Document 2539041

YUKON ZINC CORPORATION
MONITOR’S FIRST REPORT TO COURT
March 17, 2015
TABLE OF CONTENTS
1.
INTRODUCTION .................................................................................................... 1
2.
ACTIVITIES OF THE MONITOR TO DATE .............................................................2
3.
ASSET VALUES ......................................................................................................3
4.
CURRENT SITUATION .......................................................................................... 4
5.
THE REVISED CASH FLOW ................................................................................... 5
6.
INTERIM FINANCING ......................................................................................... 10
7.
CONCLUSIONS AND RECOMMENDATIONS ....................................................... 12
APPENDICES
A.
Revised Cash Flow to July 31, 2015
B.
Maynards Financial Limited Partnership Interim Loan Agreement
YUKON ZINC CORPORATION
MONITOR’S FIRST REPORT TO COURT
March 17, 2015
1.
INTRODUCTION
1.1
On March 13, 2015, on the application of Yukon Zinc Corporation (the “Company” or
“Yukon Zinc”), the Supreme Court of British Columbia (the “Court”) made an order
(the “Initial Order”) granting the Company protection from its creditors pursuant to the
Companies’ Creditors Arrangement Act (the “CCAA”). Under the Initial Order,
PricewaterhouseCoopers Inc. (“PwC”) was appointed Monitor of the Company (the
“Monitor”).
1.2
Pursuant to the Initial Order, among other things, all creditors are stayed from
commencing or continuing any proceedings against the Company until April 10, 2015, the
date set for the subsequent hearing in the proceeding (the “Comeback Hearing”).
1.3
Until January 2015, the Company operated its Wolverine Mine (the “Mine”), located 282
kilometres north east of the City of Whitehorse, in the Yukon, for the production of zinc,
copper, and lead concentrates. The by-products of the production process include gold
and silver. The Mine, comprising 3,281 mineral claims, includes underground mining
areas, a processing mill, and camp facilities.
1.4
This is the first report of the Monitor. It is not intended to be a comprehensive review of
the affairs of the Company. It is the intention of the Monitor to file a comprehensive
report in advance of the Comeback Hearing.
1.5
The purpose of this limited-scope report is to provide the Court with the Monitor's views
on the following matters to be considered during the Court hearing scheduled for March
19, 2015:
1.6
1.5.1
The Company’s Revised Cash Flow Statement (the “Revised Cash Flow”),
specifically relating to the period leading up to the Comeback Hearing; and
1.5.2
The Company's application for interim financing with a charge in support thereof
(the “Interim Lender’s Charge”).
Unless otherwise stated, all monetary amounts noted herein are expressed in Canadian
dollars. Capitalized terms not otherwise defined herein are as defined in the Company's
application materials, including the first affidavit of Mr. Jing You Lu sworn March 13,
2015 (the "Lu Affidavit").
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YUKON ZINC CORPORATION
MONITOR’S FIRST REPORT TO COURT
March 17, 2015
1.7
2.
The Monitor has created a website at www.pwc.com/car-yukonzinc. All prescribed
materials filed by the Company and the Monitor relating to this CCAA proceeding are
available to creditors and other interested parties in electronic format on the Monitor’s
website. The Monitor will make regular updates to the website to ensure that creditors
and interested parties are kept current and to add prescribed materials as required.
ACTIVITIES OF THE MONITOR TO DATE
2.1
PwC was retained by the Company to act as the Monitor in anticipation of the CCAA
filing. In the days immediately leading up to the CCAA filing, PwC began the process of
becoming familiar with the nature of the operations, assets and liabilities of Yukon Zinc.
PwC also provided assistance to the Company in the preparation of its cash flow forecast
(the “Initial Cash Flow”) filed as part of its material in support of the initial filing.
2.2
The Monitor has attended the Company’s corporate office in Vancouver, BC to meet with
the head office employees and to review the Company’s books and records. The Monitor
has not yet attended the Mine where the Company’s operations and assets are located.
