(Whitehorse) A judge has granted an order appointing a receiver to take control of the assets of a gold mine closed after a massive slide of cyanide-contaminated ore in June, Yukon’s justice minister said.
Tracy-Anne McPhee said in a statement Wednesday that the government filed an application with the Ontario Superior Court of Justice for the receivership after losing confidence in Victoria Gold’s ability to take seriously the health, safety and environmental impacts of the failure of its Eagle Gold mine.
Mme McPhee said PricewaterhouseCoopers Inc. would administer the assets and liabilities previously controlled by Victoria Gold, under the direction of the territorial government and supervision of the court.
“Immediate action is needed to address the heap leaching failure and its impact on the land, water, people and wildlife of the traditional territory of the Na-Cho Nyak Dun First Nation,” Mr.me McPhee.
“The Yukon government is concerned that Victoria Gold itself does not have the capacity and has not done the work required,” she added.
The minister revealed that Victoria Gold “failed to comply with several official guidelines” issued by the government, which “require specific measures to be taken to address risks and impacts on human health and safety and the environment”.
“Clear evidence” of contamination
On June 24, the Eagle Gold mine’s heap leach facility failed, causing a slide of cyanide-contaminated ore and releasing millions of liters of cyanide solution used in the gold extraction process.
Yukon officials said some water samples taken downstream showed cyanide levels that “significantly exceed” acceptable limits for aquatic life.
Brendan Mulligan, a senior scientist with the Yukon government, said in a briefing last week that “clear evidence” of groundwater contamination had also been found, although the samples with the highest concentrations of cyanide were “contained on site.”
Health officials said the contamination does not impact drinking water.
The territorial government and the Na-Cho Nyak Dun First Nation filed separate court applications this week seeking the appointment of a receiver, which the company said it opposes in a statement.
Chief Dawna Hope said at a news conference earlier Wednesday that legal action was the only way for the First Nation to ensure the necessary steps to mitigate the disaster are taken.
She added that Victoria Gold was not doing what was necessary to protect land and water from cyanide.
“This is unacceptable. Immediate action is needed to address the millions of litres of toxic cyanide and other contaminants leaking from the mine site,” she said.
“All mitigation measures must be implemented to protect the land, water, fish, wildlife and people affected by this disaster. We are not confident that Victoria Gold is in a financially stable position to repair the environmental damage caused by its failures.”
Millions to clean up
Mme McPhee said the territorial government has reached an agreement with the receiver to advance the money needed to undertake the mitigation work, which will be treated as a debt to be prioritized over other Victoria Gold debts.
At the First Nation’s news conference, consultant Cord Hamilton estimated the cost of cleaning up the spill would be “in the order of $100 million,” in addition to the cost of closing and reclaiming the mine.
The Yukon government has already said it has $104 million in bonds to cover reclamation costs if the mine is forced to shut down.
Victoria Gold CEO John McConnell did not respond to a request for comment.
The mine is located about 400 kilometres north of Whitehorse, on the traditional territory of the Na-Cho Nyak Dun, who have repeatedly requested that Victoria Gold be removed from management of the cleanup.
Bill Slater, an environmental consultant working with the First Nation, said at the news conference that the mine did not have enough capacity to contain the contamination and that water treatment was ineffective.
Earlier this month, the Yukon government said 68 dead fish were found after a spill of treated water from the site.
“The lack of effective water treatment also means that the existing storage on site is almost full. This includes the dynamic storage they created by starting to pump solution back onto the pile on July 14,” he said.
Public inquiry and class action
The nation has already called for a public inquiry to examine “the failings that caused this disaster and ensure it never happens again.”
Mr. Slater said the government had ordered the company to build more groundwater collection wells, but that had not happened.
The sequestration is not Victoria Gold’s only legal challenge.
A Vancouver-based law firm has also filed a proposed securities class action against Victoria Gold, alleging the company made misleading statements about environmental and safety practices at the mine, particularly regarding its heap leach facility.
The territorial government’s application for a receivership was filed in Toronto, where Victoria Gold is headquartered, while the First Nation filed its application in the Yukon Supreme Court.
The First Nation’s petition says the disaster is ongoing and is impacting the First Nation’s “inherent, constitutional and treaty rights.”
She claims the company’s attempts to contain the cyanide were inadequate and that it refused to comply with government orders.
She also says the company owes the First Nation more than $750,000 in royalties under the agreement that allows the mine to operate.
These allegations had not been heard by the court before the decision on the territorial government’s application was made.