Government officials say court action wasn’t meant to put company that’s board resigned out of business
With Victoria Gold entering receivership following a court petition from the Yukon government, eyes are now turning to the court-appointed receiver and the work that must be completed at the shuttered Eagle Gold Mine.
Following a June 24 landslide that compromised the heap leach facility at the mine, the company fell behind on clean-up projects ordered by regulators. This failure to keep up with work ordered to stave off environmental impacts of the cyanide-soaked landslide coupled with the company’s financial situation served as the basis for the territorial government’s application for a court-ordered receivership. The Ontario Superior Court appointed receiver PricewaterhouseCoopers (PwC) on Aug. 14.
At a briefing on the situation held Aug. 16, Yukon government officials explained that they didn’t want to put the mining company out of business or rush the Eagle Mine to closure and reclamation but rather to restore the mine to the condition it was in prior to the June 24 landslide.
“This legal action gives us a pathway to use the assets of the company responsible for the environmental damage to pay for the cost of addressing that damage. The Government of Yukon has agreed to advance the funds necessary for this urgent work, but the company’s own assets and funds will be used first by the receiver. Once those have been exhausted, the funds advanced by the Yukon government, will be a debt owed to government, and we will have a priority charge to recover them if and when the assets of Victoria Gold are sold by the receiver under its court-ordered powers,” said Yukon justice minister Tracy-Anne McPhee at the briefing.
She said the receivership will offer a more public and transparent forum to have concerns about operations at the mine site heard.
When the receivership was ordered, McPhee said the judge emphasized that it was the only path forward. She also noted that the company had requested an adjournment to allow it to begin proceedings through the Companies Creditors Arrangement Act, but the judge denied this and proceeded with the hearing on receivership.
McPhee said that the Yukon government was careful to undertake the legal action in a way that would allow the company to reopen and mining to resume on the site. Victoria Gold’s board has now resigned but McPhee said that was their decision and not directed by the government or the receiver.
With the receiver in control of the mine site, Yukon energy mines and resources deputy minister Lauren Haney said the next few months will be critical, with a tremendous amount of work to be done before the ground freezes, likely in October. She said work will focus on finishing incomplete inspector’s directions in areas including water treatment and water storage. The government had already taken over the portion of the project involving the creation of a safety berm allowing access to wells for monitoring and if necessary, redirection of groundwater which data suggests is highly contaminated. Haney noted that the government’s contractor picked for this job was demobilized due to safety concerns around the still-unstable heap.
“The situation will look very different going forward with the receivership in place,” Haney said.
She said that based on their experience with these kinds of projects, those hired to assist with the work — PwC and Parsons Inc. — are the people for the job. According to Haney, PwC has already been on the mine site dealing with Victoria Gold and has also taken action at its offices in Vancouver and Toronto. PwC is handling the receivership and liquidation of assets at the failed Minto Mine, abandoned by its owner last year, and also worked on the receivership of the abandoned Wolverine Mine. Parsons is involved with remediation at both the Faro Mine in the Yukon and the Giant Mine near Yellowknife.
The preliminary cost estimate for cleaning up the landslide, as put forward in court documents, is between $100 million and $150 million with between $40 million and $50 million required within the next 90 days alone.
Victoria Gold assets now in the hands of the receiver will be used to pay for the work. Haney said tallying of those assets is ongoing; she repeated confidence that PwC is up to this task. Haney didn’t know if the receiver would be counting the gold still contained in the heap among those assets but noted that the present state of licensing doesn’t allow production at the site, regardless of who controls it. McPhee confirmed that the almost $104 million in security that the government holds from Victoria Gold hasn’t been drawn on yet.
As the receivership was going through, the opposition Yukon Party issued a statement suggesting that Victoria Gold should stay on at the site and that having the receiver in charge wouldn’t ensure further environmental damage is stopped. Replying to this, McPhee said in the last six weeks, Victoria Gold didn’t adequately address environmental concerns by completing directions from government regulators. She said the receivership arrangement won’t allow Victoria Gold to duck financial responsibility.
While the receiver will take over day-to-day operations with the mine cleanup, those at the briefing heard that the territorial government remains the regulator and will continue working with the First Nation of Na-cho Nyäk Dun (FNNND).
FNNND had briefed reporters earlier this week on its own call for receivership for the mining company, this one filed in Yukon Supreme Court. It also served as a chance for Chief Dawna Hope and the First Nation’s technical team to discuss the grief that the landslide at the mine and ensuing contaminations has created for the First Nation’s citizens.
A key event of Victoria Gold’s last days in charge of the mine site was a late July and early August discharge of supposedly treated water that led to the death of dozens of fish. At the Aug. 16 briefing, Tyler Williams and Cameron Sinclair, handling water and fish monitoring respectively for the Yukon government, made it clear that all data points to cyanide as the cause of the fish deaths, not water temperature or hardness as Victoria Gold CEO John McConnell had suggested.
Contact Jim Elliot at jim.elliot@yukon-news.com