2.3
The Company has cooperated with the Monitor in providing unrestricted access to its
books and records. Further, the Monitor has begun the process of reviewing the
Company’s receipts and planned disbursements together with monitoring the Company’s
performance relative to the Initial Cash Flow.
2.4
The Monitor has undertaken its statutory notice requirements pursuant to subsection
23(1)(a) of the CCAA and as provided in Paragraph 39 of the Initial Order. In particular,
the Monitor has:
2.4.1
Sent notice, in the prescribed form, along with a letter from the Company, to the
Company’s creditors on March 17, 2015;
2.4.2 Deployed its website www.pwc.com/car-yukonzinc. The Initial Order, the
Company’s application materials, and a list of creditors including their names,
addresses and amounts have now been posted to the website;
2.4.3 Established a telephone hotline (604) 806-7237 and an email address
[email protected] to field inquiries; and
2
YUKON ZINC CORPORATION
MONITOR’S FIRST REPORT TO COURT
March 17, 2015
2.4.4 Arranged for notice of the CCAA proceedings to be published in The Yukon News
on Wednesday, March 18, 2015 and Wednesday, March 25, 2015.
3.
ASSET VALUES
3.1
The assets of Yukon Zinc are almost entirely comprised of the items relating to the Mine.
These assets consist of various pieces of moveable equipment (e.g. generators, haul trucks
and loaders), a processing mill facility constructed approximately 5 years ago at a cost in
excess of $100 million, an underground mine, 3,281 mineral claims, as well as various
leases, permits, licenses and other contractual arrangements necessary to operate the
Mine.
3.2
Yukon Zinc acquired the mine property in 2008. The Company has advised that the
parent company of Yukon Zinc has invested in excess of $500 million to acquire, develop
and fund the ongoing operation of the Mine.
3.3
The Mine was in operation until January 2015, at which time it was put into care and
maintenance, primarily as a result of the weak commodity prices for the various metals
that the mine produces. Although Yukon Zinc has not achieved historical profitability, it
has operated over a relatively short period of time, namely from early 2012 until early
2015. The Company has advised the Monitor that with improved commodity prices, the
Mine can be operated profitably.
3.4
The Monitor has not had sufficient time to review and assess the assets and operations of
Yukon Zinc to develop a view on the value of the Mine. Accordingly, the Monitor has no
independent view of value at this time. The Monitor does observe that there are various
independent third party reports on certain of the assets and the Mine in general. These
reports include an appraisal of certain pieces of movable equipment, a valuation report
performed in February 2015, a life of mine financial model to 2023, a report on the
mineral reserves, technical reports, and a closure plan.
3.5
The Monitor notes in particular that the above-referenced February 2015 valuation report
estimates the value of the Mine to be very significant. The Monitor is not able to comment
on the reasonableness of the valuation at this time.
3
YUKON ZINC CORPORATION
MONITOR’S FIRST REPORT TO COURT
March 17, 2015
3.6
4.
The Monitor also notes that the appraisal of certain pieces of moveable equipment
provides a value for this equipment to be well in excess of the $1.4 million contemplated
to be borrowed under the interim financing during the period to the Comeback Hearing.
CURRENT SITUATION
4.1
As detailed in the Lu Affidavit, the Company suspended operations at the Mine on
January 21, 2015. Since that time, the Company has been transitioning from mining
operations that employed approximately 150 people to a care and maintenance status
aimed at preserving the value of the assets.
4.2
Currently, the Company maintains 12 employees at the Mine and 13 employees at its head
office in Vancouver, BC.
4.3
The Company intends to put the Mine into care and maintenance which will allow the
Mine to remain protected and preserved for a period of time while the Company’s
financial affairs and the general market conditions improve. In order to put the Mine into
care and maintenance, the Company has to implement and carry out a temporary closure
plan (the “Temporary Closure Plan”) which was previously submitted to and
approved by the Yukon Government (“YG”). The Temporary Closure Plan includes, but is
not limited to:
4.3.1
Decommissioning the mill;
4.3.2 Dewatering and ventilating the underground mine areas on an ongoing basis; and
4.3.3 Maintaining the general infrastructure of the Mine.
4.4
As noted above, the Temporary Closure Plan was submitted to and approved by YG.
