Veris Gold ditches Ketza mine project

The Ketza mine has been abandoned by its owners, leaving taxpayers on the hook for eventual clean-up costs. Veris Gold Corp., parent company to Ketza River Holdings Inc.

The Ketza mine has been abandoned by its owners, leaving taxpayers on the hook for eventual clean-up costs.

Veris Gold Corp., parent company to Ketza River Holdings Inc., has been under court-ordered creditor protection since June 2014.

As of April 10 it has relinquished the care and maintenance of the Ketza mine site to the Yukon government.

“That became inevitable when the parent corporation, Veris Gold Corporation, would no longer fund Ketza River Holding’s activities,” said Rob Thomson, director with Energy, Mines and Resources.

“Ketza River Holdings was no longer in a position to do anything on the site. They could not pay any workers, they couldn’t buy the chemicals required for the arsenic treatment plant or any of the fuel required for the generators, etcetera.”

Ketza was an operating gold mine from 1988 to 1991, and is located southwest of Ross River.

Ketza River Holdings submitted a proposal to reopen the mine to the Yukon Environmental and Socio-economic Assessment Board in 2011, but it was withdrawn in 2014 after the company failed to produce required information at the adequacy review stage in a timely way.

Because the project was a mine site before devolution, the ultimate responsibility for the cleanup rests with the federal government.

The Yukon government has informed the government of Canada and affected First Nations that the site has been abandoned, and has begun discussions with the parties on how to proceed, said Thomson.

The likely outcome is that an independent consultant will be hired to evaluate the site and develop a closure plan, with costs falling to Canada.

“It is exclusively their responsibility,” he said.

A large portion of the company’s mine security, set aside for closure activities, has already been spent.

The Yukon government seized the $3.1 security and has been using it for urgent repairs to the site’s water management facilities and arsenic treatment plant.

That work included containing water that had been escaping untreated from two dams, treating it and returning it to the tailings facility.

The government had planned to use the security to pay for $1.2 million in bridge and road upgrades, required to safely access the site.

However, it has since determined that because the road is public, those funds will come from the Highways and Public Works budget instead of the security.

The urgent work has been substantially completed, and about $1.9 million remains in the security fund, said Thomson.

That will go towards ongoing care and maintenance, until a closure plan is initiated or the money runs out.

According to court filings, the company had been paying about $150,000 monthly to keep up the site.

The government expects ongoing maintenance to cost less than that, Thomson said. The precise amount will be determined by a public tender that has yet to be issued.

It’s a commonly held misunderstanding that mine securities are only to be used for closure and reclamation activities, he said.

In fact, the security can also be drawn upon if a company fails to comply with inspectors’ directions, or if a site has been abandoned.

The amount of a mine security, however, is calculated based on anticipated closure costs, and does not account for these sorts of contingencies.

“Obviously it’s preferable if all the security can be used to bring about complete and final reclamation and closure, but in the case of this Ketza mine, that’s unfortunately not the case,” said Thomson.

The transfer of the property was anticipated and is being managed appropriately, he said.

“We planned for it, and we’re ready for these responsibilities, and quite frankly there’s no emergency at the site. Human health and environmental health are being managed appropriately pursuant to the inspectors’ directions.”

Contact Jacqueline Ronson at

jronson@yukon-news.com

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