Sudbury firm takes long-term approach to Yukon acquisition.

Sudbury firm takes long-term approach to Yukon acquisition

Last summer's purchase of a 44.9-percent interest in the silver and lead producing Keno Hill Mines is just part of a long-term plan, says the president of BLM Mines.

"We're just thinking in the long-term," said Stan Bharti, president of the two-year-old Sudbury company. "The purchase fits in with our strategy. It's a relatively small operation and we believe we can turn it around."

BLM, a subsidiary of Bharti Laamanen Mining, purchased the interest in the Toronto-based company from Falconbridge Ltd. for $2.7 million.

Under the deal, which was finalized July 27, Falconbridge sold the 3,195,990 shares it held in United Keno for 85 cents per share. Falconbridge will also deposit $2.4 million in escrow for maintenance, exploration and development of United Keno's Yukon properties. Falconbridge will receive a royalty interest from the property based on net smelter returns.

Falconbridge will receive a one-per-cent return when the average silver price is between $6 and $9 per ounce, and three per cent when prices exceed $9. No royalty will be paid if silver prices are less than $6. The total royalty is capped at $7.2 million.

Falconbridge will also receive the one-third interest it did not hold in the DEF copper deposit in the Yukon from United Keno.

United Keno's chief assets are the approximately 950 claims it holds in the Keno Hill-Galena Hill are of the Yukon. The underground mines which dot the area have been closed since January 1989 due to low silver prices. However, the closures have done little to dampen Bharti's optimism about the purchase.

"There is no set price where we'll re-open the mines," Bharti said. "We're looking at the mines at the present prices and developing a strategy from there."

As of the end of 1988, the company had reported total and probable reserves of 322,100 tons, with an average silver grade of 28 ounces per ton and 4.6 per cent lead. In 1988 the company's 400-ton-per-day mill processed 101,300 tons of ore and produced more than 1.75 million ounces of silver.

According to Bharti, the needs of United Keno match the strengths of BLM - which also includes Bharti Engineering and BLM Mincon - and the company will be on the look-out for similar situations to use its expertise to turn a mine into a moneymaker.

"We'll be searching for other sites which match our strengths and abilities," he said. "It doesn't have to be a silver mine; it can be a gold or a nickel mine. The technical aspects of most underground mines are similar."