Sterling Mining Co. is flat broke, its attorneys said Monday, while arguing for a quick sale of the Sunshine Mine’s lease during a hearing in U.S. Bankruptcy Court.
The debt-ridden company doesn’t have $32,000 to make its payroll on Friday, said Ford Elsaesser, Sterling’s legal counsel. But a $24 million cash offer is pending for Sterling’s stock and assets – which include control of historic Sunshine Mine near Kellogg.
Silver Opportunity Partners LLC was the top bidder for Sterling at an April 21 auction. The limited partnership, a subsidiary of the New York-based Electrum Group of Companies, wants to close the sale this week, said attorney Luckey McDowell.
Silver Opportunity Partners is eager to gain control of the underground silver mine, which closed in 2008. The Sunshine Mine is one of the nation’s richest silver strikes, producing 360 million ounces of silver over 125 years.
Sterling, which filed for bankruptcy last year, is leasing the mine from Sunshine Precious Metals. To gain clear title to the Sunshine Mine, Silver Opportunity Partners would pay an additional $5 million to trigger a purchase option outlined in the lease.
“My client is here paying top dollar,” McDowell said. “We want the asset without questions.”
“It’s real money,” he added. “No one in this case thought they would get it.”
McDowell said a quick sale would ensure paychecks for Sterling’s 17 remaining workers. In addition, the sale would allow Sterling to start paying off its debts, he said. Without the cash infusion, Sterling could sink into bankruptcy liquidation, McDowell added.
But Sunshine Precious Metals is contesting the sale of Sterling’s assets. Sunshine’s attorney, Robert Faucher, said Sterling doesn’t have the authority to sell the Sunshine Mine’s lease.
In addition, the parties are fighting over who owns the mine’s equipment. Sunshine Precious Metals also contends that Sterling is responsible for $4 million worth of damage to the Silver Summit shaft, a secondary escape route that must be operational before the mine can start producing ore.
Sterling’s attorneys said that’s a moot point. Silver Opportunity Partners is willing to purchase the mine in its current condition, Elsaesser said.
Further delay “would put this sale at risk,” he said, warning of the potential for “cold feet” on the part of the bidder.
No decisions were made Monday. The hearing continues today before U.S. Bankruptcy Judge Terry Myers in Coeur d’Alene.