The Yukon government has seized $3 million from Veris Gold to pay for urgent repairs to the tailings facility at the former Ketza River mine.
The property, located southwest of Ross River, was an operating gold mine from 1988 to 1991.
Mining companies are required to provide a financial security for closure and reclamation activities to the Yukon government, to pay for work in the event that the company closes up shop.
The security is supposed to cover the “full outstanding mine reclamation and closure liability,” according to the Energy, Mines and Resources website.
But after the planned maintenance at the Ketza property is complete this winter, the company’s security will have all but dried up, and close to half of the money will have been spent on road and bridge upgrades.
Liberal Leader Sandy Silver asked the government to explain why in the legislature last month.
“What is the status of this property?” he asked on Nov. 24. “Is it closed temporarily or, now that the owner has gone bankrupt, will it be closed permanently? Is there even a water licence in place to do some of the work that the minister has outlined? Finally, is $3 million sufficient to clean up this site?”
Robert Thomson, director of compliance, monitoring and inspections with Energy, Mines and Resources explained the government’s actions in an interview with the News.
The government has been asking Veris Gold to complete maintenance on the tailings facility since May 2013, he said. The company has also not had a water licence for the site since 2009.
Veris Gold received creditor protection in a B.C. court in June of this year.
“The company failed to perform the work required under those directions, so on Sept. 25 of this year, we seized the security pursuant to the Waters Act and are taking the measures ourselves at the site,” said Thomson.
Veris Gold still owns the property.
The required work includes upgrading an arsenic treatment plant, controlling seepage that escapes untreated from the two dams and returning it to the tailings storage facility for treatment, and doing work related to surface water management so the facility doesn’t overload and spill over during the spring melt, said Thomson.
“If too much water flows into the pond, and not enough treated water is released, then there would be the danger that it would over-top and fail. That’s what all these measures are designed to prevent.”
None of the work requires a water licence, he said.
The government found that road and bridge work would also be required, just to get contractors to the site.
“In order to gain access to the site to take measures and to provide for the safety of personnel on the site, the bridge is needed to be temporarily replaced.”
The cost of the road and bridge maintenance is about $1.4 million, said Thomson.
The value of the maintenance contract is $2.79 million. It was awarded to Hemmera Envirochem Inc. in October. The contract did not go out for tender.
The main reason for that was to ensure that the work be completed before the spring melt, said Mines Minister Scott Kent in an interview.
“We appointed a contractor that’s familiar with the site, recommended by the branch at the time, just to ensure that the work could be completed this winter, prior to the spring freshet.”
Dealing with the company’s court-appointed monitor and the creditor protection process delayed things to the point where going out to tender was not possible, he said.
Once the work is complete, less than $300,000 will remain in the security that was supposed to pay for full closure of the site.
The government’s only recourse for further required work would be to bill the company for it, said Thomson.
“That of course would be dependent on the company’s ability to pay.”
Silver questioned why the government would use the financial security to pay for needed maintenance on a property the company still owns.
“It’s hard to follow the bouncing ball, but subsidiaries of this company are making money in other parts of North America, and they’re healthy,” he said in an interview this week.
“But this company can go bankrupt here, owing lots of people lots of money. It sort of begs the question of, whose bridge are you repairing? Are you trying to put this mine ready to go on the shelf again for somebody to come in and reopen it, or are you actually using the money for reclamation, which is what it’s for?
“Is this a new policy, of when a mining company leaves, you use the reclamation money to have it ready for somebody else to come in?”
Contact Jacqueline Ronson at