However, given the current financial difficulties, the Company has not been able to carry
out all aspects of the Temporary Closure Plan and, therefore, is currently not in
compliance with the plan as approved by YG.
4.5
The Company is currently in discussions with YG and hopes to have a revised, and less
costly, Temporary Closure Plan agreed to and approved in a timely manner.
4
YUKON ZINC CORPORATION
MONITOR’S FIRST REPORT TO COURT
March 17, 2015
5.
THE REVISED CASH FLOW
5.1
5.2
The Revised Cash Flow and the Monitor’s report on the Revised Cash Flow are attached
as Appendix A. The Revised Cash Flow shows a total cash requirement of $1.4 million to
the Comeback Hearing and an additional $5.5 million for the period April 11, 2015 to July
31, 2015 (for a total of $6.9 million). The Monitor notes that this cash requirement
includes the costs of performing care and maintenance activities that are determined to
be reasonable in the Company’s assessment. This cash requirement does not include the
following:
5.1.1
The full costs associated with the Temporary Closure Plan that was approved by
YG. The Company believes it will be able to demonstrate to YG that a number of
the steps in the Temporary Closure Plan can be eliminated or amended to reduce
the cost; and
5.1.2
Any costs associated with gaining access to and preserving the underground mine
areas as such costs are unknown at this time (see below).
The Monitor notes the following revisions have been made to the Initial Cash Flow
provided by the Company in the Lu Affidavit:
5.2.1
The total CCAA forecasted cash requirements to July 31, 2015 have decreased from
$7.1 million to $6.9 million. This change is as a result of the following:
5.2.1.1
The Company collected pre-filing sales amounts that were $63,000
greater than expected. This relates to the sales of inventory shipped
prior to the CCAA proceedings;
5.2.1.2
Approximately $84,000 of employee costs were paid immediately prior
to the CCAA filing as payroll was due at the Mine on March 13.
Therefore, this cost is not included in the Revised Cash Flow;
5.2.1.3
The remaining $53,000 reduction is due to changes in cash balances
and other costs stayed by the Initial Order; and
5
YUKON ZINC CORPORATION
MONITOR’S FIRST REPORT TO COURT
March 17, 2015
5.2.2 The period from Week 1 to Week 4 has been highlighted in Appendix A to show
the cash requirements to the Comeback Hearing, scheduled for April 10, 2015. As
shown, it is expected that the Company will require $1.4 million of interim
financing to the Comeback Hearing.
5.3
The forecast cash requirements to July 31, 2015 of $6.9 million as reflected in the Revised
Cash Flow will increase once the above-noted access to the underground mine areas is
achieved and the nature of the work is determined. As a result, the Company may have
incremental cash requirements which is the primary reason that the Company negotiated
an interim financing facility of $8 million instead of its currently estimated cash needs of
$6.9 million. This should allow the Company sufficient access to capital to accomplish the
increased care and maintenance activities that may be required prior to July 31, 2015.
5.4
As noted above, the Company has not been able to access the underground mine areas
since mid-January 2015 due to safety concerns. As a result, the underground areas have
not been dewatered nor ventilated. The Company anticipates there will be costs required
to make access to the underground mine areas safe, however, it is unable to estimate the
potential cost of this activity until it assesses the current situation in the underground
mine areas in consultation with YG. The quantum and timing of these costs are unknown
at this time and is one of the important activities that the Company will need to undertake
over the next few weeks. The Company will need to work with YG to determine the scope
of work and the related costs.
