrounding exploration claims. The offer, however, is conditional upon MinQuest securing the finances to complete the purchase by Aug. 10. MinQuest said it is in discussions with a number of potential financiers who have expressed interest in presenting a term sheet for financing acquisition of the mine. The terms of the offer are to remain confidential until it meets the condition. If MinQuest can swing the deal, the junior miner believes the purchase could fast-track the development of the Kona deposit, which has a JORC-compliant indicated and inferred resource of 12.6 metric tons averaging 1.56 percent copper, 0.09 percent cobalt, 0.30 zinc and 0.63 grams per metric ton gold. Preliminary studies completed by MinQuest have concluded that the Wolverine processing plant is capable of being converted to a single float circuit plant, producing a copper-cobalt-gold metal concentrate.

- Shane Lasley