Whitehorse businessman Jon Rudolph has lost his bid to save his gold mine.

Justice Ron Veale of the Yukon Supreme Court ordered Wednesday that Ross Mining Ltd. and its Dominion Creek placer mine be placed under receivership so assets can be sold and outstanding debts settled.

The company purchased the mine for $7 million plus interest in 2005 from Norm Ross but failed to make its scheduled $1.5-million payment last January, after already having paid $6 million in four previous instalments.

Ross Mining also fell into debt with MacKenzie Petroleum Ltd. of Dawson City, to the tune of $650,000-plus.

Under the terms of the purchase agreement, Norm Ross was entitled to call in the outstanding balance if Rudolph fell behind in his payments, or if Ross Mining fell behind in its payments to suppliers.

As a result, the former owner demanded last January's instalment, plus the final $1.5-million payment scheduled for January 2010, and is now owed $3.4 million, with interest building at just over $2,000 a day.

Michael Vermette, senior vice-president of PricewaterhouseCoopers, the court-appointed receiver, explained this morning the company now needs to do a total inventory of assets and debts, to determine how best to approach the matter.

Essentially, however, it will be an exercise of selling off all the assets to settle as much outstanding debt as possible.

In addition to the heavy equipment and other assets on the property, Ross Mining owns the right to a large block of 415 placer claims on Dominion Creek, some 80 kilometres southeast of Dawson City.

"I would imagine in the next four to six weeks we will be back in court saying 'here is what we think,'" Vermette said of the plan to seek Veale's approval of dealing with the assets before the sale proceeds.

Evidence before the court indicated Ross Mining is insolvent, at more than $20 million in debt, with assets amounting to about $15 million.

In each of the three seasons the company operated the mine it lost money; $914,662 in 2006; $2.5 million in 2007 and $2.5 million last year.

Ross Mining also owes $11 million to Golden Hill Ventures, the highway construction company owned by Rudolph.

Vermette said the court will ultimately decide who gets paid first, but as it stands, Norm Ross is first in line as the major secured creditor, though MacKenzie Petroleum has filed an official lien against the property as well.

The Ross Mining file was in court last week with Norm Ross seeking the appointment of the receiver, while Rudolph wanted more time to raise the money required to square up with the former owner.

Rudolph argued that placing the mine under receivership would be unfair and unjust because it would jeopardize the $6 million he's already invested, as well as taint the company's image and hurt his ability to attract further investment.

Whitehorse lawyer Murray Leitch, however, argued on behalf of his client, Norm Ross, that Rudolph has already been given enough grace.

Permitting him any more time would reduce the chance of selling the mine before the snow flies, and essentially put off Norm Ross's ability to collect his money until at least next spring, when potential buyers would next be able to tour the property, he said.

Leitch also pointed out the purchase agreement gives Norm Ross the right to call for a receiver if Rudolph defaults on in his payments.

In any event, under Canadian law, the court is required to appoint a receiver when called upon to do so by somebody who is owed money unless there is a very good reason not to, Leitch said.

Justice Veale said he could not find a such reason.

"I conclude, based upon the above factors, that (Ross Mining Ltd.) has not met the onus of showing a 'compelling commercial or other reason' why the appointment of a receiver should not be ordered." Veale wrote in his 15-page decision.

Rudolph was given a reprieve on June 9 when the court agreed to postpone the appointment of a receiver for up to a month because Rudolph indicated a deal to raise additional financing was just days away.

But the June 9 order also appointed PricewaterhouseCoopers as a "monitor" to watch over and help manage the business and assets while Rudolph completed the additional financing. Ross Mining was also supposed to co-operate with the monitor to begin preparing a marketing strategy to sell the assets in case the financing fell through.

Veale heard last week that as the monitor, PricewatershouseCoopers found Rudolph and his son, Shaun Rudolph, who was managing the mine, were everything but co-operative in the preparation of a marketing plan.

Golden Hill's demise comes less than a year after the company was applauded for its successful reclamation efforts at the Dominion Creek mine site.

The company was also recognized last summer for a deal it made with a national goldsmithing company to provide "ethical" gold coins for the Vancouver Olympics.