5.5
As noted above, the Company requires $1.4 million of interim financing to the date of the
Comeback Hearing as detailed below:
(in thous ands )
Description
Av ailable cash
Estim ated receipts
Estim ated disbursem ents (sum m arized below)
Net cash requirem ent
$
1 52
3 00
(1 ,7 57 )
(1 ,3 05)
Rounded to next 000's
(1,400)
Interim financing facility
1,500
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YUKON ZINC CORPORATION
MONITOR’S FIRST REPORT TO COURT
March 17, 2015
5.6
The $1.760 million of estimated disbursements noted above is summarized below:
(in thousands)
Description
Operating costs
Head office costs
Non-operating costs
Estimated disbursements
$
(1,080)
(144)
(533)
(1,757)
5.7
With the exception noted above, namely, the cost associated with re-accessing the
underground mine areas, the Monitor is satisfied that the Revised Cash Flow reflects
reasonable and necessary disbursements to preserve and protect the assets of the
Company to the Comeback Hearing. It is unlikely that access to the underground areas
will be achieved prior to the date of the Comeback Hearing as both the Company and YG
will need to determine how this is safely accomplished. Accordingly, these costs will begin
to be incurred in the period following the Comeback Hearing.
5.8
The Monitor provides the following comments on the Revised Cash Flow:
5.8.1
Minimal receipts
5.8.1.1
Receipts over the cash flow period total $300,000, of which the full
amount is expected to be received before the Comeback Hearing.
5.8.1.2
The estimated receipts relate to the final holdbacks on shipments of
copper concentrate. As operations were suspended 2 months ago, there
are no other receipts anticipated.
5.8.2 Operating costs
5.8.2.1
The operating costs to the Comeback Hearing are estimated to total
$1.080 million.
5.8.2.2
The Mine employees currently rotate on a one-week shift rotation (6
employees per shift). After March 27, 2015, the Company will increase
the number of employees to 18 and have them on a two-week shift
rotation (9 employees per shift). This increase in the number of
employees per shift is required by YG;
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YUKON ZINC CORPORATION
MONITOR’S FIRST REPORT TO COURT
March 17, 2015
5.8.2.3
As part of the operating costs, the Company will bring in a team of 10
employees (in addition to the planned 18 Mine employees) beginning
the week of April 3, 2015 to work for a one-month period to
decommission the mill (i.e. prepare the equipment within the mill for
long-term storage, etc.). Once the mill has been decommissioned, the
team will leave the Mine; and
5.8.2.4
Fuel (i.e. diesel and propane) costs remain the highest and most critical
for ongoing maintenance of the Mine as required for power generation,
dewatering and ventilation of the underground mine areas, heating,
and cooking.
5.8.3 Current head office costs
5.8.3.1
The head office costs to April 10, 2015 are estimated to be $143,684.
5.8.3.2
These costs will be reviewed by the Monitor over the next few weeks to
determine the actual head office staffing requirements going forward.
Until the matters are resolved with YG, the Mine moved to full care and
maintenance status, and the future direction of the Company
determined, the ongoing requirement of head office functions cannot
be determined.
5.8.4 Non-operating costs
5.8.4.1
The non-operating costs consist of the restructuring professional fees,
other CCAA related restructuring costs, as well as the costs related to
the interim financing.
5.8.4.2
Non-operating costs during the period to the Comeback Hearing are
estimated to be $533,882, consisting of:

Interim financing interest and fees of $130,882 (discussed in
the next section);

Restructuring professional fee retainers of $75,000 for the
Company’s counsel, the Monitor, and the Monitor’s counsel;
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YUKON ZINC CORPORATION
MONITOR’S FIRST REPORT TO COURT
March 17, 2015
5.8.4.3
5.9

Professional fees of $128,000; and

Professional fee contingencies of $200,000.
The estimated amount for professional fees to the Comeback Hearing is
based on a relatively straight forward restructuring with cooperative
parties; however, based on past experience, the Monitor is aware that
unanticipated actions of parties and unexpected issues may arise. As a
result, the Monitor is of the view that it is prudent to include a
contingency in the cash flow for such developments.
