Mining could resume at Eagle despite Victoria’s end, Yukon says

The Yukon government didn’t intend to shutter Victoria Gold’s (TSXV: VGCX) Eagle Gold mine permanently, or for the company’s board to resign, it said Friday, despite moving this week to put it into receivership.

Tracy-Anne McPhee, minister of justice and Yukon’s attorney general made the comment in a news briefing, one day after the Victoria board resigned. The Ontario Superior Court of Justice accepted the government’s request to put Victoria into receivership on Wednesday. PricewaterhouseCoopers was appointed receiver of Victoria and its property, and mining environmental management services firm Parsons is the lead consultant.  

“We were very careful to make sure there was a process that would allow a path forward for Victoria Gold and for mining to continue on that site,” she said. “(Our intention was) absolutely not to put it out of business. The decision by the board of Victoria Gold to resign is their decision. They were not directed to resign by the receiver or by the Yukon government.” 

Victoria halted operations at Eagle after the heap leach pad failure on June 24 caused a landslide that unleashed 4 million tonnes of material, with half leaving the pad’s containment. Between 280,000 and 300,000 cubic metres of cyanide-containing solution left the containment, according to government estimates.  

Adjournment bid 

Victoria had requested a one-week adjournment so it could prepare an application under the Companies’ Creditors Arrangement Act, according to the Ontario court document filed on Wednesday that gave details of the receivership. The judge denied that request.  

The receivership move, made after the Yukon government said it had lost confidence in Victoria’s ability to properly remediate the site, came a day before Victoria CEO John McConnell told CBC News that the board had resigned and described the company as finished. Victoria’s share price plummeted more than 90% since June. Before its shares were halted on Wednesday, they traded for 48¢ apiece. Eagle was the company’s sole asset.

The company expects the Toronto Stock Exchange will suspend its shares and proceed with a delisting review, Victoria said on Wednesday. The company hasn’t responded to The Northern Miner’s requests for comment since the accident.

$150M cleanup 

But officials in the Friday briefing emphasized the scale of the cleanup effort at Eagle and the narrowing time window before temperatures in Yukon begin to drop in October. 

“The significant health and safety concerns because of stability risks with the heap remain,” Lauren Haney, deputy minister for Yukon’s Department of Energy, Mines and Resources (EMR), said. 

Full cleanup is expected to cost $100-$150 million, according to the court document. About $40-$50 million worth of work is needed in the next 90 days.  

The key tasks in the next 90 days include fulfilling inspectors’ directions around water storage capacity at Eagle, geotechnical stability, groundwater interception wells and water treatment systems, Haney said.  

Building the groundwater wells is particularly important because it will help the government to better assess the full extent of contamination, Haney said. She couldn’t say how long it could take until the site is restored to its pre-June 24 state.   

Initial $50M payment 

The Yukon government will advance payment for the mitigation work, which will amount to a debt owed to the territory. Funding is to be recovered from Victoria’s assets. The territory has agreed to advance an initial $50-million to PwC through a non-revolving credit facility on a super-priority basis, according to the court document.  

After Victoria said on July 12 there was no assurance it would have the financial resources to repair the damage at Eagle or resume production, Haney implied later in the month that the government had spent its own funds on the cleanup.

Contractors hired for the cleanup and environmental monitoring at Eagle have billed the EMR and environment departments for about $300,000 of work, a government spokesperson confirmed in an email to The Northern Miner.

Heap leaching in crosshairs 

With the accident putting heap leaching under the spotlight, Haney said the territory wouldn’t issue new licences for heap leaching operations until an independent review board is conducted and its outcomes incorporated into policy. Work towards launching that review is ongoing, she said, though a timeline wasn’t yet known.

Western Copper and Gold (TSX: WRN; NYSE: WRN), which plans to use heap leaching methods at its proposed Casino mine in Yukon, said earlier in the week it was delaying by almost one year its submission of a key environmental permitting document. The company didn’t directly connect the delay with the Eagle accident.