An Ontario court has granted an application to put Victoria Gold Corp. into receivership after the Yukon government sought to gain control over the site of a major cyanide spill after losing faith in the mining company’s management team.
Over the past seven weeks, Victoria Gold has been attempting to mitigate the environmental damage from a catastrophic rockslide that occurred at its Eagle mine in Yukon. Four million tonnes of cyanide-laced rocks collapsed at the outdoor gold-processing facility on June 24 and half of that spilled into the local environment beyond the company’s containment zone.
Toronto-based Victoria Gold said in a release on Wednesday that it was served with an application for the appointment of a receiver in Ontario by the Yukon government.
Management of Victoria Gold and the Yukon government have clashed over how best to manage the disaster. Yukon had indicated earlier that it was prepared to seize control of the mine after the company failed to carry out some of its cleanup directives. Yukon has also incurred significant costs from the cleanup effort and the appointment of a receiver may put it in a better position to recoup those costs.
The Ontario Superior Court of Justice heard the application on Wednesday afternoon. Justice Barbara Conway said that after considering the seriousness of the spill, the urgency to continue the cleanup effort and the fact that both Yukon and the local First Nation had lost faith in Victoria Gold, the only way forward was to place the company into receivership.
When companies are put into receivership, a court-appointed trustee takes over the management of the company, and its assets, and the existing executive team is ejected. Yukon Justice Minister Tracy-Anne McPhee in a statement Wednesday named PricewaterhouseCoopers Inc. as the new manager of the company.
In an interview earlier on Wednesday, John McConnell, chief executive officer of Victoria Gold, defended the company’s work to remediate the site, and maintained that there had been very little disagreement with the Yukon government
“We have essentially achieved all of the directives that they have issued. We’ve just, in some cases, done it in a different way,” he said.
Victoria Gold has been attempting to store and treat contaminated water left at the mine site but a lack of adequate storage capacity has been a major issue. Last week, Yukon officials said that dozens of dead fish found in a creek near the mine were likely killed by contaminants that were discharged from the mine site.
The First Nation of Na-Cho Nyäk Dun in a statement said its technical teams have been monitoring contamination caused by the cyanide spill and it is grieving the effects the disaster has had on its lands, waters and wildlife.
“We’re in hunting season now,” said Dawna Hope, chief of the Na-Cho Nyäk Dun, in a press conference on Wednesday. “The biggest thing is we’re fighting an invisible war.”
Na-Cho Nyäk Dun has also served Victoria Gold with a separate receivership application in a Yukon Court. The mine is located on its traditional territory in Yukon. It had earlier called for the removal of Victoria Gold’s management because of its alleged failure to do enough to mitigate environmental damage.
Cord Hamilton, a consulting engineer working for the Na-Cho Nyäk Dun, said at a press conference on Wednesday that cleanup of the site could cost $100-million and take until the late fall at the earliest to stabilize the site, and that work could easily continue into next spring.
“It is a long road,” he said.
Meanwhile, groundwater monitoring for cyanide contamination could continue for years, said Bill Slater, principal consultant at Slater Environmental, at the same press conference.
Yukon is holding $103.7-million that it received from Victoria Gold that was earmarked for the remediation of the mine upon its future closing. The funds can’t be used for the current cleanup effort.
“That bond is for reclamation. It is not for incident cleanup,” said Mr. McConnell. “They could not access that bond to, I use the term ‘put Humpty, Dumpty back together again.’ That would mean a full reclamation of the mine and no restart. So that money is not available to them for this type of work.”
Yukon late last month was already forced to step in and take over some of the environmental mitigation efforts after Victoria Gold failed to meet a key government directive on the construction of a safety berm.
The valuation of Victoria Gold has fallen by more than 90 per cent since the heap leach failure. Trading in the shares on the Toronto Stock Exchange was halted on Wednesday by the regulator.
Victoria Gold last month said it had received notices of default from creditors. Victoria Gold currently has no cash flow, owing to its production being suspended. As of the end of March, the company had $27.7-million in cash versus $230-million in debt.
- With a file from The Canadian Press.