As the Company is going through a transition from operations to a care and maintenance
status, the costs at the Mine are not easily estimated as several unknowns remain,
including resolution with YG surrounding the required care and maintenance activities.
As such, there are some contingencies built into the Revised Cash Flow to provide
flexibility and allow the Company to:
5.9.1
Enter into new arrangements with suppliers on a go-forward basis;
5.9.2 Pay key suppliers to secure procurement of required goods and services;
5.9.3 Make alternative business arrangements in order to affect the Temporary Closure
Plan; and
5.9.4 Address the specific requirements of YG regarding the Temporary Closure Plan.
5.10
The contingencies are relatively small given the change in operating status for the
Company and the uncertainties associated with this change. The Monitor expects that
these contingencies will be sufficient until the date of the Comeback Hearing, but
thereafter it is likely that further costs will need to be provided for to address the
incremental care and maintenance costs.
5.11
The Monitor is in the process of setting up systems which will allow it to oversee the
incurring of post-filing obligations and the funding of the related disbursements.
9
YUKON ZINC CORPORATION
MONITOR’S FIRST REPORT TO COURT
March 17, 2015
6.
INTERIM FINANCING
Financing requirements
6.1
The Company estimates it will require interim financing of approximately $1.4 million to
the Comeback Hearing as detailed in Appendix A.
Securing an interim financing lender
6.2
The Company approached Maynards Financial Limited Partnership (“Maynards”) to
provide interim financing on the basis that an interim financing facility would be granted
a Court-ordered charge in priority to all charges on the Company’s assets, other than the
Administration Charge.
6.3
Maynards has provided the Company with a commitment for interim financing (the
“Interim Loan Agreement”), attached as Appendix B.
6.4
Some of the key features of the Interim Loan Agreement include:
6.4.1
The total credit facility is $8.0 million, which allows the Company the ability to
borrow its currently estimated cash requirements to July 31, 2015 in the total
amount of $6.9 million, plus provides for an additional amount should the need
arise (i.e. dealing with the underground mine areas) and the Court approves such
additional borrowing at the time;
6.4.2 The Company estimates its cash requirements to April 10, 2015 will total $1.4
million. The interim financing facility accommodates such initial cash needs and
the Company is requesting Court approval to borrow up to $1.5 million prior to
the Comeback Hearing;
6.4.3 The facility can be drawn in $100,000 increments;
6.4.4 There is a financing upfront fee of 5% on the first $1.5 million borrowed and 2.5%
on the remaining $6.5 million. The fee total is $237,500, of which $75,000 is
payable immediately with the balance payable once the remaining portion is
drawn;
10
YUKON ZINC CORPORATION
MONITOR’S FIRST REPORT TO COURT
March 17, 2015
6.4.5 The interest rate is 9% on funds borrowed and there is a standby fee of 2% on the
unused portion of the facility;
6.4.6 The annualized cost of borrowing under the interim financing facility is under
10%. This includes the commitment fee, the interest, and the standby fee. The
Monitor notes that the flexibility to draw on the facility in $100,000 increments
greatly reduces the overall cost of borrowing for the Company;
6.4.7
Graduated early prepayment options;
6.4.8 Termination date of the earliest of:
6.4.8.1
September 15, 2015;
6.4.8.2
6 months from the granting of the Order approving the Interim Loan
Agreement;
6.4.8.3
The date the stay of proceedings expires in the CCAA Proceedings; and
6.4.8.4
10 days following written notice being provided by the Company to
Maynards of an unremedied Event of Default (as defined in the Interim
Loan Agreement); and
6.4.9 All outstanding principal and interest is repaid on the Termination Date (as
defined in the Interim Loan Agreement).
6.5
The initial $1.5 million draw of interim financing proposed under the Interim Loan
Agreement would provide the Company sufficient resources to preserve the value of its
assets until the Comeback Hearing and initiate the Temporary Closure Plan.
