COEUR d'ALENE - A top representative of the company that owns the historic Sunshine Mine near Kellogg testified in U.S. Bankruptcy Court here on Tuesday that Sterling Mining Co.'s lease was no longer in good standing.

"It was our opinion that the lease was terminated," said J. Edward Short, general manager of Sunshine Precious Metals.

Sterling Mining, which is reorganizing under Chapter 11, is seeking approval of a sale of its stock and assets, with its primary asset being a lease of the Sunshine Mine, with an option to buy the silver mine.

Sterling Mining said a successful bidder on its stock and assets late last month was Silver Opportunity Partners LLC, with a cash price of $24 million. Silver Opportunity is a member of Electrum Group of companies.

Short also said some personal property at the Sunshine Mine wasn't within the Sterling Mining lease. If that's true, it would make a complete purchase of the mine and equipment by a company seeking to exercise a purchase option within a lease impossible.

Short said his employer "never contemplated" trying to sell the mine to Silver Opportunity Partners, cutting Sterling Mining out of the sale.

He said Sunshine Precious Metals hasn't identified another tenant for the mine, and doesn't have a buyer "waiting in the wings."

Short, an attorney, was called to the stand in large part because he helped put together Sterling Mining's lease of the mine. Robert Mori is the owner of Sunshine Precious Metals.

Sterling Mining acquired the rights to the Sunshine Mine and related assets in mid-2003 and began initial production in late 2007.

Due to the economic downturn in late 2008, coupled with internal financial challenges, operations were suspended in September 2008. Sterling Mining filed for Chapter 11 protection in March 2009.

Money gained from the planned sale of Sterling Mining's assets and stock would be used to pay creditors.

U.S. Bankruptcy Judge Terry Myers, of Boise, has to approve the sale. Myers scheduled the hearing to continue today in Coeur d'Alene, with Short still on the stand.