6.6
The Monitor is satisfied the terms of the Interim Loan Agreement are commercially
reasonable and fair due to the:
6.6.1
Time-sensitive nature of the Company’s cash flow requirements;
6.6.2 Unique nature of the Company’s assets;
11
YUKON ZINC CORPORATION
MONITOR’S FIRST REPORT TO COURT
March 17, 2015
6.6.3 Remote location of the Mine which is difficult and time consuming to access; and
6.6.4 Costs required to run a due diligence process for more than one potential interim
financing lender.
7.
CONCLUSIONS AND RECOMMENDATIONS
7.1
The Company is seeking the Court’s approval for an:
7.1.1
Interim financing facility in the amount of $8 million, with the CCAA-ordered
priority charge subordinated only to the Administrative Charge; and
7.1.2
Initial draw of up to $1.5 million to allow it to:
7.1.2.1
Preserve the value of its assets to the Comeback Hearing;
7.1.2.2
Attempt to reach a revised Temporary Closure Plan with YG; and
7.1.2.3
Determine what is necessary to return to compliance with its statutory
environmental and safety obligations related to the underground mine
areas.
7.2
If the financing is not approved, the Company will remain non-compliant with its
statutory environmental and safety obligations which may result in preservation
measures being taken by YG.
7.3
The Monitor supports the Company’s application for interim financing and the related
CCAA priority charge to preserve the long-term value of the Company’s assets for the
benefit of all interested parties.
12
YUKON ZINC CORPORATION
MONITOR’S FIRST REPORT TO COURT
March 17, 2015
This report is respectfully submitted this 17th day of March, 2015.
PricewaterhouseCoopers Inc.
Court Appointed Monitor of
Yukon Zinc Corporation
Michael J. Vermette, CIRP
Senior Vice President
Christopher Stocco, CIRP
Vice President
13
APPENDIX A
Revised Cash Flow to July 31, 2015
Yukon Zinc Corporation
Revised Proforma CCAA Cash Flow Statement
For the Period March 13, 2015 to July 31, 2015
Canadian Dollars
Period
Period Ending
Notes
Receipts
Collection of pre-filing sales
Other
Total Receipts
Operating Costs
Raw material / freight / storage costs
Assay / royalty costs
Mill / camp costs
Employee costs
Property tax / insurance / other taxes
Other costs
Total Operating Costs
2
1
20-Mar
2
27-Mar
3
3-Apr
-
-
300,000
300,000
3
4
5
6
(75,000)
(196,200)
(40,680)
(311,880)
(13,000)
(5,000)
(297,708)
(82,500)
(59,731)
(457,940)
(450)
(47,500)
(35,000)
(62,443)
(145,393)
7
6
(5,057)
(51,500)
(56,557)
(51,500)
(51,500)
(27,476)
(7,000)
(1,152)
(35,627)
Non-Operating Costs
Restructuring professional fees
Professional fee retainers
CCAA restructuring costs
Interim financing interest & fees
Total Non-Operating Costs
(75,000)
(120,000)
(195,000)
(164,000)
(164,000)
(10,882)
(10,882)
Total Disbursements
(563,437)
(673,440)
Net Receipts (Disbursements)
(563,437)
Head Office Costs
Lease / utilities
Employee costs
Other head office costs
Total Head Office Costs
Cash Balance
Opening cash balance
Net receipts (disbursements)
Interim financing borrowing in period
Ending Cash Balance
Interim Financing
Interim financing balance at beginning of period
Interim financing borrowing in period
Interim Financing Balance at End of Period
8
4 Comeback
10-Apr Period Total
-
(143,006)
(21,451)
(164,457)
300,000
300,000
5
17-Apr
6
24-Apr
7
1-May
8
8-May
9
15-May
10
22-May
11
29-May
12
5-Jun
13
12-Jun
14
19-Jun
15
26-Jun
16
3-Jul
17
10-Jul
18
17-Jul
19
24-Jul
20
31-Jul
CCAA
Total
-
-
105,000
105,000
-
-
-
-
-
-
-
-
-
-
-
-
-
405,000
405,000
(88,450)
(5,000)
(684,415)
(117,500)
(184,305)
(1,079,669)
(16,699)
(2,000)
(120,260)
(20,844)
(159,804)
(13,000)
(5,000)
(53,063)
(10,659)
(81,722)
(4,200)
(639,688)
(120,260)
(114,622)
(878,770)
(43,006)
(70,000)
(16,951)
(129,957)
(2,000)
(82,500)
(12,675)
(97,175)
(12,000)
(1,800)
(13,800)
(13,000)
(5,000)
(43,063)
(82,500)
(21,534)
(165,097)
(391,688)
(35,000)
(64,003)
(490,691)
(32,532)
(110,000)
(1,152)
(143,684)
(51,500)
(51,500)
(5,057)
(5,057)
(1,476)
(51,500)
(1,152)
(54,127)
(26,000)
(7,000)
(33,000)
(51,500)
(51,500)
(5,057)
(5,057)
(51,500)
(51,500)
(27,476)
(7,000)
(1,152)
(35,627)
-
(5,057)
(51,500)
(56,557)
-
(27,476)
(58,500)
(2,852)
(88,827)
(164,000)
(164,000)
(328,000)
(75,000)
(130,882)
(533,882)
(150,000)
(162,500)
(312,500)
(64,000)
(64,000)
(24,236)
(24,236)
(64,000)
(64,000)
(64,000)
(33,611)
(97,611)
-
(50,000)
(50,000)
-
(50,000)
(40,077)
(90,077)
(191,902)
(328,457)
(1,757,235)
(523,804)
(150,779)
(957,133)
(226,957)
(148,675)
(82,857)
(216,597)
(623,929)
(22,217)
(215,232)
(394,522)
(1,539,522)
(22,217)
(198,175)
(673,440)
108,098
(328,457)
(1,457,235)
(523,804)
(150,779)
(852,133)
(226,957)
(148,675)
(82,857)
(216,597)
(623,929)
(22,217)
(215,232)
(394,522)
(1,539,522)
(22,217)
152,471
(563,437)
500,000
89,034
89,034
(673,440)
600,000
15,594
15,594
108,098
123,692
123,692
(328,457)
300,000
95,235
152,471
(1,457,235)
1,400,000
95,235
95,235
(523,804)
500,000
71,431
71,431
(150,779)
100,000
20,653
20,653
(852,133)
900,000
68,520
68,520
(226,957)
200,000
41,562
41,562
(148,675)
200,000
92,887
92,887
(82,857)
10,031
10,031
(216,597)
300,000
93,434
93,434
(623,929)
600,000
69,505
69,505
(22,217)
47,288
47,288
(215,232)
200,000
32,057
32,057
(394,522)
400,000
37,535
37,535
(1,539,522)
1,600,000
98,013
500,000
500,000
500,000
600,000
1,100,000
1,100,000
1,100,000
1,100,000
300,000
1,400,000
3,100,000
200,000
3,300,000
3,300,000
3,300,000
3,300,000
300,000
3,600,000
3,600,000
600,000
4,200,000
4,200,000
4,200,000
4,200,000
200,000
4,400,000
4,400,000
400,000
4,800,000
4,800,000
1,600,000
6,400,000
-
1,400,000
1,400,000
1,400,000
500,000
1,900,000
1,900,000
100,000
2,000,000
2,000,000
900,000
2,900,000
2,900,000
200,000
3,100,000
-
(64,000)
(64,000)
-
(19,319)
(2,898)
(22,217)
(12,000)
(82,500)
(14,175)
(108,675)
(43,063)
(300,000)
(51,459)
(394,522)
(315,646)
(117,500)
(750,000)
(177,472)
(1,360,618)
(19,319)
(2,898)
(22,217)
(12,000)
(82,500)
(14,175)
(108,675)
(2,000)
(300)
(2,300)
(53,063)
(82,500)
(20,334)
(155,897)
(114,450)
(35,899)
(2,347,329)
(993,021)
(1,050,000)
(731,105)
(5,271,804)
-
(51,500)
(51,500)
(5,057)
(5,057)
(51,500)
(51,500)
(135,186)
(543,000)
(6,307)
(684,493)
-
(38,000)
(38,000)
(57,000)
(52,847)
(109,847)
(779,000)
(75,000)
(150,000)
(444,152)
(1,448,152)
(7,357)
(317,243)
(7,404,449)
(198,175)
(7,357)
(317,243)
(6,999,449)
98,013
(22,217)
75,797
75,797
(198,175)
200,000
77,622
77,622
(7,357)
70,265
70,265
(317,243)
300,000
53,021
152,471
(6,999,449)
6,900,000
53,021
6,400,000
6,400,000
6,400,000
200,000
6,600,000
6,600,000
6,600,000
6,600,000
300,000
6,900,000
-
6,900,000
6,900,000
Notes
1 The purpose of this Cash Flow Statement is to determine the liquidity requirements for Yukon Zinc Corporation (the "Company") during the CCAA proceedings.
2 Receipts are remaining payments due to the Company regarding pre-CCAA concentrate sales.
3 Includes costs to store concentrate at port and transport remaining concentrate inventory to port.
4 There are a few shipments in transit and sales have not been finalized. Further assay services by an independent third party are required prior to the final invoices being issued.
5 Includes costs for basic care and maintenance of the Wolverine Mine such as food, fuel, propane and travel expense to transport maintenance staff to the Mine.
6 Includes wages and related benefits.
7 Includes the head office lease, executive residential leases, and relevant utilities.
8 Amounts in $USD have been converted to $CAD based on Bank of Canada closing rate of 1.2790 on March 13, 2015.
Revised Cash Flow Summary
3/18/2015
Yukon Zinc Corporation (the “Company”)
Revised CCAA Cash Flow Statement
For the Period March 13, 2015 to July 31, 2015
Review of the Monitor
1.
The Revised CCAA Cash Flow Statement (the “Revised Cash Flow”) has been prepared by the
Company for the purpose described in Note 1, using the Probable and Hypothetical Assumptions set
out in Notes 2 to 8.
2. The Monitor’s review of the Revised Cash Flow consisted of inquiries and discussion related to
information supplied to the Monitor by certain management and employees of the Company. Since
Hypothetical Assumptions need not be supported, the procedures with respect to them were limited
to evaluating whether they were consistent with the purpose of the Revised Cash Flow. The Monitor
has also reviewed the support provided by management of the Company for the Probable
Assumptions and the preparation and presentation of the Revised Cash Flow.
3. Based on the Monitor’s review, nothing has come to our attention that causes us to believe that, in all
material respects:
a.
The Hypothetical Assumptions are not consistent with the purpose of the Revised Cash Flow;
b. As at the date of this report, the Probable Assumptions developed by management are not
suitably supported and consistent with the plans of the Company or do not provide reasonable
basis for the Revised Cash Flow, given the Hypothetical Assumptions; or
c.
The Revised Cash Flow does not reflect the Probable and Hypothetical Assumptions.
4. Since the Revised Cash Flow is based on assumptions regarding future events, actual results will vary
from the information presented even if the Hypothetical Assumptions occur, and the variations may
be material. Accordingly, we express no assurance as to whether the Revised Cash Flow will be
achieved. We express no opinion or other form of assurance with respect to the accuracy of any
financial information presented in this report, or relied upon by us in preparing this report.
5.
The Revised Cash Flow has been prepared solely for the purpose described in Note 1 of the Revised
Cash Flow, and readers are cautioned that it may not be appropriate for other purposes.
APPENDIX B
Maynards Financial Limited Partnership
Interim Loan Agreement